Different Strokes

As one adviser puts it, plan sponsors have been working harder lately to help their plan’s participants improve their finances. “We’re seeing an increasing trend in plan sponsors putting a concentrated effort into their employees’ financial well-being,” says Ken Etheredge, director of BOK Financial Retirement Plans and Asset Services in Tulsa, Oklahoma. “Plan sponsors are looking at a holistic approach to education, and the need has definitely been amplified by the pandemic.”

As plan sponsor financial wellness programs expand to include student loan repayment assistance and cybersecurity policies to keep employee information safe, plan advisers are selecting and tailoring programs based on the needs of each client’s particular workforce.

An adviser has numerous roles to play in helping plan sponsors select, fine tune and manage a financial wellness program. First of all, there are many types of programs—and providers—from which to choose.

The scope of offerings available can be overwhelming, and advisers should avoid recommending the newest or trendiest solution. Instead, opt for covering the necessities, says Katie Hockenmaier, U.S. defined contribution (DC) research director at Mercer in San Francisco. “What we advise is actually understanding what your participant population needs. [Financial wellness] can be a really vast topic, but what we try to encourage is understanding your employee base, to help define what financial well-being means for the specific population.”

When plan sponsors ask for assistance in selecting and implementing a financial wellness program, the adviser can aid in surveying the client’s employees about the state of their finances, health and stress, which is key to the program’s success, says Celeste Revelli, director, financial planning at eMoney Advisor in Philadelphia. Communicating with employees and gauging the state of their finances is crucial when choosing benefit strategies.

Advisers and employers can then utilize employee feedback to make improvements to their wellness benefit offerings—e.g., provide holistic education and technology that addresses the workforce’s physical, mental, spiritual and relational, as well as financial and health needs. In doing so, Revelli says, they can foster a workplace community dedicated to financial well-being.

Hockenmaier concurs, adding that the best programs are those that suit the overall participant demographic, whether they include voluntary benefits such as student loan debt assistance, an emergency savings plan, longevity insurance or disability insurance.

Hub International firms assess their clients’ participants individually, based on personal information such as age and gender, plus they also evaluate the company’s workforce overall—in doing the latter, they consider variables such as industry, region and geography.

The goal of the analysis is to create the ideal financial wellness program for that group of participants, explains Daniel Bryant, president of retirement and private wealth for Sheridan Road Financial, a division of Hub, in Northbrook, Illinois. Bryant says he believes that, in the future, participant data and analytics will exclusively drive what tools and benefits get offered. “Fast forward the next couple of years, employers won’t need to provide a bunch of benefits their employees will not want,” he contends.

However, while wellness programs typically aim to correct existing personal finance problems, there are core benefits that help employees work toward financial security throughout their career. Retirement, for example, is one of the primary benefits employers offer their workers that leads to financial security, Hockenmaier notes.

Health-care benefits, including health savings accounts (HSAs), are also widely requested by employees, who see them as a priority and a key to financial security. Additionally, employees view emergency savings benefits, student loan debt repayment and debt negotiation as being contributors to financial wellness—and success.

Just as the definition of “financial security” is different to each participant, what a program needs in order to help people achieve it differs among the providers. For instance, some providers’ strategy is to help plan participants work toward saving at their optimum deferral rate, while others stress budgeting or saving.

Plan sponsors can coordinate all services through one provider or work with unrelated providers that each supply a benefit. Hockenmaier points to how crucial advisers are in helping plan sponsors select and understand each option, especially as more providers launch new offerings—e.g., recordkeepers integrating third-party vendors’ services while also developing their own solutions.

“We’ve seen a revolution in the recordkeeping space, where they’re really starting to offer these other services such as student loan refinancing capabilities, budgeting capabilities, managed accounts, etc.,” she says.

Deliberation and Integration

Voya partners with third-party administrators (TPAs) that specialize in financial wellness benefits, including student loan debt refinancing and caregiving assistance, and offers the programs to advisers who successfully recommend it as recordkeeper.

When selecting a provider, Jeff Cimini, head of retirement product at Voya in Windsor, Connecticut, values the expertise and experience a TPA brings to the financial wellness equation. He also appreciates how collaborating can streamline the process. “A lot of it is integration, which we can work on together, so the participant thinks of it as a single experience,” he says.

Other programs were integrated into Voya’s financial wellness plan after advisers requested them for their clients, Cimini says. One such program was Wellthy, a caregiving support and counseling service. “Our thought process is that our clients are looking for this, and if their employees really like the financial experience they have with us as their retirement plan provider, then we can partner with somebody who has expanded content into other areas of [participants’] financial lives,” he says.

The employee, his needs and the steps necessary for him to achieve financial wellness all should be kept in mind when considering integration with multiple service providers, vs. one recordkeeper, Bryant says. A possible downside to working with one recordkeeper end to end is, if a plan sponsor changes recordkeepers, it will lose access to all of the integrated benefits. To mitigate this problem, Hub International works with FinPath, a cloud-based technology that also integrates with WorkDay; this helps the participant. “So if you leave, you can take it with you,” says Bryant. The key is having a cloud-based, portable end-to-end solution.”

Advisers should know the amount of complexity participants will face when trying to obtain each service the sponsor provides, Hockenmaier points out. Say an offering is linked-to on an employer’s benefit site—ask yourself how many steps it will take for an employee to access the program. “We know that if things are easy, employees will be more likely to adopt them,” she says. “If it’s complicated, that could be a big hurdle to utilization.”

An obstacle to simplifying authentication is the need for tight cybersecurity measures, especially when working with significant financial information. Hockenmaier recommends helping the sponsor understand what it needs in cybersecurity services and also what potential risks can be mitigated through contracting with the correct provider.

However the benefits are integrated, Hockenmaier says to encourage the provider to verbally interact with participants and not let it only supply an online tool. This can boost engagement with the program and financial security, too. A wellness provider that can meet participants where they are, and adjust its offerings accordingly, will produce better results for them, she says.

Art by Scott Bakal