Client Service January 7, 2016

Client Motives Differ in Broad Financial Wellness Trend

Driven both by employer paternalism and pragmatism, financial wellness programs are rapidly expanding among U.S. companies, according to Aon Hewitt. 
Reported by

A new survey and research report from Aon Hewitt reveals large employers plan to expand the depth and breadth of financial well-being programs in the year ahead.

In fact, according to Aon Hewitt’s “Hot Topics in Retirement and Financial Well-Being” survey report, a majority of large employers (55%) now offer help to workers in a least one category of financial wellness, such as budgeting, debt management or the financial aspects of health care. Survey results further show more than one-third (38%) of the 250 large employers recently surveyed—collectively employing nearly 7 million workers—provide help across at least three categories of financial wellness.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

Even more impressive are the forward-looking findings. According to Aon Hewitt, by the end of the new year more than three in four (77%) large employers will have at least one financial wellness program in place. A little more than half (52%) will be running at least three such programs.

“Workers have a wide variety of financial needs and challenges,” says Rob Austin, director of retirement research at Aon Hewitt. “Employers are realizing that they need to provide a range of financial well-being tools and resources to help this diverse workforce and to truly make an impact on workers’ long and short-term savings goals.”

The survey also delves into employer motivations for offering financial wellness programs. Most, about 85%, suggest they are creating and adding financial well-being programs at least in part because “it is the right thing to do.” At the same time employers are being pragmatic about their offerings: nearly as many (80%) also point to employer-directed goals for their financial wellness offerings, for example, increased employee engagement or productivity.

”Workers say they want their employer to provide them with the resources to help them obtain a more secure financial future, and it seems that employers are stepping up to this request,” Austin adds. “In 2016, financial well-being programs will cement themselves as part of most employers’ total benefits package.”

NEXT: What’s being offered

Many employers say they are instituting financial wellness programs to help ease their employees' transitions from working years to retirement years—from retirement asset accumulation to sustainable spending. This makes sense, Aon Hewitt says, given 70% of employers believe they will see a significant increase in retirements over the next three years.

Accordingly, one out of every five of these employers has increased the level of automation, self-service and/or web access to their retirement plans, “so workers can more easily start their retirement process.” Of the remaining group, 77% suggest they’re very likely or moderately likely to make retirement plan enhancements in 2016. By the end of the year, Aon Hewitt finds a vast majority of employers  surveyed (89%) “will have taken some step to reach out to near retirees about the necessary steps in the retirement process.”

Still only a minority of plans allow for individuals to receive their money through systematic payments delivered over an extended period of time, but Aon Hewitt projects the number that will do so to be 45% by the end of 2016 versus 35% in 2015.

Overall for the year, 56% of employers say they’re very likely to create or focus on the financial well-being of employees in ways that extend beyond strictly retirement-related decisions. This is up 10% over last year and “places expanding financial well-being firmly in the top spot of employer initiatives in 2016.”

“While there is wide accord on the desire to expand financial wellness initiatives, there is less unity in the choice of the actual tools and services offered to workers,” the report concludes. “We asked employers about financial wellness programs on seven different fronts [ranging from managing day-to-day finances and creating a basic financial plan to taxation strategies, debt management, health care planning and estate planning]. Although nearly every area saw growth from 2015, no one area is offered by a majority of employers.”

The full survey results are available for download here, following a brief registration. 

Data & Research January 7, 2016

Individuals Want Help with Current Financial Challenges

A long-term financial plan must take into account financial bumps along the way.
Reported by

Budgeting is the top financial goal of individuals overall; men are exceedingly more likely to prioritize investing as a financial goal than women; 20-somethings value saving for major expenses; and parents may be putting their family’s needs ahead of their own, a study finds.

LearnVest, a financial education and planning provider, looked at the profiles of more than 100,000 individuals signing up for LearnVest from April to October of 2015, and found that across key demographic segments—age, gender, geography—budgeting was the top financial goal, capturing 32% of total responses.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

Surprisingly, individuals ages 35 to 44 selected budgeting as a top financial goal more so than younger individuals. The study found better money habits and smarter financial organization are the desired payoffs of an effective budgeting strategy.

Other top financial goals included managing credit card debt (24%), saving for a major expense (14%) and paying off student loans (10%), all ranking higher than saving for retirement (8%) or investing (3%). However, the study found men are five times more likely than women to choose investing as their top goal—no matter their age.

Households with children had a higher propensity to select budgeting as their top financial priority compared to households without children. Those with children were 45% more likely to select budgeting as their top goal. For this segment of respondents, the increased focus on budgeting results in a decreased focus on retirement (6%).

The study suggests households with children are putting family needs, such as saving for children’s college education and caring for aging parents, ahead of their own. A recent survey by RBC Wealth Management-U.S. found nearly half of Americans (49%) think helping their children pay for their education is more important than saving for their own retirement. 

NEXT: Long-term plans should account for current priorities

LearnVest notes that in its 2015 Confidence Report, it identified the trend of the confidence U-Curve. Essentially, those younger than 25 generally felt very confident about their finances, while 30- and 40-somethings were significantly less confident. Once respondents hit age 55, confidence starts to tick up again.

The firm suggests the heightened level of confidence around money for 20-somethings can perhaps be explained by the fact that young people tend to have fewer financial responsibilities and enough money to meet their current needs. They also may expect their salaries to continue increasing at a rapid pace.

Whatever the reason for their confidence, LearnVest’s current Personal Finance Review found 20-somethings were the most likely age bracket to prioritize saving for a major expense, which it clarifies to include things like travel, education, or buying a house. While most 20-somethings have not had the advantage of time to reach other goals—or at least those that some would argue are most pressing, like paying down credit card debt and starting to save for retirement—they appear to be more focused on the aspirational side of financial planning. They are eager to prioritize reaching for these major expenses, even if they know it may take a while to get there.

LearnVest notes that the road to achieving long-term financial goals is not without its challenges, which is why a solid financial plan must take into account life’s financial bumps along the way.

The full Personal Finance Review report is here.

«