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Financial wellness is a hot topic – talked about a lot, but rarely implemented successfully. But financial wellness is critical.
In a recent Aon Hewitt study there were a number of high-level takeaways that impact advisors:
- Nearly 6 out of 10 employers are very likely, and another 33% moderately likely, to focus on financial wellness in ways that extend beyond retirement decisions. Approximately 44% of employers said they were very likely to measure the competitive position of their retirement plan;
- At of the beginning of 2017, 58% of employers have a tool available to workers covering at least one aspect of financial wellbeing and that is expected to climb to 84%;
- Increasing savings rates is the primary focus of many employers, with only 15% stating they are comfortable with the average savings rate in their plan; and
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Only 10% of employers feel satisfied with their workers’ knowledge about how much they need to save in order to pursue a successful retirement.
The message here is clear – employers are going to need much more than just a good retirement plan from their advisor. They will be looking to impact employees at a much greater level. And this will put many plans up for bids. And the winner will not be the lowest cost provider. It will be the one who offers many of the elements the employers need to deliver, well beyond just the retirement plan itself.
The role of advisor in the retirement-plan space is changing. It is no longer good enough to bring a good retirement plan platform or to show up semi-annually and conduct the enrollment meetings. Advisors must change the way they approach this business. They must evolve into true strategic partners with their plan sponsors.
In the Winter 2018 NAPA Net Magazine, Edward O’Connor summarized it best when he said, “The endgame is now financial wellness, not just retirement readiness, and this is broadening what needs to be delivered by financial advisors.”
Many advisors understand this. And some have tried to incorporate wellness as an offering. It is important, though, to distinguish offering financial wellness as a comprehensive, strategic, firmwide commitment versus the answer I often hear from advisors: “Yes, I offer financial wellness to my plan participants. Every time I have an enrolment meeting I make sure I talk about things other than just the retirement plan items”. This definition will no longer be acceptable, as employers now need more tools and more benchmarking to actually assess whether the wellness they offer is effective.
For those advisors who have already adopted a comprehensive approach to delivering financial wellness, I hear a lot of frustrations. The top frustrations I hear are:
- The product we purchased is not working as we had originally thought and they are looking for another solution;
- We are not getting the type of penetration with our plan sponsors we had hoped for;
- It is hard to get plan participants to engage, and harder to benchmark the success or failure of the program; and
- Implementing wellness has taken some of our resources, money and personnel, and they are not sure whether to continue to make that commitment. They fear this effort is “distracting” them from their core competencies.
The reality is it is not easy to bring in financial wellness to your organization. However, there are ways to overcome these frustrations. Some of that is approach, and some of that is a proper perspective, and I offer some thoughts for you,
It is not about product. There are many good products. It is much more about your ability to define what you wish to deliver and to whom. The problem lies in the strategic approach to wellness your firm takes, not necessarily in the tactical, which is the product itself.
I tried for several years to deliver financial wellness en masse. It did not work for me. Instead, as I chronicled in my nine-month 2017 study, I was more effective by offering it only to those plan sponsors who “truly” wanted it. Don’t “shotgun” this to everyone. Identify your top two or three plan sponsors with whom you can engage in a conversation about wellness, and roll it out slowly. Once you get some success, you can leverage that with your other plan sponsors.
Many plan sponsors have told me that they can only get 10-15% of their participants to utilize the financial wellness tools. It is frustrating to spend the amount of time necessary to get these programs up and running when 85-90% don’t engage. Again, as I showed in my study last year, I decided that instead of rolling out my program to everyone in the plan, I only “allowed” up to 10% of the participants to engage initially. Once I had established success with those who “raised their hands” first, I then communicated the success of the initial stage to others in the plan and offered it to them later.
Unless you have a large firm with many advisors and supporting staff, the reality is that it can be a distraction to incorporate this new offering firm-wide.
Mark Singer, CFP® is a leader in the world of financial education. Mark is an author, a frequent speaker at events, and is the creator of The Financial Literacy Toolbox, a virtual resource center to help financial advisors, wellness providers, or institutional retirement services firms change the conversation about financial wellness. To receive a free copy of Mark’s newest book “The New Financial Wellness: Changing the Conversation”, please contact him at [email protected], or go to his website at www.financialliteracytoolbox.com.
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