PANC 2020: Supporting Financial Wellness in the New Workplace

Financial wellness has taken on a new relevance in the midst of the COVID-19 pandemic. Experts share tips on how advisers can figure out how to offer access to best-in-breed programs to enrich overall benefits programs and participant outcomes.

A retirement plan and a health care plan do not bridge all the gaps employees need. That’s where financial wellness programs come in, Brett Shofner, president, Work Plan Retire, told attendees of the 2020 PLANADVISER National Conference during a virtual session.

The average company spends 83% of its expense budget on its people through salaries and benefits. Therefore, a company’s chief asset is its people. Financial wellness is all about finding a way to drive productivity among that huge spend for any company, Shofner said.

The Wellness Crossroad

The COVID-19 pandemic has made financial wellness even more relevant and has led to an enormous transformation of the workplace, according to Rita Fiumara, senior vice president of investments at UBS Financial Services Inc. “Companies are at a crossroads. Those that capitalize on post-COVID opportunities will find themselves in a good position to attract and retain employees as the situation stabilizes,” she said at the session.

Fiumara added, “We’ve seen the employee demand for our financial wellness services triple and employer demand for financial wellness grow 700% since March. Helping employees better manage their finances is the single greatest benefit employers can offer. A workforce that has more control of its financial life is more engaged and has the mental energy to tackle the business’s challenges.”

Prior to COVID-19, financial wellness programs typically included topics such as budgeting and reviewing expenses, and less than one-third of the employee population was engaged in such programs. “We never really saw the heightened popularity of capturing the larger audience,” Fiumara explained. Post COVID-19, employers are using the digitalization of participant advice to track the progress of participants over time. The implementation of goals indicates the success of wellness programs, she said.

Setting Expectations

MJ Goss, director of retirement planning and financial wellness, 401k Advisors Intermountain, said usage and execution of financial wellness programs have been very low. As plan sponsors consider adopting a program, they want to understand why usage is so low.

He said advisers need to set the bar. “Are we going to set the expectation that we’re going to have 80% participation or are we going to set the expectation according to the particular plan sponsor population?” he asked. “Most of the programs we use have a solid dose of data that comes with the program. But we can pre-set success by having the right tool in place.

“Even as early as the request for proposals [RFP], we know we are experts at this and we can bring wellness success to a plan. It is a best practice to find a program that will meet your people where they are and produce the greatest results for the plan sponsor and participants.” Goss’ team uses incentives to get participant enthusiasm up—gifts that get people excited including Apple watches and paying one month of a participant’s mortgage. They also tell stories about their own personal experiences with financial wellness tools to motivate participants.

“The quicker we can show success, as early as possible, the faster the plan sponsor understands its investment in the program. I truly believe that as long as we set an accurate expectation early, then we should 100% be able to change in a dramatic way the amount of people impacted by these tools.”

But do employees want to learn how to budget or do they want actionable ways for it to be done for them? Shofner said he’s observed that automation prevents financial wellness success. Goss suggested that when it comes to learning about investing savings, there are back-up tools such as target-date funds (TDFs). But, when it comes to financial security, employees really need to learn the foundations.

One Benefit Dollar

Employers have a certain amount of money budgeted for benefits and they have to decide where to put that money. They have to allocate that money toward retirement account matches, health care plans, profit sharing and more. The bottom line, Shofner said, is that the joke is on the employer if there is any failure on the retirement side. The older, aging employees that cannot leave are very expensive and are massive liabilities for the employer.

Daniel R. Bryant, president of retirement and private wealth, Sheridan Road Financial, a division of HUB International that has large resources in both wealth and health sectors, said the largest expense outside of payroll is a company’s benefits program. Employers have these benefits to help attract, retain and reward their employees. And, when it comes to health care benefits, the cost can be on average $18,000 per family and up to $24,000 per year in states such as New York and Connecticut. “They continue to escalate at about 10% per year and it’s growing higher on the older workforce,” he said.

Employers have finally realized that there is a connection between financial fitness, emotional well-being and health wellness. So, where an employer allocates resources to help employees accomplish what they need to accomplish is key. Research has helped employers learn that if an employee has financial anxiety, that worker may have health care issues, and if someone is not physically fit, the health care cost for the employer will go up.

Employers are adding voluntary benefits on the health care side, as well as in the financial wellness sector, including student loan debt and emergency funding aid. Many options are offered by a carrier through voluntary benefits where an employee can pick and choose what he wants. “Our view is that once you understand the demographics of your employee base, you’ll be able to offer the tools that fit your demographics,” Bryant said.

Fiumara added, “Keeping it simple, being genuine and consolidating and bring benefits together is key.”