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Moving Forward on Financial Wellness

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What You Need to Know

  • The pandemic has hit some American workers hard.
  • It’s helped give other workers more flexibility, by reducing their spending.
  • One possible solution: Employers could offer more holistic, personalized financial wellness programs.

As professionals in the financial services industry, many of us have devoted our careers to helping individuals attain financial peace of mind and retirement security — and the benefits that go along with it. The pandemic, though, has cast this work in a new light, invigorating individual Americans’ interest in financial preparedness and highlighting the connection between holistic financial wellness and overall physical and emotional wellbeing.

This is an important moment in time and opportunity for our industry and the Americans we serve, as we help to guide those who have just experienced, first-hand, the complex and unexpected path life can take. As we engage in this new environment, it’s important to understand individuals’ unique and varying needs and challenges, and to consider the ways legislation and employer relationships can positively impact and further our work.

The Current Environment

The pandemic reset the financial priorities of American workers in profound ways, contributing to the emergence of two distinct post-pandemic scenarios.

In the first, we’ve seen an increase in financial stability. These individuals, who may have had retirement preparation plans in place for some time, likely didn’t experience job loss and saw a shift in discretionary spending as a result of traveling or eating out less. About 4 in 10 Americans say they have been spending less money than usual since the pandemic began, according to a March report from the Pew Research Center.

The second scenario involves those who may have experienced job instability or been hit hard by the cost of medical or other expenses. They are feeling less financially stable.

According to the Employee Benefit Research Institute 2021 Retirement Confidence Survey, 6 in 10 workers who experienced income or job loss say the pandemic has had a negative impact on their ability to save for retirement, compared with just 1 in 8 among those who did not; 17% have pushed back their planned retirement date as a result of the pandemic and its economic impact.

Addressing Individuals’ Challenges

The widely varying experiences of these two populations confirms what we’ve always known to be true: that no individual experiences life in the same way, regardless of situation or demographic.

As recordkeepers and financial professionals, we must recognize that the path to financial wellness, as well as the end goal, will be different depending on the individual. Still, meeting each individual where they are, and providing the tools and resources they need to get to the next step — whether that’s creating a budget, exploring insurance or long-term care protection products, or implementing a decumulation strategy — will be essential in helping American workers continue to feel more confident.

Our approach must also go beyond the bank account and retirement plan and consider the critical role physical and emotional wellness play in overall financial wellness. These concepts are intrinsically tied and neglecting one in favor of the other impedes holistic wellness.

Employers’ Stake in Holistic Wellness

Some of us started as children feeding pennies into the piggy bank, then had a long gap in meaningful financial knowledge action until adulthood. For many, the workplace is the frontline for financial education, and it may even be one of the only places where adults receive financial guidance.

Employers, along with the financial professionals that guide them, will continue to play an increasingly greater role in helping employees strengthen their financial foundations, through a variety of avenues including robust plan design and holistic financial wellness education resources that motivate and guide decision-making, goal setting and prioritization. At OneAmerica, we work with plan sponsors and their advisors to offer a persona-based approach to participant education that focuses on the uniqueness of each individual’s journey. Materials cover the basics, advanced topics and everything in between, and allow individuals to make the most relevant connections.

The promising news is that employers understand the important role they play; 62% of employers feel “extremely” responsible for their employees’ financial wellness, up significantly from 13% in 2013, according to Bank of America’s 2020 Workplace Benefits Report.

Also, of great significance is how employers remained committed to providing retirement plans and plan contributions for employees, despite the economic strains of the pandemic.

More than 90% still made their retirement plan contributions in 2020, according to the Plan Sponsor Council of America’s November 2020 snapshot survey.

Additionally, more than half of the responding plans allowed Coronavirus-related distributions, and nearly a third allowed increased plan loan amounts. Half also allowed participants to pause the paydown of existing loans that were due through Dec.1, 2020, and defer payments for up to a year.

These critical provisions were a safety net for many participants, but also reinforce that employers understand the importance of financial wellness and the positive impact it has on both individual workers and business as a whole. Employees who are less stressed about financial, physical and emotional health are more focused, present and able to contribute to business success. This is a significant concept, considering data from the 2021 PwC Employee Financial Wellness Survey, showing that nearly two-thirds of full-time employees say their financial stress has increased since the start of the pandemic; this has an impact on productivity, with 45% saying finances have been a distraction at work, as well as retention, with 72% indicating they would be attracted to another company that cares more about their financial well-being than their current company.

Legislative Impact

Financial wellness has also continued to gain ground legislatively.

There are many strategic approaches and thoughtful suggestions being put forth by the industry as a whole. Our colleagues at the SPARK Institute, for example, are advocating for sensible changes to federal rules and legislative and regulatory solutions that improve employees’ financial wellness through policies that support an employee’s participation in retirement planning while also meeting current financial obligations; integrate student loan repayment solutions into workplace savings plans and advance emergency savings solutions to address the economic needs and concerns of employees; enhance access to financial wellness programs inside and outside of retirement savings plans; and expand workplace savings programs to include other non-retirement savings priorities.

These, and other efforts in place, will continue to advance our work, our industry, and ultimately, the financial wellness of the American workers we serve. As financial professionals, plan sponsors and industry influencers — we’ll move forward together.

(Image: alphaspirit/Shutterstock.com)


Sandy McCarthy (Photo: OneAmerica)Sandy McCarthy is president of retirement services at OneAmerica.