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Financial wellness continues to be a topic of interest—indeed, in the wake of the COVID-19 pandemic issues of financial as well as physical health arguably loom larger than ever. But are we closer to a workable definition? And how about that ROI? We asked NAPA-Net readers to weigh in.
According to data from Cogent Syndicated’s Retirement Plan Advisor Trends report, despite strong demand from plan participants and signs of financial wellness programs’ effectiveness, the overall availability of these programs is down from 38% in 2021 to 31% in 2022. That decline stems largely from fewer emerging DC advisors—those managing less than $10 million in DC AUM—offering financial wellness programs at 22%, down from 36% last year, according to the firm’s data. However, more than half (51%) of DC specialists—managing $50 million or more in DC AUM—are currently offering these programs.
That said, the fifth annual Employee Benefit Research Institute (EBRI) Financial Wellbeing Employer Survey found that financial wellbeing programs are being added or improved to increase worker satisfaction and retention. Yet, costs continue to be reported as the top challenge in offering financial wellbeing programs. Consequently, employers are looking for ways to measure their impact through the lens of employee satisfaction, retention and productivity.
So—what did readers have to say on the subject? Perhaps not surprisingly, asked to identify the elements of financial wellness that they included in the programs they delivered, roughly two-thirds (64%) opted for “all of the above.” As for the elements in that package, the other responses (more than one was allowed):
61% - Focus on outcomes/retirement readiness
43% - Financial literacy
41% - Budgeting
41% - Establishment of emergency savings reserves
36% - Debt management/reduction
Other things mentioned included “Mindfulness & Our Relationship with Money,” one on one assistance to solve acute financial stress/issues, and reducing employee stress. One reader noted, “Utilizing the employee benefits already available through the employer. Many employees are unaware of the benefits they have at their disposal or unsure how they work.” Another said, “Although we touch on all the above—there's only so much you can dump on someone. Overloading ... eyes roll back in the head. We do a series of focused sessions that deal with one topic at a time.”
As for that ROI:
36% - Yes, but it depends on the workforce and management.
34% - Not really in quantifiable terms.
18% - Yes, and growing every day.
7% - Yes, but it's not much.
For those who are “pitching” financial wellness, we asked if it was “catching on”:
25% - Plan sponsors are receptive to the idea—signing on for it, not so much.
20% - It depends.
18% - Yes.
16% - Yes, for the most part.
2% - No.
The rest weren’t pitching it.
“It is part of our service model with employee education,” explained one reader. “It’s part of the overall offering, depending on the client, they love it,” commented another. “We broach the topic and have a discussion with the Committee. We do our own... not these canned products that are out there.”
“The biggest hurdle is cost,” said another. “We've learned the ‘free’ programs simply don't work. Our proprietary program called * is phenomenal but most clients balk at the additional cost.”
As for how it’s “catching on” compared with pre-COVID:
35% - About the same.
32% - It's a mixed bag, depending on the client(s).
29% - Faster than pre-COVID.
4% - Slower than pre-COVID.
“Interest is higher but engagement remains the same, with cost being the biggest hurdle,” commented one reader.
As for the resistance points:
38% - Cost.
19% - Deferred for future consideration.
17% - Not the right time.
14% - We're not encountering resistance.
12% - Combination of the above.
10% - Resistance to change.
5% - Recordkeeper resistance.
The rest weren’t offering financial wellness.
Other things cited included HR bandwidth constraints, concerns of productivity loss from pulling employees away from work, lack of employee interest, lack of plan sponsor support in implementation, and lack of engagement by participants.
Other Comments
I think our financial wellness programs are good, but missing a big piece of the puzzle by not incorporating the emotional side of money. As a meditation teacher and financial advisor, I believe we need to meet people where they are emotionally with money, not just provide them with information and a data-driven approach which is what is in the market today.
Problem is that to deliver financial wellness you need engagement. Personal one on one engagement is better than through an app, but there is a cost to the personal engagement.
It's the most important part of benefits conversations. RPA's unfortunately are not well positioned to control the narrative.
It there isn't a person-to-person access element to a program, it's not true financial wellness. App based, portals, DIY, etc. are not resonating or creating outcomes in my opinion.
Focus on reducing employee stress. Stress is the number one cause of delayed budgeting, savings, and lack of preparation for an unexpected expense. If you can reduce stress of an individual first, it becomes much easier to drive behavior changes that are most important for them.
Competing platforms are creating client confusion. Recordkeepers have all re-labeled what they used to call education as 'Financial Wellness' and embedded it on their websites, oversaturating the market and watering down the definition.
We were providing financial wellness before it was called financial wellness. It was called participant meetings where we focused on retirement planning but also focused on budgeting, college education savings, saving for a home, good credit versus bad credit. It worked—we printed a significant number of 401(k) millionaires and assisted them in sending their children to college, pay off their mortgages, go on vacation...Everything is possible with a little bit of planning and self-discipline.
While they have interest in the programs and providing for participants and know that it will help long term, their time frame is shorter term as most of our small and mid-sized clients are focusing on their business profitability, dealing with supply chain issues, and increasing cost of goods and labor.
Maybe someone can define it? The reports I've seen other advisors use that try and quantify the response and progress is dubious at best. I remain unimpressed. More product that gets pitched to sell to our clients. I care deeply about preparing people for a current and future financial future but just have not seen the value of these packaged products. Yes, it's an easy way to outsource; but we don't see it as a particularly effective way.
I wish every employer offered it. I think the most important element in delivering a successful financial wellness program is the 1-1 aspect of engaging with employees. Technology in and of itself doesn't move the needle—as evidence why Fidelity only has 1-2% utilization in their financial wellness platform built into their recordkeeping platform.
Financial wellness is not clearly defined and can mean very different things to different people/plan sponsors.
It needs to be an integrated cost to your participant advice offering, not a separate cost.
Thanks to everyone who participated in this week’s NAPA-Net Reader Radar poll!
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