Financial Wellness Programs are a Priority for Plan Sponsors
Financial wellness programs are generally becoming a priority for plan sponsors. Financial well-being is even more of a priority for major plan sponsors. According to a recent MassMutual Financial Wellness Trends Study, cited in AdvantagesPro, 42% of employers offer one or more financial wellness benefits, 19% have started a new program, and nearly 20% plan to launch a financial wellness program within the next three years.
Providing a financial wellness program is critical to improving retirement savings results. Do you know what your priorities are for your financial wellness program? Does your plan advisor know if you have one? According to the BenefitsPro article penned by Kris Alban, Executive Vice President of iGrad, a fintech company that employs intelligence Financial wellness solutions, Plan sponsors typically expect their plan advisor to have the following when it comes to financial wellbeing: a successful track record of working with other businesses of similar size and type, and long-term customer relationships. Another way to gauge participants’ wants and needs is to conduct a financial wellbeing survey.
When plan sponsors consider a financial wellness program, they typically prioritize the following five functions:
- Customization: Plan sponsors generally have plan goals related to employee demographics, corporate mission, retention, and plan participation goals. The only way a financial wellness program can meet the unique needs of all employees is to offer a highly customizable version that reaches everyone regardless of their demographics and level in the company. Incidentally, the ability to have this level of customization in a financial wellness program is much more appealing to the majority of plan sponsors.
- Integration: While a holistic benefit program that includes financial wellbeing tends to produce the best results, most plan sponsors don’t have that high level of integration. According to a study by Charles Schwab, 60% of employers believe that integrating financial well-being into existing benefits helps employees take control of their financial well-being and manage their money better. However, only 46% of employers report financial wellbeing and 30% encourage participation, but only 24% are genuinely integrated. The integration includes elements such as single sign-on, where employees can access their services in a central location, the ability to track data and trends across platforms, and employee incentives that span multiple services.
- Findings: Plan sponsors want financial wellness programs that keep the needle moving; that is, they produce effective, positive results. This can include behavior changes such as adequate emergency savings or fewer payday loans, as well as high engagement and satisfaction rates. Plan sponsors should ask consultants to come up with financial wellness programs with behavioral change data consistent with these goals.
- A Holistic Approach: Financial wellness programs should address every aspect of a participant’s life while providing support for:
- personal budgeting
- Construction loan
- Debt reduction (including student loan repayment)
- Emergency and long-term savings strategies
- Spending attitudes and behavior
- financial goal setting
- Understand the financial implications of choosing your health insurance plan
- Dealing with a Financial Crisis
Holistic financial wellness programs are not only more far-reaching, they also impart helpful financial management skills that employees can fall back on for a lifetime.
- Established track record: The financial wellness program provider should be stable and profitable. Plan sponsors must invest significant resources in financial wellness programs, so it is important that the provider has a long-term presence and is able to weather an economic downturn.
If you are a plan sponsor considering implementing or improving a financial wellness program, speak to your plan advisor (if applicable) to ensure these five features are incorporated into your program to make it effective and increase chances of success.
Steff C. Chalk is Executive Director of The Retirement Advisor University, a partnership with the UCLA Anderson School of Management Executive Education. Steff also serves as the Executive Director of The Plan Sponsor University and is currently a lecturer at The Retirement Adviser University.