Financial Wellness and What Really Works

Hello and welcome to Williams-Mullen's Benefits Companion, a podcast that helps employers navigate the complex legal challenges of managing their employee benefit plans. I'm your host, Bryden DeWitt, and today I'm delighted to welcome back Sarah Parker, Director of Retirement Plan Consulting at Sageview Advisory Group. Welcome back to the Benefits Companion, Sarah. Thank you for having me again.

Excited to be back. So today, Sarah, I hope we could talk about something that's been floating around for several years, the idea of financial wellness. You kind of initially employers were focused on health wellness and then the trend over the last, I don't know, maybe 10 years has been a focus on financial wellness. Employers have been investing in more benefits and tools and education than ever for financial wellness, but, you know, maybe participation outcomes aren't quite matching that effort.

And I know you work with a broad range of employers and you've seen what resonates and what falls flat. So just to start, you know, the term financial wellness is used everywhere. How do you define it? And what do you think most employers get wrong about financial wellness?

Yeah, that's a great first question. And so I think I'll start by, in fact, defining it. And because financial wellness has been used as kind of this trendy catchphrase. And what it's not is just participant education for your defined contribution plan.

What it is, is a financial advisor that is meant to assist all of your employees. And so those are two very different things. In the financial wellness definition, where we're talking about giving employees essentially a financial advisor, we're talking about bringing in all of their financial picture, a holistic overview of their financial life, their spouse's life, their children, their 529 plans, talking about their spouse's pension, it's not just the 401k or the 403b, and it's not just the employer sponsored plans.

And so I think that what many have gotten wrong, many, many benefit teams is they think, well, we offer that because we have education services. Somebody is mailing out brochures periodically. We're offering webinars. And that's, that's really not what financial wellness was designed to do.

It was designed to help your employees with their full financial picture and potentially even avoid their need for hiring a financial advisor. And so financial wellness is really a kind of a mix of technology and then that human component, which is giving employees someone to talk to. And so I think that what some HR teams have just kind of gotten wrong is just the assumption that the education that they have is sufficient. And, you know, many times that might be, right?

Maybe, especially in professional service organizations that we work with, many of them are already working with their own financial advisors, and maybe they don't need that financial wellness service. But when we look at certain industries, like manufacturing, for example, where maybe some of those employees are maybe a little intimidated to walk into a brick and mortar financial advisory shop. This is extremely beneficial because it kind of eliminates that fear of who do I hire?

I didn't get a referral for a financial advisor. And it's also the majority of the time about half the cost as if you went and found your own financial advisor. So I just think it just a misuse of education versus wellness because they really are two distinct buckets So I guess what you saying is an employer needs to decide what the objective of the financial wellness program If it to encourage participation in the 401k plan and help employees plan for retirement, that's one thing.

But we want employees to feel less stressed about their financial situation. And they're probably not even thinking about retirement. I doubt that if you say what's financially stressing a 30-year-old employee, it's probably not, am I going to have enough money in 35 years to retire? It's, I have a mortgage and a car payment, and our child needs braces, and our credit card bills are piling up.

These are all things, those aren't employee benefit retirement plans. It's beyond that. It's more holistic. Exactly.

In fact, the student loan piece of financial wealth is probably one of the most significant questions that our team receives, especially with now with some of those payments being turned back on and revisiting their budgeting. Most of the questions are very simplistic in the fact that, you know, they're not necessarily 401k Roth related, but they do require an advisor or a human to kind of look at your full financial picture before answering the question, should you pay off debt or contribute to your 401k?

So where are employers falling short? What separates a good program from a border program? I think my next question was going to be why are employees feeling so stressed and not saving for retirement if we have these programs? I think you kind of answered that, that the programs maybe aren't focused on the right things.

So what are the elements of a sound financial wellness program and what are some pitfalls for them that are not so helpful? Yeah, I think, you know, this isn't right or wrong, but maybe why are individuals so stressed? Why are we still seeing these studies that are coming out that says, you know, over 50% of employees are thinking about their financial picture when they're at work? And that is very true.

We continue to see these, that they're still stressed. So what's missing here? Because financial wellness has been around for a while. And I do think it is HR teams and just leadership teams just, quite frankly, having a lot of other priorities, maybe even in the health care space.

You know, I think they kind of consider this as part of the 401k or the 403b, and that's working fine. So we'll get to that when we can. But the reality is that financial wealth bleeds into the overall health of that employee and bleeds into their overall benefits package. So I think where we've seen it work really well is where HR teams are thinking about this alongside all of their other benefits and how they all play together and how they can all benefit the health component of their employees by focusing on financial wellness.

So I think benefit teams that are looking at it collectively and not just bucketing this as a piece under the defined contribution plan are getting it right. I think the other thing that they're getting right is measuring the success, which we can get into. But that's a big component of this, too. You can't just turn it on and never take a look at what's going on underneath the hood.

But good components of a financial wellness program. Let me answer that real quick. So I mentioned earlier that you have to have the technology in that human component. So that's first and foremost.

