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The Workforce and Financial Wellness: Challenging Dynamics

At a Feb. 3 U.S. Chamber of Commerce conference, “The Shifting Paradigm of Retirement,” a panel of experts addressed the changing dynamics of the workforce and financial wellness.

“We know that millions of Americans are facing financial issues,” said panelist Snezana Zlatar, an SVP at Prudential. “At its core, financial wellness is a very personal topic,” she said, positing that it centers on helping individuals to adopt behaviors that will help them to better manage their personal finances, reach long-term goals and meet pressing immediate needs.

Stacey Dion, VP for Corporate Public Policy at Boeing, added that employees’ financial wellness should be important to employers not only out of magnanimity — it also can serve an employer and its bottom line. Dion pointed out that as employee financial stress decreases, productivity increases.

Zlatar cited a study saying that 60%-70% of employees trust their employers to help them to achieve financial wellness. But Robin Lenna, a MetLife EVP, suggested that employers helping employees to achieve financial wellness may be easier said than done. “It’s not an easy nut to crack,” remarked Lenna.

Student loan debt is one particularly intractable factor, said Ashwini Srikantiah, Director of Product Management at Fidelity’s Center for Applied Technology. She cited figures saying that 44 million people in the United States have student loan debt, amounting to $1.4 trillion. Student loan debt is “second only to home mortgages,” she remarked.

One-third of Fidelity’s plan participants have student loans, Srikantiah said, and over half of those with student loan debt owe more than $25,000. Not only that, Srikantiah added, student loan debt is so pervasive that it is not confined just to younger people. Nearly a quarter of Fidelity plan participants age 55 and older have student loan debt, she said, as do just over one-third of those age 40-54 and nearly 60% of those under 40.

“We live in a defined contribution world” in which the ultimate risk and responsibility lies with the employee, said Ted Goldman, an American Academy of Actuaries Senior Pension Fellow. “Many don’t have requisite knowledge and skills” to handle the responsibility of financial planning for, and during, retirement.

Zlatar agreed, telling attendees that she thinks that expecting individuals to achieve financial wellness on their own “is expecting a great deal.”

So what is the answer?

To Employee Benefit Research Institute Research Director Jack VanDerhei, a good place to start is providing employees access to retirement plans in the first place. He said that EBRI’s data “shows the incredible importance of providing access to employer-sponsored defined contribution plans.”

Speakers had divergent views on automatic features. Zlatar is a fan, commenting, “We believe that expanded use of auto enrollment and automatic increases is really, really important.” Goldman, however, said “automatic features can provide a false sense of security,” adding that, “not everyone wears the same shoe size.” He argued instead for plan and product innovations, as well as employer-provided education and tools to help employees understand longevity and how to plan for retirement.