Financial wellness trend gives advisers an opening

Holistic tack is the next phase for employers

May 25, 2014 @ 12:01 am

By Mary Beth Franklin

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Workers have long looked to their employers to provide health insurance and retirement benefits. But as the costs and responsibility of choosing and paying for those benefits have shifted to employees, financial advisers play an important role in helping both plan sponsors and individual clients make smarter choices.

I recently participated in an Employee Benefits Research Institute policy forum on the emerging trend of financial wellness in the workplace. My fellow panelists included Liz Davidson, chief executive officer of Financial Finesse, a leading provider of financial wellness programs; and Kent Allison, national leader of PwC's employee financial wellness practice.

(Click here to access Mary Beth Franklin's new e-book, "Maximizing Your Clients' Social Security Retirement Benefits)

Both Financial Finesse and PwC recently released reports on the state of employee financial wellness, an important trend that looks beyond health and retirement benefits to the actual impact of these benefits on employees' health and wealth. When employee stress goes up, worker productivity goes down. The reverse is also true.

Earlier this year, Aon Hewitt released a survey showing that more companies plan to look for ways to improve the financial health of their workforce. Financial advisers should take note and figure out how it might fit into their practice.

Aon Hewitt surveyed more than 400 U.S. companies, representing nearly 10 million workers, and found that 76% of companies are somewhat or very likely to expand their focus on the financial well-being of their employees in 2014.

“In the past, companies were primarily concerned about whether their workers were participating in their 401(k) plans, but we're now seeing employers expand their focus beyond just retirement savings to help workers improve their overall financial health,” said Rob Austin, director of retirement research at Aon Hewitt.

“A growing number of companies are offering tools and services to help employees make smarter financial decisions which can help improve employee engagement and productivity as workers focus less on financial stressors,” Mr. Austin said.

According to a separate Aon Hewitt survey of more than 2,800 workers and their dependents, an individual's financial situation is the most commonly cited stress factor, and 51% of workers surveyed said that that stress caused them to be less productive at work.

To help workers better manage their financial health, Aon Hewitt's survey shows companies are planning to provide employees with budgeting services to help them manage their debt and encourage them to save. In addition, some companies are beefing up their advice, tools and resources to help employees examine their overall financial picture, as well as simplify their retirement plan investment options through increased use of target date funds and managed accounts.

Companies are providing these types of advisory services through a variety of channels:

• 44% of employers offer access to online third-party investment advisory services, and another 14% reported that they are likely to offer them in 2014.

• 35% provide access to third-party financial advisers via phone, and another 14% may add phone-based advice in the future.

• 23% of employers offer face-to-face meetings with financial advisers, and another 10% indicated they are likely to add this feature.

A new report from Financial Finesse found that financial stress increased significantly in 2013, with 23% of employees reporting “high” or “overwhelming” levels of financial stress, compared with only 18% in 2012 and 19% in 2011.

The report also found a shift in the causes of financial stress: Fewer employees cited external factors, such as the stock market and U.S. economy, as the main cause, and more cite internal factors, such as not having control over their finances or thinking they won't be able to meet their financial goals.

“Now that the economy has stabilized for the most part, employees are taking the opportunity to assess their situation in more detail,” Ms. Davidson said.

“They seem to recognize that they can no longer point to the stock market or the economy as the reason for their discomfort,” she said. “They're taking action to address their vulnerabilities through factors they themselves can control.”

The increase in employee stress levels is a reminder that financial education must be seen as a process rather than as an event, Ms. Davidson said. She warned that employers with ranks made up of workers facing significant stress levels risk higher health care costs and the challenges of delayed retirement.

“Employers can have a critical impact on the improvements employees make during this time of awareness, but only if they approach financial wellness from a long-term perspective,” she added.

Financial stress is not spread evenly across the three generations currently employed in the American workforce.

The 2014 PwC Employee Financial Wellness survey found that baby boomer and Gen X employees generally saw improvements in their financial wellness, thanks to market gains and improving home equity.

But many younger Gen Y employees, who are more likely to rely on current income and to have less savings, are struggling with credit card debt and student loans.

“Given the likelihood that a long and sustained economic recovery alone will not reverse the growing retirement savings deficiency, employers will need to continue their efforts to help employees become better savers and lead more financially healthy lives,” Mr. Allison said in the PwC report.

(Questions about Social Security? Find the answers in my new ebook available at for $19.95.)


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