Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
November 15th, 2016
Editor’s Note
PLANSPONSOR is pleased to bring you this special edition of NewsDash sponsored by BlackRock, focused on financial wellness.
Increasing Long-Term Financial Wellness
Build for Retirement in a Low-Return World
Retirement outcomes are the result of contributions, investment returns, costs and time. If one of these factors changes, what could that mean for plan participants? Unfortunately for today’s savers, analysts believe we may be in an era of reduced market returns—and could be for some time. Low returns could put a real dent in retirement savings. DC plan participants need action and guidance from their plan sponsors to prepare for potentially low returns—including a review of plan design features, investment strategies and retirement polices and goals.Read more >
Target-Date Funds Just Got Smarter
As we face an environment of anticipated lower returns, are there opportunities for plan sponsors to tap the full potential of target date funds? We spoke to Matthew O’Hara, PhD, CFA, Global Head of the Lifetime Asset Allocation Group at BlackRock, for insight on changes BlackRock is making to evolve the investment strategies of the LifePath mutual funds series.Read more >
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Benefits of Financial Wellness
Financial Knowledge Leads to Better Savings Behavior
The Pension Research Council examined the savings behavior of Federal Reserve System employees within the Thrift Savings Plan and found financial wellness and retirement education can be beneficial even for employees who are already ostensibly knowledgeable about finances.Read more >
Employees who improve their financial wellness score from 4 to 6, on a 10-point scale, could potentially improve their retirement plan balance by more than 27%, an analysis found.Read more >
Financial Wellness Program Strategies
“One big reason financial wellness programs fail is that they focus on ‘education’ and financial literacy, which simply do not inspire or empower behavioral change,” says Carla Dearing, CEO of financial planning service SUM180. “It’s very tempting to think, ‘If we just show people the steps, they’ll be able to do them.’” She recommends offering programs that incite principles of behavioral finance such as privacy, control and feedback to help employees succeed.Read more >
Making Financial Wellness ‘Fun’ Could Boost Retirement Savings
Plan sponsors have been moving away from traditional financial-wellness education methods and utilizing tools like apps and games to help participants manage their finances and prepare for retirement.Read more >
When asked what is the “single largest influencer when it comes to your workers’ financial decisions,” three in four (74%) of 150 corporate benefits leaders surveyed by the International Foundation of Employee Benefit Plans (IFEBP) pointed to “family members, friends, co-workers or peers.” With this in mind, IFEBP says, employers are adapting their financial education efforts to better fit the needs of their workforce.Read more >
Financial Finesse’s Generational Research report says financial wellness programs help employees overcome two key biases: “present bias,” the tendency to value satisfaction today over future satisfaction, and “exponential growth bias,” the tendency to neglect the value of compounding. While all generations can benefit from basic money management, debt reduction, and retirement education, each generation learns differently and has different challenges.Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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