Open Enrollment Means Open Door to Participant Conversations

Recent research by Fidelity Investments tied to open enrollment season found that, on average, eight out of every 10 Americans rank health benefits as their top priority when it comes to workplace offerings. That said, more than half (56%) of those same respondents feel “overwhelmed” or “discouraged” by annual enrollment.

Where does that leave retirement benefit conversations during such a busy, health care-focused time?

“We’ve always actually tried to coach our plan sponsors to not necessarily include 401(k) planning as an open enrollment item, because we know that employees are already so inundated with other decisions,” says Craig Stanley, the lead partner of retirement plan consulting at Summit Group 401(k) Consulting, an Alera Group company.

But avoiding direct communication about 401(k)s does not mean Stanley and team take open enrollment season off. In fact, he has noticed an increasing trend of clients asking his firm to join open enrollment fairs and meetings to discuss general financial planning and budgeting with employees.

“We’re there to provide financial wellness resources and talk about our financial wellness program, and certainly the 401(k) does come up occasionally,” he says. “That’s a little bit of a newer thing we’ve seen in recent years.”

Many advisers and providers agree that open enrollment season is not the right time to pepper participants or eligible participants with defined contribution plan discussion. But it can be a good moment to discuss savings as adjacent to health care benefits and costs.

“Of course there is an opportunity [during open enrollment],” says Robert Campbell, a financial adviser at Ameriprise Financial. But, he notes, “urgency is a tricky thing to generate at this time.”

Most people, he says, have an “‘if it’s not broke, don’t fix it’ mentality around their savings and simply check the box on enrollment.”

As advisers working with individual clients, Campbell says, the approach should not be to convince a client that planning or benefits are “broken,” but consider whether the employee is doing everything they can to be in the best position possible.

“[I] leverage open enrollment and encourage clients to invest for the long-term,” Campbell says. “I say, ‘Let’s take a look at what you have available together to make sure you’re doing everything you can to maximize your opportunity with benefits.’”

Retirement Connection

Retirement savings definitely is a major benefits consideration for employees. A study released Thursday by human resources benefits and consulting firm Buck found that employees put retirement benefits nearly on par (65%) with medical coverage (67%) in terms of the most sought-after workplace benefit.

Roy Mangum of Equitable says open enrollment and discussions of wealth can “dovetail together if handled properly.”

The vice president of voluntary benefits and national broker relationships has been on both sides of the aisle: formerly a benefits broker providing consulting services to business clients, and now an insurance provider. On the consulting side, he says, practitioners will often get the benefits selection and setup right, only to fail their clients on employee communications.

“Having a strategy in place to educate and communicate to employees so that they can make an educated decision is where most benefits consultants miss,” Mangum says.

The insurance provider notes that employees spend less than 30 minutes per year making benefit selection decisions—so it’s important to make that limited time count.

Mangum recommends implementing multiple communication methods during open enrollment to reach all generations of participants. That means using emails, text messaging campaigns and events (both virtual and in-person).

It is also important, he says, to follow-up after the window closes. Those follow-up communications can touch on more general areas of financial wellness, as well as surveying how people felt about the open enrollment process.

HSAs: Growing Piece of the Puzzle

Health Savings Accounts are one piece of the open enrollment process that can tie directly to a tax-deferred savings option, notes plan adviser Stanley.

The savings vehicle, though earmarked for health care costs, can be used after the age of 65 for non-medical expenses without penalty. But while the HSA can be a great vehicle for saving, many people need education to understand it, Stanley says.

“I would venture to say less than 5% of employees truly have a true understanding of how HSAs work and how to use them in the best way,” he says.

Financial adviser Campbell, of Ameriprise, believes HSAs are “the single most underutilized and misunderstood” benefit.

“The last three meetings I’ve had have touched on it, with clients stating, ‘I didn’t use it one year and lost the dollars, so I stopped funding it,’ Campbell says, identifying common misconceptions about HSA use. “Or, ‘I don’t use my HSA because if I don’t, I’ll lose it, right?’”

Walking people through proper HSA use can be challenging for a financial adviser, Campbell says. But it’s also a moment for engagement.

“At the end of the day, we find clients want to know what’s the most cost-effective protection for their situation,” he says. “In general, we find that high-deductible, HSA-eligible plans make a lot of sense for healthy individuals—but typically should be supplemented with the HSA savings. Those HSA savings should be carried forward to future years to be used when health costs may be higher.”

Fidelity’s workplace benefits survey was conducted in August among 2,021 adults. Buck surveyed 344 employees with retirement benefits from July through August.