PSNC 2018: A Shift in Educating Participants—What Is Financial Wellness?

Is it more than education? Is it a full-blown program or something spontaneous and ad hoc? How frequently is it delivered, and how is it benchmarked? Who delivers it, and when?

For years, education and communications for participants centered on investing themes; times have changed, however, and the topic of “financial wellness” is clearly gaining favor. 

While the interest in financial wellness among retirement plan sponsors is clear, that doesn’t mean the trend is easy to define or measure. Indeed, as noted by a panel of industry experts convened on the second day of the 2018 PLANSPONSOR National Conference, held last week in Washington, D.C., the real challenge for the industry is to make sense of what financial wellness is—and how to make the most of it for participants.

Throughout a detailed wellness conversation led by moderator Mark Davis, senior vice president and financial adviser with CAPTRUST, attendees heard from a diverse group of industry experts and stakeholders, including Nathan Voris, managing director, business strategy, Schwab Retirement Plan Services; Edward O’Connor, managing director and head of workplace wealth solutions and corporate retirement, Morgan Stanley; Jen Harmer, assistant vice president, customer experience strategy and development, Lincoln Financial; and Rachel Weker, vice president and senior manager, investment platforms and services, T. Rowe Price Retirement Plan Services.

Asked to reflect on what makes “financial wellness” hard to define, O’Connor pointed to the fact that there has been lasting regulatory uncertainty and waves of litigation that have blurred the lines between what is advice, what is education and what actions or services are to be considered “fiduciary” in nature in the tax-qualified retirement planning context. Perhaps the broadest and most intuitive definition shared by the panel came from Voris, who suggested that “financial wellness at the core is about helping people identify goals and then move towards scratching them off the list.”

“This is what financial wellness is always about, regardless of the regulatory or litigation environment,” he said.

As Harmer and Weker pointed out, one aspect of the conversation that is quite clear is that there are too many symptoms of “financial un-wellness” in the U.S. work force to be ignored by those entrusted with running retirement plans.

“There are so many symptoms of a lack of financial wellness out there that it just cannot be ignored by providers, by advisers, by recordkeepers or by sponsors,” Harmer said. “We are all starting to think more about how to best educate and support participants on their foundational financial needs, and how these needs such as budgeting or debt management link to and promote retirement planning. We must view this as a very broad topic and a crucial topic.”

O’Connor urged plan sponsors with questions about what financial wellness is and can be, to look at their more progressive peers for ideas about what’s possible.

“I’m consistently impressed by how quickly providers and sponsors are developing their offerings and approaches,” he explained. “Month over month, there are changes occurring for the better. So it’s an exciting time for plan sponsors and participants, and it’s a time to be paying close attention to the latest developments.”

Voris echoed that sentiment and noted that recordkeepers, in particular, feel like they have a lot more to offer in this domain.

“The data and connectivity that we can take advantage of as a recordkeeper, versus the capabilities of your average third party wellness vendor, is night and day,” he suggested. “We can see so much about your participants from our position as the recordkeeper, and we can use that to guide all of our efforts. Of course, we also have to be open to partnerships with advisers and other vendors to fill the gaps.”

Weker went on to suggest another high-level consideration for plan sponsors assessing financial wellness opportunities; measuring the return on investment (ROI) is not always a straightforward affair, but there are ways to get a handle on it.

“For measuring ROI, you first need to identify goals from both the employer and employee perspectives,” she suggested. “Ask yourself some guiding questions. Are you trying as the plan sponsor to tamp down on turnover? Are you simply trying to make participants a little less stressed about money? More productive, perhaps? Depending on the goals you set and your approach, it can take more or less time to see the impact. We see the most success and the most return when the employer takes an active role and creates a culture of sharing information about debt, budgeting, etc. To be successful, we need to build an environment where people feel comfortable sharing information.”