Financial stress is widespread, says Matt Iverson, founder of Retiremap in San Francisco, citing a recent survey by New York Life Retirement Plan Services that indicates three-quarters of the population describe themselves as stressed or extremely stressed. The cause? More than half (60%) point to possible financial difficulties, and 47% are concerned about the possibility of potentially unaffordable medical expenses.

“We all say everyone should save more, but if you can’t afford to save more because of credit card debt, so you can’t retire at 65, these things have an effect on the employee as well as the employer,” Iverson tells PLANADVISER.

In the face of this significant stress, which does not seem to be going away, Iverson notes that the adviser is the main point of contact to address the problem with retirement plan participants, either by helping the plan sponsor implement a program to help them identify and set goals, or with phone support.

Contributing to the problem of financial stress, Iverson says, is that we live in an age of relentless marketing. People are constantly exposed to commercial messaging. “It’s hard to extract yourself from the things that provide short-term gratification,” he notes, adding that part of the adviser’s job is to frame things so people can make the right decisions.

A financial wellness program can help to create that environment and help to raise awareness around getting people to meet their goals, Iverson says. While plan design features definitely play a part in getting participants ready to retire, advisers can bring maximum benefit to the plan when they offer programs that directly address with participants the financial behaviors that can stand in their own way. “We can advocate for the participant to help get them where they need to be,” he explains.

Expensive Stresses

Some of the top concerns are skyrocketing medical expenses—probably the No. 1 expense, Iverson says—and, among other macroeconomic trends, stagnant wages. “People have to do more with less,” he observes, and within a retirement plan, an adviser might have to broaden the scope of topics to cover more than just investment options.

Moving from financial planning to workplace financial wellness programs is not a huge leap, and the impetus is in part being driven by the employer. It’s increasingly common for human resources (HR) and benefits people to see the impact of the financial stress their employees experience on work performance, Iverson says. They would like aging retirees to retire, but sometimes they cannot afford to, and continue to work at a time when their benefits and salary are more expensive—on average, about $7,000 additional for people who can’t retire. Iverson says some research puts the figure at $10,000, but his firm discounts the amount slightly because there are some advantages to an experienced workforce.

First, education must be relevant to employees’ goals. Advisers should use the communication strategies that will resonate with specific, targeted populations. A multi-channel approach that pulls in the Web, mobile devices and onsite workshops is best, Iverson says. Next, how can advisers best engage a population? What are the important issues the adviser needs to address?

In a company with a large percent of younger participants, home buying is going to be a big concern. For older employees, maxing out their retirement contributions and getting set for the next stage is the topic. Specific generations have specific issues: Generation X, for example, is anxious about creating emergency funds and paying for kids’ college, while Millennials are naturally focused on student loan debt.

Much of the communication should help them see if they are on track to meet financial goals broadly, Iverson stresses, not just for retirement, which is generally more a concern for people five to 10 years away from retirement.

Everyone Has Goals

Iverson explains that when Retiremap developed its financial wellness program with Dan Ariely, a professor of psychology and behavioral economics at Duke University, Ariely suggested that advisers ask if participants know where they are in making progress on their goals. “Not a yes or no question,” Iverson says. “You want to focus on appealing to their financial goals—and everyone has some goal, whether it’s saving more or reducing spending or dealing with credit card debt or buying a second home.”

The information gleaned from these conversations as well as data about the population is useful in designing messaging. It is typical for some of the older management members to make the decisions about how to communicate with this part of the workforce, Iverson points out, and it is critical to make sure that the methods of communication younger participants use—such as mobile devices—are utilized. “Advisers should learn to use data intelligently around communication strategies and report to plan sponsors,” Iverson says.

Advisers can leverage technology in a number of ways, Iverson notes: “You can put together a presentation, make it into chapters, and customize the messaging, with flyers and desk-drop cards.”

The initial engagement is used as a springboard to create the targeting, he explains. For example, in a school with a fairly young teacher population, where student loan debt is a big issue, Iverson suggests creating a presentation on ways to manage student loan debt that speaks directly to this group of employees. In a company where they have identified home buying as a top issue, advisers can bring in a presentation with messaging around how much you need to save to buy a home or home prices in this area. “The messaging isn’t as generic,” he says, “but more specific and more resonant.”

Who Pays?

Because you have the data and the hook is more narrow, Iverson says, advisers can effectively target different groups demographically and thematically, based on what message will reach them. No matter the goals, some of the approach cuts across interests and generations. “A lot has to do with taking short-term financial goals and looking at long-term financial security,” Iverson says, pointing out that if you buy this, if you continue not to save, here’s the road you’ll be going down, and showing participants the impacts of specific financial behaviors.

But paying for these programs is a hurdle most advisers are unsure how to cross, according to Iverson. Many advisers feel such programs would be a great value add and feel their plan sponsors clients would welcome them. But they want to know if they have to increase their fees, or if it comes out of the plan sponsor’s budget.

Do plan sponsors pay the expense directly, as a line item expense? According to Retiremap’s own investigations, financial wellness programs can be paid for in several ways. In some situations, they can be paid for directly from plan assets when they are considered a necessary expense and one that meets minimum standards: helping participants understand what they should be saving and how they should be investing their savings. With 12(b)1 fees, the costs can be paid indirectly from revenue sharing.

Next, advisers don’t always know how much time and effort will go into administering a financial wellness program. Iverson recommends seeking a legal opinion from an attorney who specializes in the Employee Retirement Income Security Act (ERISA).

Financial wellness programs are definitely more prevalent in the last few years, Iverson says, and they are definitely driven by the employer and their need to control costs. While helping to achieve goals that are important to the plan sponsor, these programs also have another advantage. They are a differentiator to help the adviser expand on the services he brings to a retirement plan, beyond simply selecting plan investments and helping them provide value through reducing costs and giving a boost to retirement readiness, making sure participants aren’t financially stressed—which is what the retirement plan is really about, he says.