Tools, Not Just Education, Improve Recordkeeper Financial Wellness Offerings

Recordkeepers consistently cover topics that cause concern among participants—such as taxes and emergency savings—in their financial wellness education offerings, but not so with financial wellness tools, Corporate Insight, a company that evaluates recordkeepers’ platforms, found in a two-part series analyzing financial wellness tools and education.

Financial wellness tools that automatically import relevant data—such as profile information, salary details and account balances—save participants a considerable amount of time and effort, and limits the possibility of human input errors, ensuring more accurate results, Corporate Insight says. However, it is important that firms let users modify imported information. Only 18% of recordkeepers included in Corporate Insight’s analysis automatically import participant data and also allow users to adjust the information. Corporate Insight notes that third-party tools and calculators do not include this feature, so firms with these tools are unable to adhere to this best practice.

Corporate Insights’ February Retirement Plan Monitor report also says incorporating balloon tips, built-in calculators and contextual information can help participants enter their information correctly. Balloon tips should define or explain inputs and, when applicable, use examples. Almost every recordkeeper analyzed (94%) integrates balloon tips within at least one available tool. Forty-seven percent of firms include a built-in calculator within at least one resource.

As for financial wellness education, a recurring issue Corporate Insight found in its March Retirement Plan Monitor report was findability, as many recordkeepers lacked centralized education centers that make it easy to locate and browse materials. Leading firms cover a multitude of topics without compromising findability or format.

What makes for a successful financial wellness program?

Claire Daly, a research associate with Corporate Insight, tells PLANADVISER at the end of 2018, Corporate Insight published A Roadmap of the Financial Wellness Ecosystem, a syndicated study that takes a comprehensive look at financial wellness and the landscape of employer program offerings, and from that study, came up with its own definition of financial wellness.

“We consider a person to have achieved a state of financial well-being if they possess a manageable level of stress associated with current and future financial matters; a manageable level of debt—or no debt at all—that can be paid off without financial penalty or significant stress on an individual’s financial situation or lifestyle; enough disposable income to maintain a desirable lifestyle that is within reason and an ample emergency savings fund that can sustain an individual’s lifestyle for a bare minimum of three months; and a financial acumen that will allow them to plan appropriately for future goals and respond to unforeseen financial obstacles,” she says. “Therefore, a successful financial wellness program helps employees make progress towards, achieve and maintain these.”

According to Daly, there are a variety of different ways to analyze how effective a financial wellness program is at doing what. For example, the results of Corporate Insight’s 2018 survey showed that enrollment in employer-provided third-party financial programs is correlated with an increased likelihood of plan participation, contributing more to retirement and having more saved up overall.

Participation in a financial wellness programs also was associated with better emergency savings: 78% of survey respondents who said they were enrolled in their employer-provided third-party financial wellness program reported having an emergency fund. Of that 78%, a majority claim that it could last them at least two months, often longer. Comparatively, only 53% of those who claimed they did not use a financial wellness program reported having an emergency fund.

“These savings behaviors can help sponsors assess whether or not and to what extent financial wellness programs are impacting their employees’ overall financial circumstances,” she says.

Recordkeeper vs. third-party provider financial wellness programs

While Corporate Insight has not done a comparison of financial wellness programs between recordkeepers and third-party financial wellness providers, Daly says it received feedback from its financial wellness study that many plan sponsors find resources provided by recordkeepers uninteresting or ineffective.

However, she notes, several recordkeepers have partnered with third-party financial wellness program providers to offer robust offerings. In one such instance, some interesting aspects of the offering include its financial wellness assessment, which looks at participants’ financial knowledge and habits to provide personalized content suggestions, Daly says. In addition, participants can find curriculum-style lessons that include overviews of what participants will learn, knowledge quizzes and FAQs. The last page of each course reviews the material and suggests immediate action items, often linking to a calculator or tool for further engagement.

“More robust programs—which go beyond just education—tend to cost more for plan sponsors,” Daly says. “But, they include features such as on-site support, account aggregation, budget tracking and goal setting.”