PLANADVISER: Let’s start with the basics. What does “financial wellness” mean at Schwab Retirement Plan Services, Inc.?
Nathan Voris: First, financial wellness is not new to us. It’s in our DNA and we’ve been helping employers and participants for decades. To us, financial wellness means that people can understand and address their financial priorities, like managing short-term finances, and balancing that with setting and maintaining longer-term goals. For retirement plan participants, this starts with making the most of their workplace financial benefits and providing access to resources to help them create a broader plan.
PA: The retirement industry has spent decades educating employees about investing for retirement. Why the need now for broader financial wellness programs?
Voris: It’s clear people need more help. Many Americans are saving for retirement in workplace plans yet only about half of plan participants are highly confident making investment decisions on their own1—and many aren’t saving enough to maintain their lifestyle after they stop working. Meanwhile, more than half of Americans can’t come up with $500 in an emergency,2 or make their monthly loan payments on time.3 These things impact employers, too. According to a survey we conducted last year, 30 percent of non-savers and 21 percent of savers say personal financial stress has affected their job performance.1
PA: If education hasn’t worked completely on the retirement front, why should we expect that more education—even in the form of a more expansive financial wellness program—will work?
Voris: Education is just one part of the picture. A financial wellness program also has to identify next steps and provide the tools and guidance people need to take immediate action—to actually get things done.
PA: Are employees asking for this?
Voris: Absolutely. More than three-quarters of the people we surveyed said they would welcome a workplace financial wellness program that provides education, tools and resources to help with their overall financial health.1 But it has to be easy to use and feel tailored to them. People expect efficient interactions. They want clear, meaningful next steps, and the ability to take action in the moment. Say I learned about ways I can save money for my child’s college education. Where do I go to actually open an account? Or what if a calculator shows me I need more retirement savings than just my 401(k)—even if I’m contributing the maximum allowed? What else should I be doing, and how do I get started?
PA: What are some of the key components of a financial wellness program like this?
Voris: When we asked employers what mattered most to them in a financial wellness program, they generally agreed it should include broad guidance on personal financial management principles, online access to education and planning tools, full integration with existing benefits, and measurable impact. They also cited supplementary access channels, niche education topics and one-on-one advice as “nice to have” elements.4 We decided to include it all, so that individual employees can engage and act based on their unique situation. Yes, we provide resources for people who may be struggling to get a handle on the basics and start saving. But we also help experienced savers and investors analyze their situation, set or evaluate their goals, and create or revisit their financial plans so they feel confident taking action.
PA: What goes into creating a program like this?
Voris: It requires a combination of intelligent technology and personalized guidance—high-tech, high-touch, or both. From our perspective, the best approach is to efficiently and intuitively create the shortest distance between a person’s need and the right next step for them. And we believe we can help any employer improve their support of employee financial wellness.
PA: What’s in this for employers?
Voris: Because financial stress affects individuals and the workplace, employers have a vested interest in helping their employees get on the right path and take ownership of their financial futures. Further, as recruiting competition increases, benefits that demonstrate that a company cares for a person’s full life may help employers attract and retain top talent.
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