Saving and investing for retirement among average American workers through tax-advantaged company retirement plans has received heightened attention in recent weeks, as public visibility around the Retirement Enhancement and Savings Act of 2018 introduced in the U.S. Senate last month continues to build. Certainly, a lack of retirement readiness continues to be a serious issue for many American workers across the country. However, looking beyond potential legislative fixes, it’s clear that retirement plan advisors can serve a more vital role than ever before in helping to address this national problem by delivering new tools to encourage workers to more fully engage with their employers’ retirement plans. And in our experience, nothing more effectively motivates employees to maximize their engagement with company retirement plans—from higher enrollment, to increased monthly contributions – than helping them feel in control of their financial lives. But this doesn’t happen overnight.
For retirement plan advisors and plan sponsors, simply sending employees the right communications materials or even providing them with greater visibility toward their long-term goals won’t do the trick unless these steps are taken as part of a robust, consistent and personalized financial wellness program. Effective financial wellness programs can diagnose an employee’s financial situation in a way that demystifies the process of planning for the future, establish a roadmap that shows them the milestones they need to hit in order to achieve their goals, and coach them step by step to take control of their financial destiny by making better decisions over time. Based on this, what are some of the top characteristics of financial wellness programs that plan advisors and plan sponsors should actively look for when it comes to significantly boosting retirement plan engagement?
1) Exam-Based, Goal-Oriented Personalized Planning
Plan sponsors and plan advisors typically have neither the time nor resources to conduct an in-depth discovery process for each employee. Yet, it’s still possible for each participant to have a personalized plan tailored to his or her needs, which will give them a greater sense of control over their future. One of the best ways to accomplish this is to administer a brief but meaningful financial wellness examination to identify each employee’s top financial priorities, debt levels, retirement readiness and other key details. Based on the results, plan sponsors, plan advisors and their financial wellness partners can develop individually tailored plans for each employee, starting them on the path to greater control by meeting them at the appropriate starting point and helping them progress from there.
This approach also enables financial wellness providers to segment the audience to make sure the workshops and materials they provide to employees are relevant. After all, you wouldn’t want to present in-depth information on asset allocation when much of the audience is still struggling with basic budgeting.
2) Knowledgeable, Accessible Assistance From A Live Support Team
It’s impossible to overstate the importance of the human element in helping employees seize control of their financial situation. All too often, though, employees’ only option when they have a question about their financial wellness plan is an online tutorial or sifting through a huge library of esoteric presentations.
If they are able to speak with a live person, it’s frequently an HR rep who is bandwidth-constrained and unable to articulate all of their options.
When employees cannot find answers to their questions quickly and concisely, they are far more likely to tune out financial wellness programs altogether, disengage with their personal plans—and even reduce their contributions to the company retirement plan.
An effective remedy here is to offer consistent access to an experienced team of financial problem-solvers that are tuned in to employees’ needs and can quickly point them in the right direction when problems arise. By connecting them with such support teams, employers can shift employees’ perception of them from simply providing a paycheck to providing valuable financial solutions—all while seeking to drive stronger retirement plan engagement.
3) Phased Education Process That Offers Multiple Entry Points To Get Engaged
Plan sponsors and plan advisors frequently make the mistake of thinking that a single “silver bullet” can boost employee involvement with retirement plans, whether it’s sending out the right communications materials or expanding a plan’s menu of investment options. The reality is that changing employee behavior is a long and involved process. Plan sponsors, plan advisors and their financial wellness partners should factor this into their programs by offering phased educational curricula that give employees multiple opportunities to find the answers that “click” for them, whether that is simple budgeting concepts, managing debt or, for more experienced investors, how to adjust their portfolios as they get closer to retirement.
These programs can be further reinforced and personalized through regular in-person or over-the-phone consultation sessions to check on employees’ progress and answer any questions they may have. Financial wellness programs should also avoid overloading employees with information. The most effective programs start at the right level for the employee, then help him or her take one step at a time toward their goals.
Financial Wellness As An Engagement Tool
Employees who don’t understand their financial picture, and who don’t feel a sense of ownership over their own financial outcomes, are unlikely to set realistic financial goals, much less see a company retirement plan as a tool for achieving them. By working with third-party financial wellness partners whose offerings incorporate the elements above, however, retirement plan sponsors and plan advisors can help make a lasting contribution to the long-term well-being and quality of life of their plan participants.