Beginning with the so-called Great Resignation, and fast-forward to today, employers are experiencing a challenging, tight labor market — requiring employers put a greater emphasis on creative benefit structures to attract and retain key talent. This week — and ahead of two great sessions at the NAPA 401(k) Summit — we asked you.
That’s right, we’ve got a special workshop at the 2023 NAPA 401(k) Summit focused on that topic specifically — but ahead of that, we’d like to know which lever(s) you see most often — and which you find to be most effective.
Oh — and how about financial wellness? Is it working, and if so, how? And if not, why not? Yes, there’s ANOTHER workshop focused on the “fad” of financial wellness — and ahead of THAT, we’d love to know about your experience and opinion(s) on the subject.
Plan Design Levers
With regard to the Top 3 plan design levers — well, it wasn’t all that close:
95% - Employer Match Formula
55% - Plan Eligibility
38% - Vesting
Ah — but #4 and #5 weren’t far behind.
And as for what was seen as the Top 3 EMERGING plan design & resource levers to attract/retain workers?
- Financial Wellness Guidance & Resources
- Tiered Employer Contribution Formulas
- Bonus Deferrals
Speaking of financial wellness, another session at the 2023 NAPA 401(k) Summit will examine the “fad of financial wellness (Monday, April 3 at 2:25 pm). Asked what percentage of their current clients offer financial wellness:
26% - Less than 25%
22% - More than 25% but less than 50%
19% - 100%
16% - More than 50% but less than 75%
14% - More than 75% but less than 100%
3% - None
That’s right — pretty diverse. Some reader comments on the subject:
Most are smaller and still don't see the ROI.
We've had clients offer it and really lean into the philosophy, only to find their workforce was not that interested. The initiative ultimately gets abandoned.
Most don't want to pay for it. The challenge is the "freemium" programs don't work by virtue of low utilization and poor efficacy (case in point Fidelity has 1% utilization in their proprietary Financial Wellness platform). Absent of a human being delivering 1-1 advice powered by some sort of technology, I haven't seen a program work well.
We just started promoting expanded financial wellness offering (website and unlimited Virtual 1:1's) 2 years ago. We are aiming to push above 50% for the expanded financial wellness offering. But ALL of our clients are supported by our general education services (monthly calendar of webinars, and set # of education days annually).
Firm hesitation due to perceived liability
It is growing rapidly in interest — we expect it to be 50% within a year.
I think still that some advisors are not paying as much attention to their clients and offering (and in some cases forcing) the client to implement these things.
In many ways it's been part of the education process since inception.
Sounds good and it's a ticket for entry to some plans, not sure how effective it is or how well it's used and understood by ppts.
Also diverse was the response as to whether survey respondents include the effectiveness of the financial wellness program in their client reviews:
39% - Yes
39% - Sometimes
22% - No, because I find it a challenge to track or benchmark the effectiveness of the program.
As for some of the “why” behind those responses:
Can be hard to track overall but should be able to easily tell how many participants took advantage of some services.
We discuss it and initiatives with education but haven't found a great way to track/benchmark.
It can be a difficult one to gauge the effectiveness on, but we always start with participation rates and average deferral rates. If those are increasing, we feel like the financial wellness program is working.
We're just now formulating the financial wellness program we intend to offer to our clients later this year. Eventually, we'll add this to our reviews.
Assuming they are using our proprietary program. Absent of that, I don't put any stock in the provider "Financial Wellness" assessments.
From a delivery standpoint, yes. We also track data points, ie: enrollment, deferral, age group engagement and change delivery of financial wellness on those data points.
Some final thoughts:
I've been surprised at how much participants seem to gain from Financial Wellness classes. The basic level of financial knowledge out there is pretty low!
Inflation is pushing the compensation levels up and plan sponsors looking to keep prices in check. Finding good people is getting more expensive so margins are being impacted negatively. The market has heated up and we are busier than pre-pandemic. Business owners and HR staff are actively looking for more efficient and direct benefit packages and financial wellness to address current work force.
It all goes back to education from HR/advisor. If the employer offers certain benefits, but they don't educate their employees on why it's important, it doesn't matter because the employee won't use it.
Financial Wellness needs to be helpful, but also easy. Finance is not a topic that many employees enjoy discussing. So making it easy is very critical.
We've had lots of conversations with employers about ways to adjust and amend their retirement plan to optimize it for recruitment and retention, but at the end of the day, the changes aren't implemented. Sometimes it's for budgetary reasons, sometimes it's administrative and potential impacts to the current employee base. However, the most common message I hear is that the organization would be better off just paying people more vs. making changes to their benefits package.
The integration of savings and health benefits strategies can optimize ROI for employers and outcomes (utilization of benefit spend dollars) for employees.
Still time for you to weigh in — at https://www.research.net/r/DV7TDCG.
Oh — and if you haven’t registered yet for the NAPA 401(k) Summit? There’s still time… you can do so at https://bit.ly/3T4PG9c
Thanks to all who participated (and who will continue to participate in PERSON at the 2023 NAPA 401(k) Summit!