4 Steps to Evaluating a Financial Wellness Partner

A recent study reported that 56% of employers have financial wellness as the No. 1 focus for 2016. How can you tell which financial wellness partner is the right choice?

Jania Stout, managing director and co-founder of Fiduciary Plan Advisors at HighTower, suggests a four-step process in her latest column in NAPA Net the Magazine.

Step 1: Set a Budget

Most of Stout’s clients have found that adding financial wellness to their existing health and wellness strategy is the easiest route to take. Thus, the wellness committee needs to first determine whether there is a budget for implementing a financial wellness strategy, she says.

Once a budget is established, the plan sponsor should consider sending an RFP to a handful of financial wellness providers. “There are many out there and new ones popping up all the time,” Stout notes, including Smart Dollar, Financial Finesse, LearnVest, Hello Wallet, RetireMap, and Edu(K)ate. Each of these providers offers a financial wellness platform for a fee. Plan sponsors can pay out of pocket, pay using ERISA budget accounts, or apply these fees to the plan trust (the participants).

“Recordkeepers are just now starting to either partner with a third party or build it themselves,” she notes. For example, T. Rowe Price recently announced a partnership with Smart Dollar, and is investing money and resources into integrating their systems.

Having an integrated model might increase utilization, suggests Stout. “For example, when a participant is speaking with a call center rep and that rep notices certain behavior (like needing a loan or asking about how to get their money out), they might suggest the wellness program Smart Dollar. There is a discount clients get when using Smart Dollar and T. Rowe Price together, but there still is a fee — so understanding your budget will be important.”

If there is no budget for implementing a financial wellness program, the only option is to evaluate the tools and services provided by the 401(k) recordkeeper — and, of course, any support the plan advisor can provide.

Additionally, says Stout, some of the large 401(k) providers have rolled out new tools and websites focused entirely on financial wellness. Recently, a few made big investments in enhancing their services around financial wellness, including Fidelity, Empower, Transamerica and John Hancock.

Step 2: Evaluate the Providers

The providers of financial wellness services are in the business for different reasons. “They all have a focus on providing some level of financial education, but some are heavily focused on the tools they offer, like fancy apps and great websites,” says Stout. “Others are more about providing inspiration and motivation to keep the participants engaged. And for some, providing financial wellness services is just a means to an end, like offering the participant the ability to use their managed account services or going through a financial plan.”

Step 3: Implemention and Ongoing Support

“Make sure to ask lots of questions about how the program will be communicated and rolled out to the employees,” Stout recommends. “Will the plan sponsor be responsible for all communication, or will they provide this for you? Will you have a dedicated relationship manager assigned to your plan?”

Step 4: Measuring Results

“What type of reporting is available to measure the results and impact of the program? To me, this is the most important part of finding the right provider — if you can’t measure the engagement rate, there is no way to know how the program is really doing,” Stout notes. She recommends asking for a complete list of available reports, including their frequency.

In addition to Stout’s regular “Inside Wellness” column, the summer issue of NAPA Net the Magazine includes the cover story profiling the winner of the 2016 NAPA 401(k) Advisor Leadership Award, as well as feature articles on the DOL’s final fiduciary rule and a wrapup of this year’s NAPA 401(k) Summit in Nashville. The issue also features insights from regular contributors Jerry Bramlett, Steff Chalk, Nevin Adams, David Levine, Brian Graff, Don Trone, Sam Brandwein, Fred Barstein and Lisa Schneider.

To view Stout’s column, click here and select “4 Steps to Evaluating a Financial Wellness Partner.” And to view a pdf of the full 64-page issue, click here.

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