Financial wellness has become a trendy topic that suggests an in-demand status among plan sponsors and their employees. But this poses a problem: Many advisors lack familiarity with the concept and therefore might miss out on a significant opportunity where all sides benefit.
To get a better handle on how to address advisors’ specific needs in this realm, Hartford Funds partnered with Ann Schleck & Co. to research advisors, record keepers and third-party providers. The goal was to use our findings to help advisors focused on the institutional retirement plan market. As a result, they would understand the financial wellness concept, why it is trending, and why they might want to implement it into their practice.
In short, capitalizing on the financial wellness trend represents a must for defined contribution (DC) specialist advisors. But before building a financial wellness program, it’s important first to recognize what it is and why it matters. Financial wellness describes the process where one learns about, comprehends and then manages short- and long-term savings—so a person can invest in a secure financial future. Also called financial literacy, financial education or even retirement readiness, financial wellness is a benefit plan sponsors offer their employees to improve their financial behavior.
Delivery methods for this learning can include one-on-one discussions, in-person group meetings, secure website education and tools, webinars, print material and phone conversations. Much in the way that well-being programs help employees adopt healthier habits, financial wellness programs help them develop a holistic view of their finances that reduces their financial stress and inspires confidence as they reach financial goals.
Despite the benefits of financial wellness programs, a disconnect still exists between plan sponsors and how often they bring up the topic with financial advisors. Yet this also creates a potential opportunity to initiate the discussion and demonstrate care, knowledge and an orientation towards innovation. In a 2015 plan sponsor focus group conducted by Ann Schleck, all the participants said they were interested in financial wellness—yet advisors reported that on average, only 21 percent of their plan sponsor clients have asked them about financial wellness.
The onus, therefore, rests on the financial advisor to bring up financial wellness with their plan-sponsor clients, and to know how to discuss the topic in an appealing way. When talking to plan-sponsor clients about the possibility of implementing financial wellness, financial advisors should highlight the benefits.
Make no mistake: Financial wellness is wanted and needed. It generates measurable success for plan sponsors and the advisors. Advisors who fail to offer financial wellness programs might miss out on a golden opportunity to stay competitive, retain clients and gain new business. The time is now, the data speaks for itself and the next step for DC-specialist advisors is to consider how—not if—they will move forward to implement a financial wellness program. To borrow from Ben Franklin, financially healthy in this instance means both wealthy and wise.
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