Financial Success

The Key Ingredient In A Financial Wellness Plan

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives

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Financial Success

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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
  • 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.

Read the full article here by Mark Singer, Advisor Perspectives

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