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Financial Wellness Movement Gets Turnkey Solution

Updated: Aug 16, 2019

Financial wellness programs in 401(k)s seem to work. But few advisors and plan sponsors have the time and resources to keep up with them, so firms like Merit Financial Group are stepping up with solutions.

By Christopher Robbins FAMagazine


Financial wellness programs in 401(k)s seem to work. But few advisors and plan sponsors have the time and resources to keep up with them, so firms like Merit Financial Group are stepping up with solutions.


This month, Alpharetta, Ga.-based Merit, an LPL office of supervisory jurisdiction with nearly $1 billion in assets under management, announced that it is launching a financial wellness platform for plan sponsors and advisors.


"I feel like there’s now a clear way that we can all make a difference with a platform that listens to participants,” says Rick Kent, founder and CEO of Merit Financial Group. "They’ve been left out of the equation when we try to figure out the best way for implementing a 401(k) plan.”


The Worksite Financial Wellness Platform is a turnkey solution designed to help workers meet their retirement goals using a defined contribution plan, while helping employers and advisors track their financial wellness program’s return on investment.


Over the past few years, 401(k) sponsors, advisors and recordkeepers have moved to adopt financial wellness programs to boost participant saving rates.


“I’m hearing of this more as a growing need,” says Kent. “More importantly, we’re just now starting to see the return on investment from the first financial wellness programs, and we’re going to start seeing more interest when these results are digested.”


Mere plan participation is not enough, according to Bethesda, Md.-based retirement consultant AFS 401(k). AFS found signs of poor financial health in a recent survey of plan participants. While most contributed to their plan, 71 percent did not have a 3-month emergency fund, 62 percent were unable to pay off their credit card debt on a monthly basis and 36 percent struggled with both student loan and credit card debt.


Wellness plans attempt to address all of those problems, helping participants to pay down their debt and establish a budget to maximize their savings potential. A financial wellness program’s value proposition is that it will enhance employee productivity, reduce regulatory risk to employers and in the long run positively impact sponsors’ bottom lines.


“Wellness changes outcomes for participants, and it works when it’s done right, but the plan sponsor has to be involved,” says Kent. “That’s the challenge. There has to be enough information available to convince plan sponsors.”


Retirement researchers have found that a handful of simple, automated plan attributes, like auto-enrollment or auto-escalation for participants, greatly increases the likelihood that workers will save in their plans.


AFS 401(k) found signs that wellness programs are at least as effective as automated features—in the case of one employer the firm surveyed, implementation of a wellness program correlated with a 20 percent rise in plan participation rates, from 73 percent to 93 percent, in less than a year.


Wellness programs also ensure that sponsors and advisors are meeting their fiduciary responsibilities to the fullest possible extent, says Kent.


“Gone are the days when you can offer a 401(k) plan to your employees and just let it go,” says Kent. 


Worksite will be broker-agnostic, meaning any plan advisor can use Merit’s tools. The platform will be able to offer services directly to advisors or act as a third-party resource for advisors, benefits consultancies, recordkeepers and other service providers.


For every new plan sponsor that signs on to Website, Merit administers a financial wellness exam to all plan participants to gauge both individual and enterprise financial health. Data from the exam is used to help develop a plan for participants and for sponsors.


Sponsors may use the information to learn more about their employees and the financial conditions of their workforce and to select tools and resources for their participants, according to Merit. Participants can use Worksite’s data to better understand their own needs and to educate themselves on how to pursue their financial goals.


Most advisors aren’t equipped to offer a comprehensive financial wellness program themselves, says Kent, because they lack the resources.


“Plan advisors are watching their traditional services become commoditized. Their fees are being driven down, and it’s because the story they tell sponsors is old and doesn’t really help participants,” says Kent. “There’s really only going to be a select few people who huddle around this concept early on.”


The key to getting more advisors onboard, according to Kent, will be platforms that simplify or automate wellness programs, like Worksite.


Worksite will include a web portal for participants and sponsors, and seven full-time professionals will staff the platform to provide education and coaching.


AFS’s research found that most participants prefer to receive financial education and assistance in person, either one-on-one with an advisor, preferred by 63 percent of respondents, or in groups with an advisor, preferred by 58 percent. “The typical answer in the industry has been for the recordkeepers to offer digital tools, add on bells and whistles like calculators and questionnaires,” says Kent. “From the research that I’ve seen, very few people take advantage of those tools.” 


Advisors stand to benefit from financial wellness, too, says Kent. “This is a crisis, and someone in our industry has to stand up and provide some leadership,” says Kent. “If we don’t, we’ll go the same way as the health care industry—and who do we have running our health care plans today? Not the doctors, not the nurses.”


For its study, AFS 401(k) interviewed 1,500 U.S. workers in 2016, supplementing its results with case studies of three employers utilizing its own financial wellness services.


See original article here.

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