Employers are “embracing benefits planning and combining traditional benefits communication with financial planning to help employees,” Liz Davidson, CEO and founder of Financial Finesse, said in a webcast on Tuesday.
One of the most common questions to Financial Finesse’s employee hotline is how the Affordable Care Act will affect employees, Linda Robertson, a senior financial planner at Financial Finesse, said on the call.
Robertson said that as a result of the ACA, one in four companies are predicting an increase in premiums in 2013. “The good news is that there is an expanded focus on wellness incentives, and a full one in four companies are actually predicting an increase or more of a focus on expanding their wellness incentives.”
“Over the last few years, there’s been a huge increase in premiums, over 131% for family coverage,” Robertson said. Historically, 66% of employees had access to employer-sponsored health care coverage, now that’s fallen to 63%.
Another common question is on target-date funds and managed accounts. “Employees are not recognizing that the TDF itself is a vehicle for allocating assets appropriately. It’s far too common that they will choose the target-date fund among other investments and end up with an allocation that can be very different from what they were expecting or hoping for based on their risk tolerance,” Davidson said. “Employers are really struggling with striking a balance between making these options available, especially the managed accounts, and making sure they’re not overpromoted or that employees are unaware of the fees associated.”
Davidson stressed that employees are very engaged and responsive with the benefits process and more likely to make behavioral changes if it “starts with them.” She noted that employees have been demonstrating for several years that they can’t depend on their employers for financial security and that they have to take responsibility for it. “We’ve been seeing increasing recognition of that fact, but this recent quarter, Q1 2013, we really saw a tipping point in terms of employees embracing this idea, not only accepting that their employers aren’t going to completely take care of them, but embracing the idea that this is in their control.”
Another indication that employees are shouldering more responsibility for their financial situation is their use of wellness programs. “Among a stable client base, we’ve seen double the utilization of our financial wellness programs.”
Davidson added that there are “plenty of workplaces” where the majority of workers are using financial wellness tools on an ongoing basis. “That was unheard of a decade ago. A decade ago, utilization, if you were lucky, was five to 10% of employees.”
Long-term behavior has yet to be changed substantially, though, Davidson acknowledged.