Advisers Called to Help 'Heal' Finances

Art by David Huang

When I ask a roomful of plan sponsors, “Who’s interested in financial wellness?,’ 100% of the hands go up,” says Michael Kane, managing director of Plan Sponsor Consultants in Atlanta.

According to just one statistic, 87% of 950 adults surveyed recently by Harris Poll said their finances cause them some stress or more. This financial stress is negatively affecting sponsors through employees’ increased absenteeism, lost productivity and inability to retire at the time they want, Kane says.

Retirement plan advisers, thus, have an ever-widening opportunity to address their clients’ financial wellness needs. Yet, when the services—which can involve research, tools, technology, programs and follow-up—could potentially strain your firm’s resources, how much time and money is it worthwhile to invest?

To complicate an assessment, trying to monetize the work can be hard, says Patrick Delaney, vice president, retirement insights leader, with T. Rowe Price Investment Services in Baltimore. “There’s not a ton of money in it, and it’s tough for advisers to get paid for it.” But offering it can make a crucial difference when prospecting new clients, he says, citing advisers who have won—or lost—in their final presentations based on whether or not it was something they brought to the table.

Advisers do have substantial choice in the level of service they offer. They may lack the bandwidth to invest time in, say, providing extra participant educational meetings, or sustaining the momentum of a client’s wellness program—necessary when the goal is behavioral change. Instead, “they may introduce a valuable solution to a client, not deliver the service themselves,” says Rachel Weker, vice president and senior manager, investment platforms and services, at T. Rowe Price Retirement Plan Services in Owings Mills, Maryland.

Kane outsources a variety of services. The best vendors, he stresses, start with analytics, measuring the client company’s financial needs, shaping education accordingly and tracking employee actions taken. To nurture change, they supply coaching, artificial intelligence (AI) prompts and, likely, a support line.

The adviser is paid for being integral to the process, he says. “You’re bringing the best practices and doing the implementation and making sure this thing works as advertised.” The adviser may also supply coaching, he says.

Some advisers charge à la carte for each service they provide such as to add a discussion of budgeting or debt reduction to group meetings or one-on-ones, says Delaney. Others may create their own proprietary program, he says. To implement that with a client, they may charge above and beyond their fee to service the plan.

Some sponsors, though, expect such services to be free, Weker says, so it is important to confirm what they are willing to pay.

Whatever level of service the adviser offers, he should start with identifying the client’s wellness goals upfront, she says. “Ask, ‘What do you want to accomplish? Why …? What are the employees’ financial challenges?’ Zero in,” she says. “Financial wellness is really, really broad, and it will be impossible to effectively boil the ocean.”