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Products & Services May 23, 2024
Financial Wellness Moves From “Nice to Have” to Table Stakes
In the second installment of this quarter's PLANADVISER In-Depth, advisers discuss the crucial role financial wellness programs play both for clients and growing their participant connections.
Reported by Bailey McCann
Art by Kiki Ljung
Financial wellness programs have been a hot topic among plan sponsors and plan advisers for the past few years. These programs are designed to offer financial literacy information and, in some cases, additional employee benefits like emergency savings accounts or student loan repayment programs.
The goal is, in most cases, to offer employee participants more comprehensive financial planning resources than basic financial wellness programs, which typically are opt-in and offered at no cost to the employee. If employees want to engage beyond the scope of the program, plan advisers can often put them in touch with financial planners or advisers who are available for an additional fee.
In this way, according to experts, financial programming is a two-way street: It meets the needs of plan sponsors and sets up advisories for longer-term relationships with participants.
But the setup has not come without cost. The investments plan advisories are making in these programs has grown over the past decade, according to Kyle Bingham, a Salem, Oregon-based managing director at Financial Fitness for Life, the financial wellness program offered by Prime Capital Investment Advisors. Bingham says that plan advisers have come to view financial wellness programs as a way to build relationships with employee participants to help them understand all of their current and future financial needs.
“When you used to look at financial wellness programs, they were very basic in terms of the education,” he explains. “A plan sponsor would ask a company or an adviser to come in and deliver a workshop about saving or the details of their 401(k) account, for example. What we’re seeing more now is that plan sponsors are much more in tune with the needs of their participants and the expectation is that a financial wellness offering goes far beyond the idea of just delivering education.”
That means, he says, offering more comprehensive platforms and more initiatives within a financial wellness program.
Focus On Relationships
What does a comprehensive financial wellness offering look like that meets the needs of both the sponsor and the advisory? Providers are using a multi-channel experience including in person meetings, webinars, micro-sites, calls, and one-on-one meetings with financial coaches.
For participants in the Financial Fitness for Life program, they work on doing an initial financial assessment to help people understand the full scope of their financial picture. That can include something as basic as connecting someone with a budgeting app they can use on their phone to more in-depth consultations that help people identify the best debt reduction strategies to fit their needs.
“If there is something that goes beyond the scope of the program— maybe someone has a complex tax situation or wants to focus on estate planning—then we can connect them to someone else within our organization who can work with them on a more traditional adviser relationship,” Bingham says.
The process works similarly for participants in Pensionmark Financial Group’s financial wellness program. Pensionmark offers a combination of online tools, online courses, webinars and group calls. Participants also have the option to work with a financial coach first and can then opt-in to a more traditional adviser relationship if they want to. The financial coach acts as a half-step between someone in a call center and a traditional adviser or certified financial planner. They work with participants in the program on their financial goals, but they aren’t recommending products or specific actions.
“We have found that people want to be able to talk to someone about their personal details and that’s not always going to fit within a group meeting or a webinar; but at the same time that doesn’t mean they want to end up speaking to a call center that may be located outside the country,” says Emilio Vela, Long Beach, California-based director of participant engagement and education. “They also don’t want to be sold something. The coach is just there to answer questions.”
The financial coach can also be with someone when they call in and want to make a change to their retirement plans or investments.
It Takes a Village
Financial wellness program providers say that in addition to building individual relationships with employee participants, these programs can also serve as an additional team for recordkeepers and advisers.
“We’re working alongside the existing plan recordkeepers as an additional team that can provide unique content and answer questions,” Vela says.
Robert Patton, Redwood City, California-based managing director for SageView Advisory Group agrees. He says —SageView’s financial wellness program—is the single biggest investment they have made to date on retirement education and relationship building.
“We try to make our content unique from what participants are going to get from the recordkeepers, for example,” he says. “The recordkeeper is going to have the basics down on what a 401(k) is or whether someone should do a traditional IRA or a Roth. We’re trying to offer support on a wider range of topics and work with people to provide resources for their individual situations.”
Customization Key
If a plan sponsor offers additional services like emergency savings accounts or student loan matching as part of the program, then PersonalSAGE, which stands for Strategic Advice, Guidance and Empowerment, will take up the education on that and help people understand what tools are available.
Patton notes that each financial wellness program can be highly customized based on what plan sponsors are hearing from their participants about what they want. And because these programs are opt-in at no additional cost to participants, adding financial wellness services typically isn’t a big lift for plan sponsors once they’ve identified their providers.
Matt Escalante, Austin, Texas-based senior vice president and senior director at Trusted Capital Group, part of Hub International, which oversees financial wellness programs within Hub, notes that some plan sponsors have employee census data that they can use to draw insights about what to offer. Often employees are just asking for certain services as well.
“We have found that getting an individual in for a financial assessment is really the best way to understand what’s going to be most helpful to them from a financial wellness perspective,” he says. “People’s financial needs and goals change over time and these programs are designed to work with them as they move through life.”
This is the second installment of PLANADVISER In-Depth, a quarterly series delving into the world of 401(k) plan advisement and the future of retirement savings. The next article will focus on the quest by those in the retirement industry to work with participants.
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