Through the use of technology, pension customers of Nationwide Financial Services reach no farther than their keyboards to control their retirement benefits.
That's because two years ago, Nationwide established a Customer Virtual Service Center on its Web site that enables its Best of America Group Pension Series customers to go online to look up account balances, move money among investment options or change investment elections.
"We were fortunate enough to have people who had the foresight to say this is where we want to be, and we want to be a leader in this area," says Scott A. Stewart, director of pension services for Nationwide Financial Services.
Customers are responding. In less than a year's time, the number of online accounts-currently about 30,000-doubled, while the total base of customers increased 20 percent. Between August 1997 and July 1998, the number of monthly online transactions made by those customers nearly quadrupled.
That figure continues to grow, as each month 1,000 to 2,000 of the approximately 350,000 participants in the group pension series open online accounts.
In addition to pension customers of Nationwide's Best of America Group Pension Series, members of the Public Employees Benefit Services Corp., a subsidiary of Nationwide that administers deferred compensation and post-employment health plans, can use the Web site to access their accounts. The service will be offered to individual annuities customers and variable life insurance customers as well.
The advantages, Stewart says, are two-fold.
Customers benefit by having more control over their accounts.
"They can go in and look at their account balance, make an intelligent decision of how they want their money invested and go ahead and do it," he says.
Nationwide benefits, too, because each online transaction is one less that an employee must take the time to enter.
Testing the waters
Research to add a service center to the Web site was minimal-informal surveys of customers and a test with current customers to check their acceptance. The main impetus, Stewart says, was to take advantage of what was, in 1996, the anticipated potential of the Internet as a business tool.
Retirement customers, Stewart points out, run the gamut demographically, so some assumptions had to be made that the Internet capability would be used across the board.
"Software firms, engineering firms already saw this coming. From them you'd hear, 'Yeah, great,'" Stewart says. "You just make the jump to say this is going to go mainstream."
Previously, customers had the option to make changes in pension accounts by using an automated telephone system; by talking to their employer's human resources department; or by setting up an appointment with their local preferred pension administrator.
Now customers can make their own changes to their accounts 24 hours a day, seven days a week through the World Wide Web.
"Obviously the Web, because of its graphic capabilities, has a lot more opportunity for a lot of robust functionality," Stewart says.
Maureen Durr, who handles benefits for Houston-based Belsco Services Inc., says using Nationwide's online service center was a natural for the engineering, sales and assembly firm whose 22 employees use computers in their day-to-day work.
"Another reason [we elected to have the Internet access] is the ability to go in and change your funds as you care to, which is sometimes a lot easier than trying to contact the 'right' person," Durr says.
To access accounts on the secure Web site, www.bestofamerica.com/html/sc.shtml, customers must enter their own identification number and password.
"When they're sending financial information or looking at their financial information, there's no danger of it getting to the wrong party or into the wrong hands," Stewart says.
Nationwide offers Internet access as an optional, free item, so if employers with 401(k) plans aren't comfortable with it, they don't automatically get it.
"Having said that," Stewart adds, "very few customers have made an issue of 'I have concerns about this; I don't want my employees to have access to it.'"
Durr says employees at Belsco also can see, for example, what portions of their funds were generated from payroll deferrals vs. the company's contribution.
Because Nationwide already processed its business electronically, the main task in setting up the Internet capability was to create software that would let existing processing systems interface with a Web-based, front-end system and offer a secure environment for transacting business.
The software programs were written by Nationwide employees, but the costs are difficult to break out, Stewart says, because Nationwide built several Internet interfaces simultaneously for different business units.
One initial unknown, Stewart says, was response to a phone number Nationwide posted on the Web site in anticipation of customers needing more than virtual help.
"We knew there were going to be situations where unsophisticated participants might not be able to navigate through the Web site," Stewart says. "We had to set up some sort of a support system to help them out."
In the last quarter of 1997, Nationwide Financial Services received 2,276 phone calls with questions related to the Web site. In the second quarter of 1998, that number was more than double-4,793-as the number of online accounts increased at the same rate. Roughly 1.5 to two full-time equivalent positions were added to handle those calls.
At the same time, use of the Web site also has increased. In August 1997, nearly 13,000 transactions were made online; that rose to more than 50,000 by July 1998.
As the use of the Internet site increases, Nationwide looks for ways to enhance it.
Among the plans:
- Adding investment performance, which will give the user historical information about the funds.
- Posting units and unit values, to show the users how many shares or units they have and the values of those units.
- Including the capability to reallocate account balances by percentages rather than dollar amounts.
"I think that a financial services company's image in relation to technology is key," Stewart says. "I believe that having the Web capabilities and the ability to transact business the way we do on the Web is really a key component of creating that image. It gives our customers tools they need to do business with us on their terms."