Incorporating automatic features into retirement plan design sets participants on a better path for financial security in retirement and frees plan sponsors and advisers up to talk about other subjects to help improve overall financial success for employees, Ganong said, speaking to attendees of the 2014 PLANSPONSOR National Conference in Chicago. “Financially successful employees are happier and more productive,” she added.
Matt Gulseth, a partner at Channel Financial, added that employees want someone to do it for them, and plan sponsors must accept they will have an uphill battle with education. “If you are not doing auto features to the max, you’re wasting time on financial wellness,” he contended. He suggested plan sponsors use plan design to “legislate” good outcomes before they consider a financial wellness program.
Gulseth added that when it comes to financial wellness education, plan sponsors should think about what they remember from high school biology—it’s probably not much. They should determine how to deliver “just-in-time” messages—for example, a seminar about mortgages for participants who are ready to get a mortgage. Messages should be in easy, “rules-of-thumb” formats, he recommended.
“Financial wellness covers all the other stuff outside of the retirement plan—estate planning, insurance, etc.” he said. “Meet folks on the decision points they face in their lives.”
Gulseth also contended that part of a workplace financial wellness program is deciding whether you want to transition employees into an income solution. “If you don’t help with those very complicated choices, they’ll be spinning in the wind,” he said, adding that CEOs want employees who want to work for them, not employees who work for them because they have to or need to. They need engaged employees, and if employees have other things on their minds, they will be less productive.
According to Ganong, one of the big benefits of a financial wellness program to plan sponsors is that helping employees retire will keep health care costs down. In addition, it allows employee mobility within the firm—there’s no stagnation of younger folks’ careers or ideas.
One point made by Gulseth: There’s only so many people whose behavior you can change. “When does education become brow-beating?” he queried, adding that plan sponsors should see financial education not as a behavioral change mechanism, but as an issue-addressing mechanism.