Data & Research October 14, 2020

Financial Wellness Is the First Step to Retirement Security

Financial wellness programs are here to stay, and they are a big part of the employee benefits landscape of the future, says Craig Copeland, a senior research associate at EBRI.

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A webinar held by the American Savings Education Council (ASEC) reviewed two Employee Benefit Research Institute (EBRI) surveys that examined how employers and employees are navigating the coronavirus crisis.

The companion reports—“The Employer Perspectives on Financial Wellness Survey” and “The Workplace Wellness Survey”—studied recent trends among both groups when it comes to financial planning, retirement and health care. The first survey found that about half of employers are currently offering financial wellness initiatives tied to their retirement plans. Larger employers are more likely to already offer a financial wellness initiative, while smaller employers are more likely to be actively working to implement one.

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“The Employer Perspectives on Financial Wellness Survey” found that more plans are offering holistic approaches to financial wellness, and few are providing benefits as a one-time initiative. For this year, 57% of employers stated their primary approach in offering financial wellness is to have a holistic program. Only 6% indicated it would be a one-time opportunity.

“More plan sponsors are committed to these programs. They are here to stay, and they are a big part of the employee benefits landscape moving forward,” said Craig Copeland, a senior research associate at EBRI.

The survey also found that employers are emphasizing select benefits to help minimize the impact of COVID-19. Emergency savings accounts and debt counseling services are two topics receiving a lot of plan sponsor attention during the pandemic. Discount programs, tuition reimbursement and bank-at-work partnerships are less likely to be offered at the moment. Survey findings also indicate that the pandemic has led to an increase in employee engagement with emergency funds, short-term loans, payroll advances, debt management services and caregiving benefits.

Long-term financial planning is regularly a hot topic for both employers and their workers, but the pandemic has shown many people the importance of shorter-term economic well-being, especially when it concerns health care costs. “The Workplace Wellness Survey” found seven in 10 employees feel that they need their employer’s help in feeling healthy and financially secure. Additionally, 54% of workers say having a traditional pension or defined benefit (DB) plan contributes significantly to their feeling of financial security, while 55% say the same for retirement savings plans. Unsurprisingly, 63% of employees said they feel more financially secure if their employer offers health insurance.

Since the start of the COVID-19 pandemic, employees say their employers have furloughed or laid off workers, promoted telemedicine benefits or increased leave availability, according to “The Workplace Wellness Survey.” “The Employer Perspectives on Financial Wellness Survey” found most employers are not planning on pausing or discontinuing any financial well-being benefits. Only 14% have paused financial planning education, seminars or webinars, and 11% have discontinued personalized financial counseling, coaching or planning.

“The Workplace Wellness Survey” finds more employees are asking for information and guidance about open enrollment as the process moves to remote environments. Nearly four in 10 workers are requesting more communication than they did in past years. Furloughed employees are more likely to want additional information—58% compared with 37% of employed workers.

When it comes to online resources for open enrollment, employees say the tools they want the most are a portal for selecting benefits, online tools to help make decisions on benefits and online brochures. Employees, and especially furloughed workers, are asking for information packets and forms to be mailed home. Twenty-one percent of employees said they would like one-on-one support on the phone or online, and eight in 10 employees were at least somewhat likely to take advantage of an adviser service that recommends benefits based on their household situation.

Client Service October 14, 2020

Advisers Counter Effects of COVID-19 With Technology

Like so many other industries, the financial planning community is being adversely impacted by the pandemic, Nationwide reported in a survey.

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Advisers and other financial professionals say they have been adversely impacted by unemployment and business closures caused by the coronavirus pandemic, much like other industries, according to Nationwide’s sixth annual “Advisor Authority Study.” Conducted by the Nationwide Retirement Institute, the study is based on a survey of more than 1,800 advisers, financial professionals and individual investors.

“When advisers and financial professionals think about the success of their practice over the next 12 months, they think about the impact of COVID-19—and we understand their concerns,” says Craig Hawley, head of Nationwide’s annuity distribution. “However, by re-tooling with the right technology, advisers and financial professionals can continue delivering an exceptional client experience, retain current clients and attract new ones, ensuring their practice and profitability can withstand the outsize challenges of this pandemic.”

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Twenty-nine percent of advisers and financial professionals say decreased profitability and client attrition are top concerns related to the pandemic for their practice over the next 12 months. Only 54% of advisers and financial professionals expect their profitability to increase in the next 12 months, down from 75% who said the same in the 2019 survey.

On the flip side, echoing this finding, 19% of advisers and financial professionals expect the profitability of their practice to decrease in the next 12 months, up from 6% in 2019. Of this group, 68% say it will be due to COVID-19.

Only 38% of advisers and financial professionals are optimistic about their financial outlook, down from 50% last year.

Twenty-one percent of advisers and financial professionals say adding technology is the most important thing they can do to improve the profitability of their practice over the next 12 months.

Nationwide says using technology to enhance the client experience is especially important, as adding new clients is consistently the No. 1 driver of profitability year over year. Twenty-six percent of advisers and financial professionals say providing a digital experience and self-service tools for clients is among their top concerns over the next 12 months. Twenty-four percent say providing a work from home strategy to their employees is important, as well.

Thirty-seven percent say serving clients remotely is the most important way they can use technology over the next 12 months. This outpaced 30% saying focusing on one-on-one relationships with clients was the most important, 28% saying providing more personalized holistic financial planning, 24% saying protecting clients’ assets from market risk, and 24% saying understanding client feedback about their experience and expectations.

Asked what new technologies they are interested in integrating into their practice in the next 12 months, 39% of advisers and financial professionals said e-signature solutions were their top choice. Next up were tools for risk management (34%) and mobile websites and/or apps (34%), followed by an interactive website/client portal (31%).

The survey also found that different generations of advisers and financial professionals have various concerns with respect to how the pandemic is impacting their practices.

They do tend to agree on providing a digital experience for clients, with 27% of Millennials, 24% of Generation Xers and 26% of Baby Boomers saying this is important. However, while 31% of Millennials say helping their employees work from home is a priority, this opinion is shared by only 22% of Gen Xers and 11% of Boomers. Fifty-seven percent of Boomer advisers are planning to begin using e-signatures, but only 36% of Millennial advisers and 34% of Gen X advisers have such plans.

Furthermore, 36% of Millennial and 32% of Gen X advisers want to integrate mobile websites and/or apps, but only 29% of Boomers share these plans. When it comes to integrating tax optimization software, only 19% of Boomer advisers are eyeing this offering, whereas 33% of Millennials advisers and 27% of Gen X advisers are. Using artificial intelligence (AI) and/or data analytics is yet another area for wide discrepancy among the generations: 33% of Millennials, 27% of Gen Xers and 13% of Boomers. Same for robo-advisers: 24% of Millennials, 15% of Gen Xers and only 4% of Boomers.

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