This article was updated on Aug. 15, 2016.
Millions of Americans rely on access to 401(k) plans at work as their primary way of saving for retirement. Despite this, criticisms of 401(k) plans are frequent, with many workers complaining about their high costs, lack of strong investment options, and general shortage of help in setting up a viable retirement savings strategy.
Not all 401(k) providers are bad, though. In fact, a 2015 survey from the National Association of Retirement Plan Participants surveyed thousands of Americans in an effort to find the best financial firm helping their client companies' employees plan for their retirement. The study confirmed its shocking finding from its initial 2014 version of the survey: the nation's most successful 401(k) plan provider was none other than Bank of America (NYSE:BAC) and its Merrill Lynch unit.
Why good 401(k) providers are essential
America's retirement crisis centers on the fact that most workers don't have the information and knowledge they need to make smart savings choices. According to the NARPP's initial Participant Financial Empowerment, Literacy, and Trust Study, many employees don't know even the most basic investment terms. Only 38% of plan participants knew what diversification was, and fewer than half had made any attempt to calculate how much money they'll need for retirement.
Moreover, skepticism about plan providers is prevalent. Only a third of those responding said that they found that the information providers gave them actually helped them learn investing basics, while only 30% found fee-related information easy to understand. Meanwhile, the majority of respondents believe that information from providers isn't always in their best interest, with a quarter saying that materials that are supposed to be educational end up seeming more like marketing or advertising of specific products.
How B of A ended up on top
The Participant FELT Study sought to evaluate plan providers on a number of key factors that it deems important for getting workers to participate and save enough in their retirement plans. Among the things that the study looks at is how well plan providers interact with participants through educational efforts and other assistance, how much trust participants have in the company providing those services, and the impact that those factors have on how much participants save and how financially literate they are. After interviewing more than 4,300 participants, the Participant FELT Study ranked B of A first out of 18 leading plan providers for 401(k)s nationally.
For its part, Bank of America Merrill Lynch was proud of its result in the study, even though a report it had conducted recently gave evidence that supported its high placement. According to the Merrill report, nearly 80% of the participants in the provider's plans either increased their contributions or started making contributions for the first time in 2014. The number of meetings between plan participants and Merrill Lynch educational specialists rose by 14% in 2014, and phone calls and online visits to get similar assistance also rose between 15% and 18%.
Bank of America also found that more of its customers are taking retirement matters into their own hands on the go. The number of plan participants monitoring their accounts and getting other educational information from its mobile-oriented online service site jumped 46% last year, as advances in mobile technology complemented B of A's efforts to make information more readily available to users in their preferred format. As B of A/Merrill executive David Tyrie put it, "We offer a range of financial education resources across several channels, including in-person, phone, online, and via mobile devices, so employees can choose the avenues that fit their needs and preferences."
Is Bank of America getting more popular?
The most surprising thing about the survey results is that they stand in stark contrast to the reputation that Bank of America has as a retail consumer bank. The most recent version of the American Customer Satisfaction Index again put Bank of America at the bottom of its banking list, and other similar surveys have noted the numerous ways in which the bank has suffered reputational damage from its role in the housing bust and subsequent financial crisis.
Yet B of A has made progress on a number of fronts. Customer loyalty has climbed sharply since 2012 to reach the top half of major financial institutions. Moreover, with its Merrill Edge discount service, B of A's brokerage division has sought to get a broader audience for its financial products, in stark contrast to Wall Street firms that largely still focus on the highest-net-worth individuals.
In the end, though, what matters to you is your own retirement, and figuring out how to get the tools you need to adequately prepare for it is vital in order to maximize your chances of reaching your goals. Thus, regardless of who your plan provider is, it's important to assess your 401(k) options and make the most of whatever's available to you. Whether you get educational information from a plan provider or an outside source, becoming informed about your retirement prospects will help you find more long-term success in your efforts to save for retirement. And if you need help choosing a provider for your retirement account, use the Fool's brokerage comparison tool.
Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.