You need to have a financial wellness program where that technology piece or the backbone to it is being invested in. A lot of these technology tools are really expensive. It's expensive to integrate in a piece about debt and how to pay down student loan and having that alongside Social Security and looking at the 401k provider and pulling in demographic information. All of those interfaces are pretty expensive And then you incorporate AI and how you want that to assist the technology And so you really want a firm that reinvesting in that And then the second piece the human piece is if participants you would know your industry or you know your employee base if they demand an in advisor they want face meetings which by the way the majority of them do that needs to be very very clear who that individual or that team is, how they can schedule a meeting with them, whether it's scanning a QR code, you have a website.

That piece is very unique and not offered in every financial wellness program. And we've seen the most success in our program when there is a dedicated individual where participants can schedule a meeting. Yeah. And in talking with clients, I think part of it is getting that engagement, which I think when you're talking about technology and in-person, advisors, if it's come for a lunch meeting and we'll have a presentation with a PowerPoint.

That's not, it has to be accessible to the employees. And that varies by industry of the employee group that you have. It has to be customizable. It has to be able to be fluid with your workforce and what works for them.

If they're used to coming on site twice a year at corporate companies headquarters, and that's what really works. And they want all day meetings and they want you to establish one-on-ones, then we're going to do that. If it's a remote workforce and they're all across the U.S.

and you want to be able to have them schedule on-demand meetings and that's what works, great. I think it's flexibility is the key. It can't just be online. And many employees are, in fact, kind of used to in-person settings.

So I guess when you're picking a vendor to do this, do you see any conflict of interest issues that an employer should be aware of? Yeah, that question comes up a lot because the reality in the financial industry right now is that there's mass consolidations. It's very common for a financial firm to have wealth advisory and retirement plan advisory or record keeping and wealth advisory. And so they offer many different services.

So the conflicts of interest that employers should really be on the lookout for is pushing of products. I think that, you know, if a firm has their own mutual fund and they are also offering these one on ones to your participants and they have maybe just any other type of product that you fear they might be pushing, asking questions about that would be pretty important for you're looking to onboard a financial wellness solution. just understanding if those advisors are working on commission and ultimately kind of what that advisor is looking to do.

So you just kind of want to be careful with that and just make sure you're asking the right questions around if that individual is looking to build their own book of clients. That's really good advice. So how does an employer measure success? And we were saying at the outset that there have been a lot of these programs implemented with limited success in some areas.

How does an employer really keep it accountable and see if the efforts are paying off? Yeah, well, you should designate someone to be in charge of the rollout alongside the financial wellness program. So a good financial wellness program will have a formulated rollout plan. They will handle it all for you.

They'll handle all the email communications. They'll handle kind of all the lead ups to the announcement of the financial wellness. And then once that is established and the program is live, really what you want to make sure you kind of keep your finger on the pulse around is attendance, utilization, increase in your employer-sponsored plan contributions, improvement in investment diversification. But then you also want to offer a survey after the program been live for a while and just see what employees how they feel about it If you getting phenomenal ratings and you getting I would say for lack of a great case study then it working It's improving the overall morale and doing what you want it to do.

But you should look at those at least once a year, those success measures. And I also would take it a step further. I mean, you can create an education policy similar to an investment policy and really outline what it is that you're going to be measuring. That's a great idea.

So getting out your crystal ball and with all of the advancements, the rapid advancements and changes with AI, where do you see financial wellness going in the next three to five years? Yeah, I see continued. We're doing it internally. So I know that this is happening.

Continued advancements in how AI can assist with the financial wellness programs. Better integration with the record keepers with these financial wellness programs. Keep in mind, record keepers get quite a bit of information. Especially managed account programs, they get quite a bit of information, demographic information, and ultimately not requiring employees to enter all this information and click 100 times for them to all work together.

So I see more collaboration. I also see more collaboration with the benefit providers. I see more collaboration with benefit brokers, health and welfare brokers, working with retirement plan consultants and these health, these wellness platforms. So participants have more of a one-stop shop.

I know years ago being unbundled was kind of the thing. Then we kind of went to being bundled. I guess what I'm saying is, is I, I kind of see it being bundled even more. So, but I think that that's to the benefit of the employees.

I'm not saying that all of the service providers have to be the same. I'm just saying we all need to start to work together and realize that our role is not just investments only, especially if we're brought on as the financial wellness solution. We really need to be communicating with the other benefit platforms to help employees. So I see AI helping that immensely.

A holistic view of the betterment the employees of the entire program working together. Right. And even take it a step further, you know, even in open enrollment, you know, when employees are asked, you know, do you want to allocate to this voluntary benefit? Do you want pet insurance, for example?

I see that being streamlined and more assistance there, utilizing the financial wellness tool to help employees decide where, what piece of the pie of their financial picture goes to what based upon where it makes the most sense. Yeah, it's all part of the same objective. Right. Well, Sarah, thank you once again for being on the Benefits Companion podcast.

Thank you for having me. I appreciate it. Enjoyed the conversation. That wraps up this episode of the Benefits Companion.

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