“We found that if you make it simple and make it intuitive, you can get participants to engage,” Ed Murphy, head of defined contribution (DC) at Putnam, told PLANSPONSOR. Beginning in December, Putnam will offer planning and advice services from LearnVest in what it says is the third piece of helping participants engage more fully in saving for retirement.
“In partnering with LearnVest we’re partnering with an industry leader in the space with a multichannel approach to financial wellness,” Murphy said. Participants are given services through a website with content and information on budgeting, savings behavior and how to establish financial goals beyond retirement savings. A financial management tool aggregates all accounts so the user can take a holistic view of a broad financial picture of assets.
Last, Murphy said, is a dedicated financial wellness expert to offer budget and planning assistance to participants. The optional service carries a onetime signup fee of $250 that is discounted 20% from LearnVest’s retail price, and a $19 monthly charge.
The offering will be integrated into a user’s experience on the Putnam 401(k) platform, Murphy said. “They log on, and messaging and prompts introduce them to this capability, a continuation of the work we’ve been doing around personalization.” Citing the Lifetime Income experience that Putnam launched in 2010, Murphy also noted the firm’s Health Care Estimator that helps plan participants estimate potential future health care costs in retirement. (See “Putnam Launches Health Cost Estimator.”)
Plan sponsors have shown a lot of interest in this service for participants, Murphy said, pointing to research from the Employee Benefits Research Institute (EBRI) that says employees want to save more, but many live paycheck to paycheck.
More than half of employees (68%) know they must save more than 10% to live comfortably in retirement, but day-to-day expenses is the No. 1 reason they don’t contribute more, Murphy said. “If you prompt them to save more, they ask where they are going to find the money.” Since few people have put together a comprehensive budget, he said, this is a way to help them learn where they can find the dollars to meet expenses and save for retirement.
Access to financial wellness services will give Putnam’s 401(k) plan participants the ability to examine their retirement goals within a broader context through LearnVest tools, Murphy pointed out. Participants can seek assistance with financial planning elements such as aggregating accounts, budgeting, expense tracking and debt management.
“Achieving retirement success in today’s world, which we define as the ability for an individual to replace current income in retirement, requires a new, more comprehensive approach,” Murphy said. “Plan sponsors and advisers have told us that many plan participants would like to save more, but feel they lack control of their finances or find it challenging to do so as they navigate expenses in paycheck-to-paycheck situations. Saving for retirement needs to be an ongoing priority that is considered not in a silo, but in concert with an individual’s overall financial needs, goals, obligations—and ultimately, health.”