A vast majority, 70% of recordkeeper offered plans, did not provide tools or help with financial crisis management. Most wellness programs offered savings strategies, but again, the vast majority did not offer credit, debt, or student loan management. In fact, more offered tax and estate planning than either of those two topics.
When it comes to financial wellness, plan participants and sponsors might not be seeing eye to eye. In recent surveys plan participants overwhelmingly agree that their employers should help them with financial wellness. Yet, the rate of use of those programs is a dismal 20% CITE ME. Even the ones that offer wellness programs may not be meeting their employee’s needs. How to bridge the gap? The answer could be a little planning.
In their 2024 survey of defined contribution sponsors and participants, JP Morgan found that 89% of sponsors thought it was of importances to offer financial wellness program, and that those programs were valuable.[1] In fact, comparing JP Morgan’s 2024 survey to its 2023, survey, it’s clear that this trend is expanding. Specifically, in 2023, 65% of participants thought “their employers have a responsibility to help with employees’ financial wellness.”[2] That is a nearly 30% increase in one year.
Given the increased concern and interest, you would think that these programs would be at an all-time high utilization rate. Yet, new research from Cerulli Associates shows usage rates of less than 20% among plan participants.[3] While it is possible that participants only say they want a wellness program but are not willing to do the work, the gap between need and action could rest on a different issue. According to Cerulli, the problem may lie in accessibility. “Financial wellness programs … are frequently not designed in a way that encourages participation.”[4]
It is possible that sponsors are providing programs that do not meet the needs of their participants. It might be helpful here to stop and define what, exactly, a financial wellness program is. In fact, definitions may be the first thing participants need help with. According to new results from the Global Financial Literacy Excellence Center, personal finance knowledge is quite low. It showed that on average, U.S. adults scored a mere 48% their financial index assessment.[5] Sponsors may be offering programs too advanced for their participants. This is why planning could be the answer to providing participants with a financial wellness program they will use.
According to Cerulli, only 40% of participants found the information in the program to be “very helpful.”[6] In fact, plans vary quite significantly in what tools and advice they offer. Of the plans sponsored by recordkeepers, less than half include tools to help participants track household expenses or emergency savings, two of the top issues advisors see as a priority for financial wellness[7] A vast majority, 70% of recordkeepers did not provide tools or help with financial crisis management. Most wellness programs offered savings strategies, but again, the vast majority did not offer credit, debt, or student loan management. In fact, more offered tax and estate planning than either of those two topics.
The fault for those programs missing the mark might not rest with plan sponsors. Given that wellness programs sometimes rely on reports and surveys of experts,[8] and experts only, sponsors may be hitting a pitch from the wrong person – experts not employees. Even the definition of wellness those experts use shows the mismatch between what employees need and what they get. One group, after noting the inconsistency in definitions, defined “financial wellness program” as “a program offered … to address employees’ personal financial well-being concerns…. Additionally, financial wellness programs may offer training to hone budgeting skills, address management of financial-induced stress, identify short- and long-term financial needs, and monitor progress against goals over time.” If the average American gets a failing grade on financial knowledge, why only offer the skills management occasionally?
Instead of rolling out what the experts suggest for employee wellness and watching the utilization rate remain at a dismal fraction, plan sponsors can achieve their goals of offering those programs by beginning with the participants themselves. The Office of Personnel Management for the U.S. government suggests that federal employers start by surveying their employes before creating a health and wellness program.[9] Additionally, other social welfare groups have created guides to help employers design financial wellness programs that focus on employee concerns of meeting a financial crisis, budgeting, and having greater choice in financial options.[10]
For example, the National Fund for Workforce Solutions and Social Policy Institute at Washington University in St. Louis suggests starting to plan a financial wellness program by understanding and assessing employee’s financial wellness needs. From that assessment, plan sponsors can then opt for the right solution to meet those specific needs. They also suggest evaluating and altering the plan over time to ensure the plan really does meet the needs for which it is designed.
[1] Retirement INSIGHTS: 2024 Defined Contribution Plan Participant Survey Findings
[2] 2023 Defined Contribution Plan Sponsor Survey Findings
[3] https://www.planadviser.com/arent-participants-using-financial-wellness-programs
[4] https://www.planadviser.com/arent-participants-using-financial-wellness-programs
[5] https://gflec.org/wp-content/uploads/2024/04/TIAA_GFLEC_Report_PFin_April2024_07.pdf
[7] https://www.plansponsor.com/financial-wellness-by-the-numbers
[8] See Transamerica's 5th Transamerica Prescience 2026 link for download available here: https://www.benefitspro.com/2024/07/17/future-of-financial-wellness-47-of-employers-will-be-offering-by-2026
[9] https://www.opm.gov/policy-data-oversight/worklife/news-attachments/needs-assessment-fact-sheet.pdf
[10] https://nationalfund.org/employee-financial-wellness-guide
These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.
Before leaping into the unknown, we recommend a thorough examination of your plan. Because we are experts in the field, we know the marketplace and know what your existing vendor is capable of offering. Through this examination, we can help you optimize the service you receive.
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