401(k) Specialist Issue 4 - 2017 - 22

401(k) ADVISOR VOICE
The Single Biggest Impediment to 401(k)
Financial Success?
By Todd Timmerman
HAVE YOU EVER THOUGHT ABOUT THE
single biggest obstacle to the success of
plan participants in meeting their financial
and retirement goals?
The best strategies take advantage of
opportunities while overcoming obstacles.
You can have the best-laid retirement
plan, but employees won't be able to fully
utilize it and become engaged unless you
address the biggest block to your employee's
financial success: debt.
The Wall Street Journal finds 70 percent
of Americans are living paycheck to
paycheck, with the U.S. Census reporting
24 percent of take-home pay is wasted
on nonmortgage debt. More concerning,
almost two-thirds of Americans can't cover
a $1,000 emergency without borrowing,
according to CNN Money.
It's an issue, and financial wellness is the
answer.
Traditional retirement plan education
focuses only on saving for retirement. But
many employees are struggling with debt
and how to manage their month to month
expenses. To help meet this education gap,
our firm has created a financial wellness
solution to help better engage the plan
participants we have the privilege to serve.
The first step (of course) involves
planning. We partner with our clients to
determine their key financial wellness benefit
goals and how we can most effectively
structure the benefit to ensure the largest
impact possible.
The goal of the financial wellness benefit
is to help plan participants address and
overcome financial scarcity-supporting
their journey from a struggle to make ends
meet to financial security and a focus on
the future financial goals. Our plan sponsor
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ISSUE 4 2017 | 401kSpecialist.com
on their key priorities and concerns
through our online learning center;
2. Complementing the personalized
strategies with custom education addons,
including workshops/webcasts or
videos focused on key life events; and
3. One-on-one meetings with a financial
planner to receive personalized financial
guidance and take positive action.
The third step is the review and measure " TRADITIONAL
RETIREMENT
PLAN
EDUCATION FOCUSES
ONLY ON SAVING FOR
RETIREMENT. BUT
MANY EMPLOYEES ARE
STRUGGLING WITH DEBT
AND HOW TO MANAGE
THEIR MONTH TO
MONTH EXPENSES. "
clients find it can lead to higher productivity,
better benefits appreciation, lower
turnover and more engagement.
The second step involves execution.
There are ways in which a 401(k) advisor
and plan sponsor client can implement a
financial wellness benefit program to help
improve employee financial health and
support long-term behavioral change:
1. Each employee receives a personalized
strategy with action items based
ment. Once the financial wellness benefit
is implemented, committee meetings
take place to review initial goals, show the
relevant ROI and highlight the employee
impact resulting from the financial wellness
benefit program.
Once employees are confident with
their current financial health, a dramatic
improvement of matching utilization,
increased deferrals, increased use of plan
tools (outcome analysis) and fewer loans
and withdrawals from the retirement plan
are realized.
One of our greatest privileges as 401(k)
advisors is working with organizations that
view their role as a " steward " and truly
desire to do everything possible to help
their employees thrive. A financial wellness
solution helps a retirement plan participant
remove barriers and enables them to become
just that-better financial stewards.
This can make a huge impact in employees'
lives and help impact our client's (meaning
employer's) bottom line.
Todd Timmerman, CFS, CEBS, AIF, is managing
director with Charlotte, North Carolina-based Retirement
Plan Analytics.
http://www.401kSpecialist.com
401(k) Specialist Issue 4 - 2017

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