401(k) Specialist Issue 1 - 2018 - 24

401(k) FINANCIAL WELLNESS
How to Effectively Move 401(k) Financial
Wellness from Idea to Execution
By Mark Singer
FINANCIAL WELLNESS IS a hot topic, one
discussed, written about and analyzed at
conferences. Moving from simply talking
about financial wellness to its actual execution,
however, is a huge hurdle for many
advisors for a variety of reasons.
One thing is crystal clear-plan participants
are in need of more financial literacy,
and plan sponsors are trying to find ways
to help. Plan sponsors know they have a
responsibility to educate their participants,
and advisors see the opportunity to potentially
build their practices and strengthen
existing relationships.
The results of recent studies show the
extent of the issue and its impact:
* According to The Pew Charitable Trusts,
writing in 2015 on the topic of financial
education, " demand from participants
is big " ; 83 percent reported that they
have a lack of savings, 71 percent stated
they do not have enough money to
cover regular expenses, and 69 percent
said they do not have enough money
for retirement.
* PricewaterhouseCoopers 2016 Employee
Financial Wellness Survey found that
46 percent of employees spend three
hours or more on personal finances
at work, creating a distraction in the
workplace.
* And the 2017 PwC Employee Financial
Wellness Survey reported that employees
are nearly twice as likely to miss
work due to personal financial issues.
These statistics are not at all shocking
when you consider that numerous studies
show when advisors are with the plan participant
and delivering financial information,
we are not " connecting " with them in
a meaningful and useful manner.
24
ISSUE 1 2018 | 401kSpecialist.com
on productivity and on promotion and advancement
opportunities in the workforce
are not considered and measured. "
One of the hurdles, historically, in getting
a commitment to deliver financial wellness
has been proper benchmarking. Financial
wellness may sound like a good idea, but how
can we sell it to the plan sponsor when we
can't show its actual impact and what works?
From an advisor's perspective, the need
" ONE THING IS CRYSTAL
CLEAR-PLAN PARTICIPANTS
ARE IN NEED OF MORE
FINANCIAL LITERACY ... "
They're dealing with short-term, day-today
financial crises, and are not ready to
" listen " to us as we discuss the benefits of
investing for their retirement.
The traditional " retirement ready "
conversation is not an effective means of
communication for many employees.
From the employer's perspective,
stressed-out employees lead to lower
productivity. Even more compelling for the
employer is the impact of an employee
deferring retirement because they are not
properly prepared.
It was illustrated by Prudential Financial's
Why Employers Should Care About
the Cost of Delayed Retirements, which
concluded that the cost to the employer
was $50,000 per year for every employee
who delayed retirement.
The real cost, Prudential states, is
actually higher " because qualitative costs
of delayed retirements, such as the impact
for financial literacy represents a tremendous
opportunity. According to The Elephant in the
Retirement Room, written by Ann Schleck &
Co. and Hartford Funds in 2016, 51 percent of
advisors surveyed said they expect financial
wellness will add revenue to their firms. In the
same research, advisors expect a tripling of
plan sponsor utilization of different financial
wellness programs in five years.
Bottom line: the employee is demanding
more help, the employer recognizes this
and is trying to offer it, and the advisor/
plan consultant can offer up a solution that
would benefit everyone. What hurdles could
possibly be left to solving this problem?
I've spoken with hundreds of plan sponsors
and plan consultants, and I hear feedback
that the topic of financial wellness is
simply too big. There's not enough clarity
about what it is, and the playing field of
wellness offerings is growing exponentially.
This gives way to an enormous amount
of confusion and makes it difficult for the
advisor to successfully execute on the topic
of financial wellness.
Mark Singer, CFP, AIF is a leader in the world of financial
education. Mark is the author of three books, a
frequent speaker at events, and is the creator of The
Financial Literacy Toolbox, a virtual resource center
to help financial advisors, wellness providers, and
institutional retirement services firms change the
conversation about financial wellness.
http://www.401kSpecialist.com
401(k) Specialist Issue 1 - 2018

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