The “build it and they will come” concept is not as simple for employer-sponsored financial wellness initiatives as it is for a baseball field, according to a new issue brief from EBRI.
Persuading employees to utilize financial wellness webinars can be challenging, especially for younger and lower-contributing workers. However, those who do utilize the webinars may make material changes in their 401(k) plan, the organization explains in its Field of Dreams? Measuring the Impact of Financial Wellbeing Initiatives on 401(k) Plan Utilization study.
According to EBRI’s 2021 Employer Financial Wellness Survey, some employers are not offering financial wellness initiatives to simply “check the box” on benefits, but instead, are seeking to move the dial on employee behavior, such as improving overall satisfaction or improving employees’ use of existing benefits. To that end, EBRI examines the extent to which webinars intended to educate employees on a variety of financial wellness topics change behavior in one specific area—in this case, the use of an available 401(k) plan.
In 2021, EBRI began collecting data on the use of financial wellbeing initiatives of participants across 500 plans within the EBRI/ICI database. While the data were not personally identifiable, EBRI explains they it was encrypted in such a way that it could be connected to the 401(k) activity of plan participants before and after the participant engaged with the financial wellbeing initiative. The 401(k) data used within the analysis spanned from 2017 to 2019.
The Findings
When estimating the impact of attending just one of the financial wellbeing webinars examined, EBRI found that employee contributions increase between $649 and $988 depending on age and initial contribution level.
For those who are younger and making lower contributions, EBRI found that the greatest change in contribution levels was associated with attending a budgeting webinar. On average, contributions increased $3,284 for younger and lower contributors who undertook this financial wellness initiative.
Attending a health care choices webinar was associated with an average $2,789 contribution increase. Attending an HSA webinar was also associated with an increase in 401(k) contributions—by an average of $2,654, EBRI notes.
What’s more, attending a webinar on investments is associated with an “improved” asset allocation for older employees with lower contributions. For those individuals attending an investing webinar, the equity allocation improved by 11 percentage points, such that it was closer to what EBRI considers the target allocation.
Of course, it is possible that employees motivated enough to attend a financial wellbeing webinar are already in a mindset to make changes in their financial behaviors, the brief observes.
The Unexpected
EBRI also found, however, that changes are not always in the expected direction. While attending budgeting webinars was associated with higher 401(k) contributions across all cohorts examined, attending HSA webinars was associated with greater loan taking for younger worker cohorts, the brief observes.
Moreover, EBRI found that older and higher-contributing webinar attendees seemingly changed their equity allocation in a deleterious way. Here, the study found that the equity allocation moved farther away from the age-appropriate target-date fund allocation once individuals viewed such webinars on health care choices or tax changes.
“In other words, getting people to come to the Field of Dreams of financial wellness initiatives can be challenging for certain worker cohorts. However, for those workers who do engage in certain webinars, changes in 401(k) behavior may be evident,” EBRI emphasizes.
As financial wellbeing programs become a central part of the benefits provided by employers, understanding their impact on workers increases in importance for decision-makers seeking to determine the best way to allocate their financial wellbeing budgets, the brief explains. In the future, EBRI notes that it will seek to apply similar analytics to assess student loan debt interventions, emergency savings help, budgeting tools and financial counseling.
