Inspirational Financial Wellness

To truly help participants, financial wellness programs need to advance beyond mere education. They must truly motivate participants to take action to improve their financial outlook, Cerulli Associates reports in “U.S. Retirement End-Investor 2019: Driving Participant Outcomes With Financial Wellness Programs.”

“Many employees in today’s workforce are struggling with competing financial priorities, and they’ll often express these concerns to their employer,” says Dan Cook, a research analyst with Cerulli. “Plan sponsors have taken note. Nearly one-third, 32%, identify improving the financial wellness of employees as a top priority for their 401(k) plan.”

But rather than looking to move the needle for participants, most plan sponsors focus on their return on investment (ROI), which can be hard to measure, Cerulli says in its report. “Plan sponsors have a broad range of goals for financial wellness programs,” Cook says. “Some goals such as increasing 401(k) contribution rates are straightforward. Others such as improving financial literacy, increasing workplace productivity and decreasing employee stress are more nebulous and/or difficult to directly attribute to a financial wellness initiative.”

The way to help employees improve their financial situation, the report advises, is for plan sponsors to move past ROI to make their financial wellness programs action-oriented. “Individuals must be triggered to enact changes that affect their financial lives in a positive way,” Cook explains. “So, providers must consistently collect data to identify engagement strategies that resonate most with specific groups and craft digital experiences through which a participant’s ‘next best action’ is only one or two clicks away.”

The report says participants’ primary sources of financial stress are health care expenses, cited by 30.5%, insufficient retirement savings (25.7%), monthly bills (10.7%), inadequate emergency savings (10.6%), credit card debt (8.4%), and student loan debt (4.7%).

It says health savings accounts (HSAs) could help participants with their health care expenses, but few participants know much about them, particularly that they can use the accounts to invest. Plan sponsors should educate participants about using HSAs as a retirement benefit, starting with their triple tax advantages, Cerulli says. Moreover, sponsors should not just try to educate participants about HSAs at the annual benefit enrollment period but throughout the year.

Cerulli also says that when making changes to their 401(k), older participants prefer to interact with a call center representative and younger ones prefer chat features.

As to what motivates people to open a 529 college savings plan, only 15.1% credited the advice of a financial professional.