Three Who Lead the Way

Daniel Bryant: It feels like the understanding of priorities has leapfrogged five years in the past five months, when it comes to benefits and financial wellness programs. The first thing we’ve seen is that this pandemic has tightened the link between emotional, health and financial well-being. If anyone had any doubt, the pandemic has thrown cold water in your face and said, “Look, these things are completely connected.” A health crisis has caused people to be furloughed, to lose their jobs, and now we’re in the middle of an economic crisis. The pandemic has shone a light on that conundrum.

Second, clients have begun to prioritize things they hadn’t thought about from a financial wellness perspective—for instance, the SECURE [Setting Every Community Up for Retirement Enhancement] Act loan provisions and the tax-deductible pretax repayment of student loan debt. These have helped to provide liquidity and ease debt burdens.

And lastly, for perhaps the first time, senior management and human resources [HR] are aligned in their desire to provide financial solutions to their employees. For example, if employees are nearing retirement, they need financial and retirement income support. We recently helped a multinational company in the New York City area with retirement income planning for employees who’d been laid off—helping them understand their separation agreement, talking them through Medicare and Social Security. It underlined the importance of achieving workplace wellness.

Rita Fiumara: Sadly, we all know people who have lost their jobs, been furloughed or experiencing financial hardship due to the pandemic. Participants have become interested in learning more about emergency savings and cash-flow planning. Consequently, financial wellness is proving to be increasingly important to participants of all ages and income levels. In fact, 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.

Ideally, a financial wellness program provides both digital and human-delivered guidance for participants to stay engaged so they can build positive financial habits. This is even more relevant for female employees, as more than half don’t feel confident or don’t want to deal with financial decisions, which makes them even less prepared for the future.

If an employer doesn’t offer a formal financial wellness benefit, retirement plan advisers need to educate participants on basic financial habits, such as budgeting, paying down debt and saving for emergencies.

Then there are conversations about the CARES [Coronavirus Aid, Relief and Economic Security] Act. That legislation allows individuals an increased ability to access funds from their retirement plan to meet financial emergencies that have resulted from the pandemic. The consequences of these withdrawals haven’t been clear. A distribution of $50,000 from an individual’s retirement plan that is not repaid can have a detrimental effect on current savings, for which taxes will be owed. In addition, it will create a big dent in his accumulated wealth, with the individual losing out on investment returns and the compounding of returns 10 to 20 years from now.

Rick Wedge: When the CARES Act became law, we offered clients educational meetings to explain what their options and participants’ options were—many took us up on that.

We wanted everyone to understand that participants can take up to $100,000 from their plan, their 401(k), if they’ve been affected by COVID, plus have additional flexibility with their plan. The good news is we’ve seen very little uptake on those benefits. If you need it, you need it. But we try to get people to avoid breaking the glass with the 401(k). Let’s leave that money invested if we can.

Video conferencing with Zoom, for instance, is much harder than having meetings in person. We really like to do one-on-one education meetings. We’ve seen a big drop off in those. Partly that’s the pandemic; plus, in the summertime it’s always a little tougher to get people to engage. As people get used to this new normal, we’ll likely see a pickup in one-on-one meetings, come fall.

Bryant: The words “financial wellness” did not become part of our everyday vernacular until 2015.

The consensus is that was the year that phrase stopped being a throwaway differentiator and started having a real meaning. And it also evolved from being solely about education to more outcome-based strategies. Prior to 2015, we had only pieces of the puzzle, as some of the financial wellness details were still missing. That was partly due to the Pension Protection Act [PPA] and the fiduciary legislative changes that sucked the oxygen out of our client conversations. It wasn’t until 2015, when the true understanding of how financial wellness could improve financial, health and life outcomes for our clients and their participants became widespread.

That’s what’s been fascinating over these five years as we’ve gotten knee deep into the financial wellness narrative. We are trying to help employees make better financial decisions so they can retire on their own terms. That’s what committees at companies have really embraced: It’s all about the employees and helping them be able to retire.

We’ve had companies where the dynamic between the employer and employee has changed because the company realized it’s in their best interest for employees to retire on time. It’s the right thing to listen to the needs of your employees and to embrace empathetic leadership, but it’s also right from a profitability standpoint [to help them retire].

