Worksite wellness has been a significant theme throughout 2014, particularly focused on health wellness and the extended benefits of a healthy workforce. As we look toward 2015, we can anticipate the wellness movement to continue through the expansion of financial wellness, a component of the movement specifically focused on helping individuals ease economic stress, overcome money challenges and promote financial health.
With financial stress cited as a common workplace distraction, a financially-focused wellness initiative will become a higher priority among businesses and human resource teams moving forward. For your business owner clients, adding a financial wellness component to their retirement plan fully optimizes the benefit for both employer and employees. Employers should give strong consideration to how health and financial wellness initiatives work together to create an advantage for employees – and their bottom line – when evaluating their benefits packages.
As the advisor, recognizing the financial wellness trend now can give you a head start on anticipating your client needs. As you map out what to include in retirement plans for 2015, here are three reasons why you should give financial wellness a closer look.
Employers want to see participation and you are responsible for driving it
Typically, 401(k) plan participants fall into two categories: involved and uninvolved. Involved investors comprise 15 percent of participants, who are considered sophisticated and prefer a “do-it-yourself” approach. They retain personal financial advisors to walk them through the 401(k) process and educate them about their investments. The majority of investors, however – those 85 percent – are often uninformed about their investments, making it difficult to make their own decisions, and they do not have direct access to an advisor or coach.
Still, it cannot be overlooked that those 85 percent make a big difference in plan participation numbers. Participation is important for employees’ retirement readiness, but more importantly for the business owner – your direct client – who has a vested interest in proper saving habits. Morningstar data found when employees are not saving enough, the delayed retirement costs as much as $50,000 per employee, creating quite the expense for your client. Advisors must recognize the connection between awareness and action and encouraging financial wellness initiatives helps bridge that gap.
Financial wellness works on both sides of their balance sheet (and yours)