Financial wellness is one of the hottest of hot topics and Mark Singer, CFP was sure to raise an eyebrow amongst attendees with his session at Excel 401(k): The Advisors’ Conference in Las Vegas on Monday morning called Is Financial Wellness a Waste of Time?
From Singer’s perspective, the answer is no but the industry approach to it needs some work.
The president and founder of Financial Literacy Toolbox revealed it was actually a fellow top advisor who told him that he had no plans to roll out financial wellness to his clients because “it was a waste of time.”
“Advisors are having difficulty incorporating financial wellness into a big picture perspective within a firm,” Singer added.
He noted that companies need to commit to the financial wellness premise, but also want to achieve an ROI on the investment.
Singer realized he was going about it the wrong way since data shows that less than ten percent of participants are engaged in financial wellness.
“I decided I wasn’t going to deliver it en masse, and instead found those who were already raising their hand (and wanting to learn more about financial wellness).”
He needed to gather data so he put the word out and assembled a group of 10 plan sponsors and 125 participants, though even securing them wasn’t easy.
“I’ve never spent so much time trying to give away a free program,” he laughed.
The goal of his five-week study was to better benchmark the ability to reduce stress and find new AUM through retirement contributions. He’d take participants through a series of learning modules that focused on the key tenets of financial wellness and they’d also take a pre- and post-assessment survey.
Joining Singer on the dais was Jonathan Leidy, CFA, CFP of Portico Wealth Advisors whose plan sponsor client served as the program’s eventual case study that looked at the actions of 14 participants.
Leidy said he opted in to financial wellness programs to connect more with plan sponsors versus the sizable time commitment that is needed to do individual participant outreach.
Singer said Leidy’s participants offered up some telling results:
- Beneficiary designations are often noted and then forgotten. “You’ll find ex-spouses or other out of date designees,” said Singer. Thirteen of the 14 participants reviewed their beneficiary designations for accuracy and two changed their designees.
- Participants completed a checklist of typical financial planning issues and of the 11 who completed this task, all found it to be a useful exercise. Singer said this exercise was especially impactful because seven identified an actual financial planning item and came up with a timeline and plan to resolve it, which they said would result in lower stress in their lives.
- The cash flow worksheet task completed by eight participants produced a feeling that they were able to better manage their finances.
- Lastly, though the participants reviewed their contribution level, only two eventually changed their contribution upwards.
Singer observed that there was more success with addressing daily financial tasks but that lack of contribution changes showed that “participants are focused on day-to-day tasks versus retirement readiness.”
Singer cites that in the pre-assessment survey, 52 percent of the case study group were at a 7 or higher on scale of one to 10. After the program concluded, that number dropped to just 18 percent.
Singer’s conclusion?
First, since advisors can’t agree on the objective of a financial wellness program it’s difficult for them to make it part of an overall strategy.
However, for those handful of advisors who want to take small steps to incorporate financial wellness, it’s very doable — and the impact can be enormous, especially when it comes to reducing employee stress.
As importantly, Singer says it created a better and more trusted connection by addressing issues of the day and then advisors can “back into the retirement question.”
Singer is rolling his program out as a paid offering and is building out several more modules that will address more sophisticated topics.
“As advisors, we naturally want to help, which is hard when 90 percent of participants aren’t ready for financial wellness,” but he hopes his program will be a starting point for all.
Lynn Brackpool Giles is a contributing editor to 401(k) Specialist. Giles is a former Managing Director of Communications and Consumer Services for the Financial Planning Association (FPA), where she oversaw all corporate, legislative, and consumer communications. In her current journalistic practice, she is a frequent contributor to numerous financial services industry publications.