The second change is the maturing of the Millennial demographic. Some are turning 40. Just five years ago, the stereotypes may not have been incredibly favorable as they were characterized as group thinkers, experientialists, job jumpers and non-savers. Post-2015, they’re being recognized as inclusive, global and having a different perspective. They do save, and they’re now in positions of authority, becoming heads of human resources, CFOs [chief financial officers]. They have a different view of the world, and they feel that companies should provide wellness services.

The third thing is technology. It has become infinitely more sophisticated. We now have data analytics, data intelligence, business intelligence. We know the true cost for all of our benefit plans. We know who is married, who has renter’s insurance, etc. We have all the data, and we know this Millennial cohort inside and out. I can go to any company in any location and find out the averages on Millennials in that region.

There are other things, but I think it’s the demographic, the technology, the fact that employers look at financial wellness as a strategy, as part of the benefits package, and it helps the company.

As a Gen-Xer, I once worked as an investment banker, 100 hours a week, sleeping at my desk; we worked all day Saturday and Sunday on Wall Street and in San Francisco. I can assure you no one was asking me how my emotional well-being was, or “Are you financially anxious?”

When I accepted the award five years ago, I did talk about empathy and improving people’s lives—we’ve talked about that forever. But I wasn’t espousing financial wellness. Now I can’t be on the numerous calls I’m on each day without someone saying, “My biggest issue is financial wellness”—but they may not know what it means. It’s a strategy, it’s a tool, it’s an app, it’s education, it’s planning. Financial wellness is a total lifetime road map to get you from a place of financial anxiety to a place of financial freedom.

Wedge: We were probably talking around the edges of financial wellness back in 2013. We were doing 45-minute webinars. We now do 60-second or 75-second clips. We’ve gotten a lot better at getting participants to engage with what we’re doing. I think the proliferation of automatic enrollment, automatic escalations and QDIAs [qualified default investment alternatives] has helped with the basics of getting folks into the plan, getting the deferral percentages where they should be and getting them invested in a proper asset-allocation model. So, when we start working with participants, we can push past the basics, because we’ve got those in place.

I laugh when I think we did those long webinars. Since then, we’ve engineered how we communicate with participants. We let them sign up for things, and most will. We distribute a monthly educational email, and most of these have digital media embedded within them. Participants can sign up to receive a weekly market recap and a quarterly investment review. We offer quarterly reviews of their plan investments, as well. We’ve got tons of tools for them to use, but if they don’t want to up their game with us, we at least know they’re in a great asset allocation.

A couple of years ago, we added to our platform what we call Smart Map. It’s a full-blown investment product enabling us to build a complete financial plan for participants. It’s completely unbiased. We don’t sell any product, but for participants who want to engage with us, we’ll help them consolidate their financial information and create a plan for them. There is a cost to it, but most employers pick that up. We’re seeing about an 8% to 10% uptake and are hoping to get closer to 15%. It’s not for everyone, but for those who want to engage, it can be life-changing.

Fiumara: Since 2015, the most significant changes have been employers integrating wellness initiatives that result in behavioral changes, plus more employer-sponsored programs dedicated to cultural diversity and volunteerism within local communities. Many employers have taken an active role in supporting wellness programs, as studies have shown that improved quality of life positively affects overall productivity and the health and stability of the workforce. Employers are learning that the long-term success in building a sustainable model to fit their culture begins with the encouragement of healthy behaviors as both wealth and health have become equally important.

The retirement plan adviser has evolved into being a retirement benefits adviser. Today’s adviser has expanded his skill set to become an extension of the human resources team. More collaboration in working in tandem with recordkeepers has emerged in not only assisting with operational compliance deadlines, but also with strategically reviewing plan design and employee communications.

At UBS, we have a formal financial wellness program that aims to help employees of all ages and income levels have a positive relationship with their money. We have access to global resources and financial expertise that allows us to provide financial education and guidance to employees and companies of all sizes. Employees have access to a UBS financial adviser who can help them optimize their finances and receive personalized education and guidance. Our approach provides employees with access to human and digital education that appeals to each individual’s preferences. Employees also have the ability to complete a financial wellness assessment so they and their adviser can identify areas that require the most attention. Ongoing interaction with employees is available via email, seminars, webinars, and on-site and phone one-on-ones.

Our individual practice also complements an employer’s wellness program, as we can customize topics tailored to the client’s demographic group. We formalize webinars on various subjects as the first step in a conversation in a financial planning session. Other topics include: asset allocation and Social Security, to name a few.