The COVID-19 pandemic cast a spotlight on financial wellness as an essential workplace benefit. How can advisors identify and harness the opportunities created by the growing interest in financial wellbeing programs?
In a Sept. 14 workshop session at the 2021 NAPA 401(k) Summit, three industry execs shared their perspectives on that question: Jason Chepenik, an SVP with OneDigital, Lisa Petrino, a Managing Director with Strategic Retirement Partners, and Petros Koumantaros, a financial consultant with intellicents. Nevin Adams, Chief Content Officer at the American Retirement Association, moderated the session.
The COVID Effect
The panel agreed that there has been a significant uptick in plan sponsors’ interest in financial wellness during the pandemic. “There’s no doubt that over the course of the last year we have seen a change in attitude driven by the pandemic,” said Koumantaros. “Starting in March of last year, we saw workers uncertain about their situation in a way they hadn’t been before. For me, that brought into focus our role as financial advisors—the misalignment between employers’ needs and workers’ emergency financial needs.”
This had been developing over the last couple of years, he pointed out. “The issue is that workers’ needs had become more sophisticated; however, our role as advisors was still focused on one aspect of financial needs: the retirement plan,” he declared. The same compartmentalization applies to recordkeepers and TPAs, Koumantaros added, noting, “Nowhere in all this are there emergency savings or budgeting and planning—looking at overall holistic financial health.”
It’s clear what this leads to, Koumantaros believes: “It creates opportunities to rethink our role in the future.” Regarding emergency savings in particular, he noted that during the pandemic, there was a financial emergency, and people found that they were ill equipped for their financial needs.
“The fact is, for the American worker, they’re getting their financial needs satisfied in the workplace,” said Koumantaros. “But we’re approaching this largely in the context of retirement plan consultation work. We really need to rethink our roles. I would submit that our roles really should be more in the context of worksite financial planning consultants, of which the retirement plan is perhaps the most important lever for providing a dignified financial future for people. But there are other aspects as well—emergency savings, debt relief, budgeting and planning—and there are ways we can rely upon our vendor partners so that we can capitalize on these opportunities.
“If not us, who? Who is helping people determine how much emergency savings they need, and with budgeting and planning? The workplace is where we can begin delivering these types of services to the vast majority of American workers.” For the mass affluent, Koumantaros said, “the workplace is the center of their financial lives—it’s where they’re compensated, where they get their health care benefits and retirement benefits, disability benefits. They might get corporate perks. And we’re there.”
Moreover, there’s strong support for financial wellness programs among participants and plan sponsors, Adams noted, citing a recent NAPA Net reader poll which found that 86% pf participants feel that it’s important for their employers to offer financial wellness programs and 62% of employers feel they have a responsibility to do so.
Chepenik noted that engagement with financial wellness increased during the pandemic. “The conversation we’re having with our clients, whether it’s the committee, or HR or finance or the people we work with, are far more meaningful today,” he said. “And it makes it a far more fun and meaningful job to me too—for us to have these broader conversations and actually make a difference. Plan sponsors are waking up, and they’re having these conversations with us. After these last few years, with fee compression and us becoming more of a commodity, this is a great opportunity for us to not have to do that anymore.”
Koumantaros encouraged advisors to think about their value proposition and service model. “Consider rethinking your role,” he said. “If you’ve been staying in your lane as a retirement advisor, consider expanding that and finding solutions to make that type of expanded service more economical for you and your practice, and to capitalize on the opportunity. Because the business value is there, and the value we’re delivering to clients is there as well.”
Worklife Harmony
Petrino sees financial wellbeing as being part of a larger arc of wellness-related dynamics in today’s workplace. In addition to health and wellness dynamic, she cited topics that were front-and-center in several other 401(k) Summit sessions she attended. “We talked about mental wellbeing and burnout; we talked about career wellbeing. But there’s also community wellbeing and social wellbeing.”
Petrino sees financial wellbeing as an entry point to that arc. “If we can help people get to a place where they have greater financial wellbeing, it helps improve their physical wellbeing, their mental wellbeing—it’s all interrelated and interconnected,” she said. “The pandemic really helped us understand that, and to start seeing this holistically as ‘worklife harmony’ and where financial wellbeing fits in when you think about the whole person.”
The DEI Factor
Petrino also sees a strong connection between financial wellbeing and diversity, equity and inclusion (DEI). Citing research finding that that the only group that identifies retirement savings as their No. 1 financial priority is white men, she encouraged advisors to think about plan design through the lens of DEI. “For a long time we’re talked about things like stretch matches, like 50% up to 10%,” she said. “But when you look at who’s able to take full advantage of a stretch match, could there be a better, more equitable way?” One example, she added, would be looking at nonelective contributions to provide a base for everybody.
“A big part of it is starting the conversation,” Petrino pointed out. “I know that there are some people who think this is an uncomfortable conversation, but plan sponsors want to talk about this.” Added Chepenik, “Most every client these days has some sort of DEI program or initiative. So they’re definitely talking about it.”
Petrino offered some advice on getting started. “First, become educated enough about the statistics and research on the racial dimension of retirement saving,” she recommended. “Then have some of these discussions with your own team or other industry professionals so that you start to feel that confidence to bring this up to the committee.”
“Have the courage to have a meaningful conversation about this issue,” Chepenik added. “In most committee meetings, we talk about the numbers all the time. This is far more interesting and relevant to their teams. And stop using the word participants—it makes it seem like it’s not a real person. They’re real people.”
Additionally, he suggested, “Work more closely with our friends on the employee benefits side. It doesn’t matter who’s handling a piece of business—they’re delivering wellness and wellbeing programs that are similar. And hold our vendor partners accountable for the work that is done in this area, and that they’re in sync with what we want to deliver. We need their help to stay on point with our message.”
