Financial Wellness Programs It became a hot topic Over the past few years, there has been a surge in interest among plan sponsors and plan advisors to provide information about financial literacy and, in some cases, offer additional employee benefits such as emergency savings accounts and student loan repayment programs.
In most cases, the goal is to provide employee participants with more comprehensive financial planning resources than the basic financial wellness programs that are typically offered free to employees on an opt-in basis. If employees want to go beyond the scope of the program, plan advisors can often refer them to financial planners or advisors that are available for an additional fee.
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Thus, experts say, financial programming is a two-way street: meeting the needs of plan sponsors while also tailoring advice to build long-term relationships with participants.
But the programs came at a cost. The amount plan advisers are investing in such programs has increased over the past decade, says Kyle Bingham, managing director of Financial Fitness for Life, a financial-wellness program offered by Prime Capital Investment Advisors in Salem, Ore. Plan advisers are starting to see financial-wellness programs as a way to build relationships with employee participants and help them understand all of their current and future financial needs, Mr. Bingham says.
“Financial wellness programs used to be very basic in terms of education,” he explains. “Plan sponsors would hire companies or advisors to run workshops on, say, the ins and outs of savings or 401(k) accounts. Now, plan sponsors are much more attuned to participants’ needs, and financial wellness offerings are expected to go far beyond the idea of simply providing education.”
That means offering a more comprehensive platform and more initiatives within financial wellness programs, he says.
Focus on relationships
What does a comprehensive financial wellness service look like that meets the needs of both sponsors and advisors? Providers are leveraging multichannel experiences that include in-person meetings, webinars, microsites, phone calls and one-on-one meetings with a financial coach.
For participants in our Lifelong Financial Wellness program, we conduct an initial financial assessment to help participants understand the full picture of their financial situation. This can range from something as basic as introducing them to a budgeting app they can use on their phone to a more in-depth consultation to identify the best debt reduction strategy for their needs.
“If there’s something that’s outside the scope of the program, such as someone with a complex tax situation or someone who wants to focus on estate planning, we can introduce them to someone else within the organization who can work with them in a more traditional advisory relationship,” Bingham says.
This process is similarly true for participants in Pensionmark Financial Group’s financial wellness program. Pensionmark offers a combination of online tools, online courses, webinars and group calls. Participants also have the option to work with a financial coach initially and then choose a relationship with a more traditional advisor if they prefer. Financial coaches serve as a cross between a call center representative and a traditional advisor or certified financial planner. They work with program participants on their financial goals but don’t recommend products or specific actions.
“We found that participants want to talk to someone about their personal information, and that doesn’t always fit into a group meeting or webinar, but at the same time, they don’t want to talk to a call center that’s out of the country,” says Emilio Vera, director of participant engagement and education, who is based in Long Beach, Calif. “And they don’t want to be sold anything. The coaches are just there to answer their questions.”
Financial coaches are also available to those who call to discuss making changes to their retirement plans or investments.
Cooperation from the entire village is needed
Financial wellness program providers say that in addition to building individualized relationships with employee participants, these programs can also serve as an additional team of record keepers and advisors.
“We work with existing planning record keepers as an additional team who can provide unique content and answer questions,” Vella says.
Robert Patton, managing director of Redwood City, Calif.-based SageView Advisory Group, agrees. He says SageView’s financial wellness program is the largest investment his company has ever made in retirement education and relationship building.
“For example, we try to make the content unique and different from what participants might get from a record-keeper,” he says. “Record-keepers have the basics, like what a 401(k) is and whether they should set up a traditional IRA or a Roth. We try to provide support on a broader range of topics and provide resources tailored to participants’ individual situations.”
Customized Key
If plan sponsors offer additional services as part of their programs, like emergency savings accounts or student loan matching, PersonalSAGE (which stands for Strategic Advice, Guidance and Empowerment), will take on the education on that and help people understand what tools are available to them.
Patton points out that each financial wellness program can be highly customized based on the desires plan sponsors hear from participants, and because participants can opt-in to these programs at no additional cost, adding financial wellness services is usually not a big burden once a plan sponsor has identified a provider.
Some plan sponsors have census data on employees that they can use to gain insight into what to offer, says Matt Escalante, executive vice president and senior director at Trusted Capital Group, the Hub International unit that oversees the Hub’s financial wellness programs. Employees are also often just asking for certain services.
“We’ve found that inviting individuals in for a financial assessment is the best way to understand what would best serve them in terms of financial wellness,” he says. “People’s financial needs and goals change over time, and these programs are designed to adapt to their lives.”
This is the second installment of PLANADVISER In-Depth, a quarterly series that delves into the world of 401(k) plan advice and the future of retirement savings. In our next installment, we’ll focus on efforts by retirement industry players to collaborate with participants.
