401(k) Advisors Who Ignore Financial Wellness Risk Losing Business
Shout out to advisors for their listening skills—although it would’ve been hard for them to ignore pleas from employers and employees. 401(k) plan participants want help getting their finances in order, and plan sponsors have taken notice. Citing concerns over employees who are financially stressed and failing to save enough for retirement, employer sponsors are more interested in financial wellness programs than ever.
In response, the vast majority of defined contribution (DC) plan advisors are now offering some sort of financial wellness services, according to LIMRA Secure Retirement Institute (LIMRA SRI) data.
Research shows nearly three-quarters (73 percent) of advisors incorporate financial wellness into their DC plans, “ranging from broad-based programs to specific services.” Among those who do, almost all integrate retirement savings guidance (96 percent) and investing support (95 percent).
Other common components of financial wellness offerings include:
- Rainy day/emergency funds (71 percent)
- Budgeting and managing spending (66 percent)
- College savings (66 percent)
- Short-term saving to support planned expenses (59 percent)
One area in which DC plan advisors are missing the mark, however, involves debt management. Only 58 percent of financial wellness programs provide advice about managing debt, such as that incurred from student loans and credit cards. Yet, LIMRA SRI research shows “it has one of the strongest ties to one’s retirement savings.”
What’s more, a recent study from Bank of America suggests that the disconnect between what employees want out of these programs versus what is actually being provided is causing workers to opt out. Advisors and sponsors would therefore be better off gauging participant needs and tailoring programs accordingly, rather than making assumptions.
“Helping advisors add this benefit to their offerings will increase their competitiveness as well as the effectiveness of their DC plans,” LIMRA SRI noted in its report. “Alleviating financial stress, especially around retirement, has widespread benefits for plan sponsors and their participants.”
Jessica Claeys is an editor, writer, and graphic designer, who has been creating both print and digital marketing and communications content for 10+ years.
Jessa Claeys is a licensed insurance producer in the state of Colorado and an insurance editor for Bankrate. She currently covers auto, home and life insurance with the goal of helping others secure a healthy financial future. Jessa has over a decade of experience writing, editing and leading teams of content creators. Her work has been published by several insurance, personal finance and investment-focused publications, including BiggerPockets, 401(k) Specialist, BP Wealth and more.
