Data & Research January 14, 2015

More Employers Offering Overall Financial Help

An increasing number of employers are broadening the types of financial and retirement planning resources they offer employees.
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Employers are expanding their focus on the overall financial well-being of their workers, a survey from Aon Hewitt finds.

According to the survey of nearly 250 U.S. employers representing approximately six million employees, 93% intend to focus on the overall financial well-being of their employees, beyond retirement readiness. Nearly half (46%) are very likely and another 47% are somewhat likely to add new plan features, mobile apps or online tools to assist individuals with understanding financial concepts and financial planning.

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Sixty-nine percent currently offer online investment guidance, up from 56% in 2014, and 18% of the remaining employers are very likely to add this feature in 2015. More than half (53%) offer phone access to financial advisers in 2015, up from 35% in 2014. Nearly half (49%) offer third-party investment advice, up slightly from 44% in 2014, and 47% offer managed accounts, up eight percentage points from 2014.

“Employers’ focus on financial wellness has been steadily picking up steam in recent years. This year, even more organizations will address this topic head-on and help workers think beyond just saving enough for retirement and consider all aspects of their financial health,” says Rob Austin, director of Retirement Research at Aon Hewitt. “Depending on the individual needs of their employee populations, companies are offering features like basic budgeting help, while others are providing assistance on how to save for life events like a home purchase or college.”

The survey also found companies are more carefully reviewing the costs associated with their defined contribution retirement plans and are using their scale and purchasing power to make changes that may improve returns for workers. More than one-third (34%) of employers recently made changes to their fund line-ups to reduce plan costs, compared to 27% in 2014. Of those employers that have not yet made this change, 34% are very likely to do so before the end of the 2015.

Additionally, the percentage of employers that have recently moved from mutual funds to institutional funds or separately managed accounts has almost doubled, from 16% a year ago to 30% today.

“Employers understand that small plan fees can add up and ultimately make a big impact on workers’ retirement savings,” explains Austin. “To help workers’ maximize their retirement dollars, employers are scrutinizing each fund in the plan to determine if the associated fees are reasonable.” 

A copy of the report of survey results may be requested from here.

 

Data & Research January 14, 2015

Modern Families Face Financial Challenges

Non-traditional families living with additional members in their households report a positive living situation, but feel financially burdened, according to a study by Allianz.
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More than one-third of Multi-Generational (Multi-Gen) and Boomerang families say they often feel financially-burdened by the number of family members living in their household, while 22% of other modern families, including those that have same-sex couples, are blended, have single parents, and have older parents with younger children, say the same.

In a study commissioned by financial service provider Allianz, many Multi-Gen and Boomerang families say having an extra adult family member at home is a positive aspect of their living situation. More than a quarter (27%) of Multi-Gen families, defined as three or more generations living in the same household, reveal that living with extended family is beneficial for help with children and/or household responsibilities. More than half (54%) of Boomerang families, defined as parents with an adult child between the ages of 21 and 35 who left and later returned to the family household, report they would prefer to have their adult child living at home with them as long as he/she wants to.

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Allianz Life vice president of consumer insights, Katie Libbe, cautions that these families shouldn’t ignore the effect this could have on limiting their ability to save for retirement. While reporting happiness associated with closer family ties, families also acknowledge the potential risk to retirement savings. The families note their living arrangements create a risk for retirement readiness. Having extra family members, sometimes unplanned, can result in more money spent on current expenses, leaving less available for retirement savings.

Multi-Gen families were more likely to feel a great deal or some stress about the following topics, compared to other modern families:

  • Covering financial expenses – 72% vs. 63%
  • Getting out of debt – 67% vs. 57%
  • Caring for a parent or relative financially – 60% vs. 31%

Additionally, nearly six in 10 (59%) Multi-Gen families say they currently live paycheck-to-paycheck, compared to less than half (47%) of other modern families.

Boomerang families report being more open about discussing family finances, as 80% say they are completely or somewhat open with their children on the topic, compared to 71% of other modern families. Boomerang parents have also done more to teach their children about money, having taken the following initiatives, compared to other modern families:

  • Have helped their children to open a savings account or develop a savings plan – 71% vs. 59%
  • Have talked about their personal financial situation with their children – 62% vs. 49%
  • Have encouraged their children to invest and save for their own long-term financial goals, including retirement – 60% vs. 40%

Despite their openness when discussing finances, welcoming an adult child back home is not without negative consequences. Less than half (48%) of Boomerang parents say they are on track to achieve their financial goals. Another 17% have had to go back to work to make ends meet (17%), and a similar number (16%) have delayed or considered delaying retirement.

Advisers can help modern families address the financial challenges associated with their living situations. Libbe says it’s wise for both Multi-Gen and Boomerang family types to seek out financial professionals that have experience dealing with unique family structures and who can provide guidance on how they can balance supporting their family while still planning for tomorrow.

The Allianz “LoveFamilyMoney” study was conducted with more than 4,500 respondents, ages 35 to 65 with a household income greater than $50,000.

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