Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.
Client Service July 30, 2024
Workplace Advice Use Trending Up, But Age, Assets Matter
Data from Hearts & Wallets found that more middle-asset, middle-aged households are turning to the workplace for financial guidance, but how widely that spreads is an open question.
Reported by Alex Ortolani
Art by Summer Lien
It is no secret that the workplace has become a focal point for financial firms offering everything from basic budgeting advice to complex investment products with pension-like retirement payouts. But even if you offer it, will a busy workforce pay attention?
According to Hearts & Wallets LLC, the independent savings, wealth and retirement data benchmarking firm with more than a decade of data, the answer is, increasingly, yes—but mostly for middle-class, middle-aged workers.
In recent analysis run for PLANADVISER, the firm found a 15% increase in people turning to their workplace as a source of financial advice, with 65% of respondents doing so at least sometimes, usually or even as a primary source, up from 54% in 2015.
“People are leveraging workforce solutions at a greater rate,” says Laura Varas, founder and CEO of Hearts & Wallets. “Even if it’s not a primary source, they are taking a look at what’s available from the workplace, and from that, utilization [of financial wellness offerings] are going up.”
When diving deeper into the data, based on some 131 million households, Varas finds an intuitive, but also telling difference across asset levels: People in the middle asset ranges of $100,000 to $500,000 are much more likely to turn to the workplace than either those with fewer or more assets.
She found a similar story when looking at age ranges as well, with those aged from 35 through 44 most likely to turn to the workplace, with older workers turning to it at a lower rate and retirees showing up well below—though, interestingly, with a slight increase from their previous levels.
The breakdowns from Hearts & Wallets surveying are as follows:
Sometimes, usually or primarily turn to workplace for financial advice, by asset range:
Asset Range | 2015 | 2023 |
<$100,000 | 37% | 49% |
$100,000 – <$500,000 | 47% | 59% |
$500,000 – <$2M | 52% | 52% |
$2M+ | 35% | 41% |
Sometimes, usually or primarily turn to workplace for financial advice, by age range:
Age Range | 2015 | 2023 |
<35 | 50% | 65% |
35 – <44 | 54% | 74% |
44 – <54 | 50% | 63% |
54 – <64 | 36% | 48% |
65+ | 18% | 22% |
To Varas, the data tell a story of increasing importance for the workplace, but also the potential to reach even more people.
“The workplace has a special role in helping the middle class and the people that are really struggling,” Varas says. “Peak accumulators are not the ones that need the help; they help themselves, and there are plenty of firms falling all over themselves to help them outside the workplace.”
Three Channels
Varas sees three core channels for people to get financial and investment guidance: financial wellness at the workplace; financial advisers; and managed solutions, such as managed accounts offered through defined contribution retirement plans.
Among those options, she sees financial wellness through the workplace as having the possibility to reach the most people.
“These financial wellness packages have the chance to be broader than managed products and be more scalable than traditional advisers,” she says. “That is what makes me excited about them.”
Varas’ excitement seems to be shared not just by the recordkeepers who offer financial wellness platforms, but by retirement plan advisories as well, with most of the largest players offering plan sponsor clients a workplace offering—think CAPTRUST at Work, Sageview Advisory Group’s PersonalSAGE and Hub’s FinPath.
But while she sees such services as being for the masses, she does not believe they should be free.
“Pricing is a necessary, good thing,” she says. “I’m not a fan of free stuff in the workplace—there needs to be pricing to provide high quality and have engaged users.”
Beyond the 401(k)
While the evolution of advice offerings and communication about those offerings needs to continue, Varas says the past 15 years have shown major improvements. About the time she started Hearts & Wallets after holding vice president roles at Fidelity Investments and Citigroup, advice “was very poor” for three reasons, she says.
First, it would focus solely on “saving more in your 401(k) or 403(b),” as opposed to considering the full financial picture. Second, offerings “tended to overstate the need and just scare people” into saving. Finally, she says, it was focused too much on near-term tax savings as opposed to long-term savings, putting people in the bad position of “dying with all of your assets” in a tax-deferred savings plan.
That approach led to people “just tuning out,” Varas says. “You have to make it about achievable goals. … I’ve been happy to see workplace advice over the last 15 years stop doing those bad things.”
If the workplace engagement numbers are going to keep increasing, it will take both private and public actors improving offering and access, Varas says.
“We’re seeing platforms that can [use payroll deduction] for emergency funds, to pay for college and other types of accounts,” she says. “It just doesn’t make sense anymore for the 401(k) to be the only thing people are investing in through work.”
