The vast majority of Americans get their financial needs taken care of at work by their employer’s compensation and benefits programs.
These plans have grown not only in number, but also in their complexity and cost; yet we continue to ask employees to make annual enrollment decisions that they have little training, education, or experience in making.
Decisions made on one employee benefit can dramatically impact not only the affordability of other benefits, but also how other benefits work.
Also, a spouse’s benefit elections in their place of employment can negatively impact their partner’s benefit elections. These are no longer just employee benefits questions, but rather financial planning issues.
Consequently, retirement, health, and wealth are all converging in the employee benefits space, with worksite financial wellness programs being the mortar that holds them all together.
To truly be successful, these programs must be much more than pretty technology solutions focused merely on education and attached to a 401(k) recordkeeping platform that prompts less than 10% of its participants to take action.
They must instead coordinate people “smarts” with great technology that immediately engages the participant, motivates them to add additional information, and provides direct access to professional advisors for actual advice when desired.
Imagine a system that:
- At implementation, takes a routine download of an employer’s payroll data that includes the participant’s wage and the age of each family member
- Immediately upon initial login, the participant receives a robo-foundational financial plan detailing the participant’s projected:
- Emergency fund for the unexpected
- Maximum total recommended debt level
- College savings requirements for both state and private schools
- Life insurance needs to protect against untimely death
- Disability insurance needs for unforeseen illness or injury
- Retirement needs to maintain the same lifestyle as they are accustomed to during their working career
- Necessary will and trust estate planning tips
- Encourages the participant via gamification to add additional missing data to make her financial plan “smarter” and more robust
- Provides the participant with a financial wellness assessment, detailing both the strengths and weaknesses. This would also include an overall financial wellness score
- Digitally sends the participant targeted tips and information to assist in improving their weak areas
- Provides one place for the participant to aggregate and organize all their financial accounts, and which is automatically updated each day
- Assists the participant in creating and monitoring a family budget
- Provides a secure electronic vault to store all their important documents
- Offers a library of relevant articles, videos, and webinars on hundreds of financial topics that can be delivered both online and via onsite group meetings by an advisor
- Offers online self-help planners and calculators that are automatically populated with any data provided on or by the participant
- Has direct access to Certified Financial Planners (CFP) for personal assistance and advice
- Benchmarks employer reporting on aggregate workforce financial wellness and retirement readiness scores, the aggregate cost of delayed retirements, problem areas that need to be focused on with education, year-over-year improvement, and return-on-investment
And all of this can start with merely a simple employee spreadsheet from the employer that includes age and wage.
Now, just think how powerful it could be if it included the employer’s schedule of benefits for group term life insurance; disability insurance; and participant 401(k) deferral percentage, asset allocation, and account balance.
Could it even use all this gathered information to assist the participant in making their annual employee benefits elections on the same technology, and then automatically forward it to the applicable payroll systems, carriers and health account administrators which all have 360-degree integration?
I can only dream.
Bradley K. Arends is Co-Founder and CEO of financial planning and retirement plan consulting firm intellicents.