is Financial Wellness? Financial Wellness: ✓ Helps reduce financial stress ✓ Ensures employees can successfully retire on time ✓ Engages employees to help them reach their financial goals
The Promise and Potential of Financial Wellness ✓ Most EEs are awash in debt, have little liquidity and not on track for retirement. ! ✓ Multiple health plan options and the growing use of HSA plans is increasing choice and complexity. ! ✓ An EAP is not the same as Financial Wellness. ! ✓ Employers can “do the right thing” and reap the benefits of adapting a well designed financial wellness program. ! ✓ Financial wellness can be a central organizing principle.
Design Points of Financial Wellness ✓ Everyone is provided access to the service. It’s democratic and offered to all employees. ✓ The information presented is customized i.e., specific to the individual and is actionable. ✓ The information is delivered across multiple media platforms. ✓ Activities can be measured and tracked and the results reported back to clients. ✓ Each implementation is customized to the specific client. ✓ No product is sold and there are no real or perceived conflicts of interest. ✓ Participant confidentiality is strictly maintained.
Drivers What we can measure and track to assess financial wellness’ impact. ✓ Health care expenses related to financial stress ✓ Employees having to delay retirement ✓ Poor employee engagement in the DC benefit
Health Care Expenses $300 in lower health care costs for each employee who improves his or her financial behaviors and financial well-being. ! These health care savings are due to a reduction in anxiety, insomnia, headaches, and depression, as well as an inability to afford or access recommended health maintenance practices and health care services.
Employees Delaying Retirement An older workforce that cannot afford to retire will cost the employer approximately $10,000 in insurance premiums per employee per year once an employee is in their mid-sixties, when compared with an employee in their 40s. ! However, older employees are not “all downside” and the positive qualities of older workers are documented by the Department of Labor, A more appropriate employer cost should be estimated to be around 7,000 per employee per year.
Employee Engagement in DC Plan Recent research from Blackrock show a causal relationship between financial benefits, financial wellness and employee engagement with the employer. ! The more connected individuals were with retirement planning, and the better understanding they had of their plan’s design and the DC plan benefit, the higher their engagement with the employer.
using the Personal Financial Wellness (PFW) scale. ✓ PFW is an 8-item online questionnaire that in 3-4 minutes measures financial heath. ✓ PFW is a peer-reviewed, published, valid and reliable measure (over 20 years in development) with national norms. ✓ Use of PFW is free with permission. http://personalfinancefoundation.educatedinvestor.com/fss/ROICalculator/calculator.html ! Calculating ROI: PFEEF
ROI Impact: ✓ Savings from making sure employees can retire on time ✓ Savings from improving employees’ financial health ✓ Productivity from increased employee engagement
Year 1 Year 2 Year 3 Plan ROI (additional assets) $194,500 $344,100 $513,500 Employee ROI (more savings) $3,240 $5,215 $7,225 Company ROI (financial wellness) $2,080 $3,220 $4,390 Retiremap Cost $1,900 $1,900 $1,900 Year 1 Year 2 Year 3 Plan ROI (additional assets) $5,508,800 $12,137,400 $21,177,900 Employee ROI (more savings) $2,754 $3,793 $5,018 Company ROI (financial wellness) $69,315 $134,344 $204,080 Retiremap Cost $71,000 $70,000 $70,000 100 employee company 10,000 employee company
engagement in the first month 97% Feel it’s an excellent new benefit 42% iWorkshop attendees decide to increase their deferral rate by 5.7% of pay 98% Feel more engaged in the 401(k) plan 47% Requested an advisor 15% interested in auto- escalation
engagement led to… Gen X $131,000 household income $435,000 in household savings Save $1,800/month Invested in “half stocks” Credit card debt + car loan = $26,000 in debt Access + Track More impactful meetings Engage
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