Plan sponsors, record keepers struggling to measure success of financial wellness programs

A new report from Cerulli Associates finds determining ROI is preventing successful implementation of financial wellness initiatives

Aug 8, 2019 @ 4:55 pm

By Ryan W. Neal

Record-keepers and retirement plan sponsors are struggling to measure the success of new financial wellness programs, according to a new report from research and consulting firm Cerulli Associates.

Financial wellness programs go beyond traditional retirement savings accounts by offering plan participants holistic financial advice on such issues as budgeting, debt management and health-care expenses. It has become an increasingly popular method over the last decade for companies to differentiate in a crowded retirement market, especially to help baby boomers ill-prepared for retirement or millennials struggling with student loans.

Recommended video: Retirement advisers can boost business by focusing on participants in these ways

But implementing these additional services can be expensive for record-keepers and plan sponsors, and many firms are having a hard time justifying the cost.

Ten percent of firms don't measure the effectiveness of financial wellness programs, while another 5% said they lack a method of determing whether a program is successful. Without a way to measure a return on the investment, financial wellness programs can be criticized as marketing gimmicks by senior management, said Cerulli managing director of U.S. research Bing Waldert.

(More: Convergence of retirement and wealth management is next 'battleground')

One plan sponsor states that ROI is a significant barrier to implementing new benefits programs," Mr. Waldert wrote in the report. "They add that initiatives related to emotional well-being are particularly difficult to justify from a financial perspective."

He recommends firms collaborate with plan sponsors to determine specific goals for a financial wellness program and a reasonable timeframe for achieving them.

Providers should also share data with plan sponsors on how participant behavior is changing over time, Mr. Waldert said. For example, Financial Finesse published a case study showing employees who participated in a financial wellness program made significantly greater contributions to their 401(k) plans and health savings accounts over a five-year period.

(More: Here's where elite 401(k) advisers are focusing their energy)

Case studies like these are "instrumental in demonstrating the value of a financial wellness program and setting expectations for plan sponsor clients," Mr. Waldert said in the report.

More subjective goals like improving financial literacy or decreasing employee stress are much more difficult to quantify, but still worthwhile.

"One provider described establishing correlations with workplace productivity measures as the 'holy grail' for financial wellness programs," Mr. Waldert said.

One option is to track participant behavior on a recordkeeper's digital platform. User engagement on the website can give insights into how employees are feeling. Providers can also work with retirement plan advisers to manage relationships and consolidate data.


What do you think?

View comments

Recommended next


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print