Arguing For ‘Broker/Dealer’ Agnostic Financial Wellness

One advisory firm argues delivering financial wellness programming on a third-party basis can better bolster employees’ financial health and retirement readiness. 

There are many different ways of delivering financial wellness programming to retirement plan participants, and it’s a pretty easy matter to find proponents of each.

One recent theme being embraced by a wider number of advisory firms and clients is “financial wellness delivered on a turnkey, third-party basis.” The idea is to move financial wellness and general education initiatives around budgeting, benefits optimization, tax management, debt, etc., away from being tied to a specific set of products.

This is the approach taken by Merit Financial Group, an independent registered investment advisory (RIA) firm supporting approximately $900 million in client assets out of Alpharetta, Georgia. The firm is affiliated with Merit Financial Advisors, a multi-state independent Office of Supervisory Jurisdiction firm linking nearly 30 independent firms across the U.S.

Rick Kent, president and founder of Merit Financial Group, observes that more and more plan sponsors are coming to understand it as a serious part of their fiduciary duty to do all they can to ensure employees are financially well, both inside and outside the retirement plan. Not only that, employers increasingly understand that financially well employees are generally more productive and healthier—in an economically meaningful way. This is the driving force behind the recent push into financial wellness, Kent suggests.  

To meet demand for new forms of financial wellness, the firm recently rolled out its “Worksite Financial Wellness Platform,” which it bills as “a comprehensive offering that provides customized, turnkey financial wellness education, coaching and training resources to company retirement plan participants.” The platform’s services can be offered both directly to retirement plan sponsors, “or act as smoothly integrated, third-party resources that augment the offerings of retirement plan advisers, third-party employee benefits consultancies, retirement plan recordkeepers as well as other service providers that focus on the company retirement plan space.”

NEXT: Moving wellness programing away from product platforms 

The firm tells PLANADVISER its launch of the new wellness programming “follows a selective test phase … when the platform was utilized and tested by three of Merit Financial’s retirement plan sponsor clients with approximately 4,000 total plan participants.” He says the pilot clients responded very positively to the testing, leading to the wider roll out. 

The offering itself is piloted on the back end by “seven dedicated full-time professionals who deliver education, coaching and monitoring resources, combined with comprehensive, integrated technology and resources.” For each new retirement plan sponsor that utilizes the platform, Merit’s team begins by “administering a financial wellness exam to participants to help them gauge their financial health, retirement readiness and long-term priorities.”

Data from the exam is then used to develop “a comprehensive, two-pronged strategic plan, both at the plan sponsor level and for each participant … At the sponsor level, depending on the results, this may include giving participants the tools, resources and direction to pay down debt; improve preparedness for retirement; better navigate features or options of their current retirement plans; and understand key financial concepts in more depth.”

At the participant level, the “data enables Merit Financial to provide personalized reports to each participant to help them better understand their financial needs and present them with an educational plan to help them pursue their goals. The reports also guide participants through the resources that are available through the Worksite Financial Wellness portal.”

Kent suggests the Department of Labor and other regulators will continue placing more pressure on plan sponsors and service providers to provide “robust education and oversight functions.”

“The days when plan sponsors could put a menu of investment options on the table and let employees figure the rest out are over,” he argues. “In today’s environment, plan sponsors are finding out how crucial it is to advance the financial wellness of plan participants.” He concludes that “to do so by engaging a dedicated third-party platform that thoroughly knows the retirement plan space” is the superior way to go.

NEXT: Other forms of wellness will stick around 

Of course, there are reasonable counterarguments to be made here in defense of products-oriented educational programming from a broker/dealer or recordkeeper, especially when such offerings are delivered with a fiduciary standard of care. Participants in fact often want specific product based information of this nature—many want to be told outright what funds or products to invest their hard-earned money in. They want to get actionable advice they can trust, however valuable general wellness education may also be for managing personal and family finances outside the 401(k).

Kent here observes that his firm’s solution (and similar approaches coming to market) can work well when implemented alongside more product-oriented offerings. As he explains, there may be a role for both types of offerings—the first representing more of the “advice” side, delivered directly by the broker/dealer, and the latter pure “education” from an independent RIA. When participants receive both in an affordable, efficient, non-conflicted and coordinated way, the positive results can be significant.

“I am increasingly hopefully that providers in the industry can come together and stop really thinking about each other as competitors and instead put a real focus on participants and changing this industry,” Kent concludes. “It really is a terrible crisis situation that many participants are in, and for too long nothing has really been done about it. We cannot just think about financial wellness as a buzzword. It is something that has to be addressed.”