Retirement planning is part of a “broader benefit and human capital narrative,” according to Daniel Bryant, CEO and managing partner of Sheridan Road Financial, a division of HUB International. Employers have competing human capital and financial wellness priorities, Bryant said during a webinar for the Excel 401(k) 2020 Digital Series.
“We’re just one piece of a broader puzzle when it comes to the employer and all the different things they’re thinking about,” he said.
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Bryant outlined six factors that influence how employers and plan sponsors make decisions, and how financial wellness can help them achieve their objectives.
- Human behavior. People make bad decisions about money, and financial education doesn’t do enough to change behavior, he said. Advisors and plan sponsors need to look to behavioral economics to understand why participants make the decisions they do, and how to guide them into more appropriate selections.
- Demographics. Depending on a participant’s generation, motivations and expectations of their employers may be very different. For example, millennials expect financial literacy and planning tools from their employers, Bryant said. They’re also burdened with unmanageable levels of debt, he noted, more so than other generations.
- Consumerism. People’s expectations around purchases have changed. They’re used to being able to get what they want, when they want it, and generally customized for their needs, Bryant noted.
- Changing relationship between employers and employees. Today’s employers are more paternalistic of their workers. “They’re more socially aware of them, they want to have a safety net for them,” Bryant said.
- Convergence of health care and financial care. Healthier people have lower health care costs, and people with lower financial stress have better health, Bryant said.
- Big data. Employers have much more information about their workforce, and can use it to “better target market benefits to individual cohorts,” Bryant said.
There may not be full consensus on what financial wellness means, but “we all know what financial illness is,” Bryant said, adding that the stats on individuals’ financial state is “mortifying”: 80% of people have no emergency savings, 70% struggle with household expenses, 75% have financial stress.
Financial wellness is “taking yourself from a place of financial stress or anxiety, all the way along that continuum to a place of financial fitness and financial freedom,” he said.
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