Soni Kapoor wanted to stay ahead of the game on his personal finances and retirement planning. As the product marketing manager for the Silicon Valley tech firm Synopsys, Mr. Kapoor kept meticulous entries of his expenses and investments in a personal spreadsheet.
Last year, though, his company offered a new benefit that streamlined his financial life: a “financial wellness” program, called BrightPlan, that let him track his finances in one place — everything from retirement contributions to balances in his health savings account. A dashboard feature gave him access to most of his accounts with a few clicks.
“I attached all of my financial accounts to the dashboard, and can do everything from budgeting to portfolio performance with one click,” Mr. Kapoor, 34, said. “I use it every day.” Assistance on paying down debt or building a retirement portfolio can come from digital tools or from a professional — human — adviser.
Employees’ financial stress is a major issue for U.S. employers. According to a recent PwC study, 63 percent of American workers said their financial stress had increased since the start of the pandemic. More than half of respondents to PwC’s survey just before the pandemic said money was already a significant strain.
Big employers that have recognized some of these challenges, particularly in areas like debt and retirement savings, have embraced and expanded financial wellness programs. A wide variety of companies, though usually the larger ones, like Delta Air Lines and SunTrust Banks, now offer such plans. Independent firms such as GO Plan101, Best Money Moves and Enrich construct and run the wellness platforms.
More than half of the companies surveyed in 2019 by the Employee Benefit Research Institute reported providing financial wellness initiatives to employees. Another 20 percent were setting them up, and 29 percent were interested in offering such programs.
A global benefits administrator, Alight Solutions, conducted a survey this year showing that about 80 percent of U.S. workers took a specific step to better manage their money because of the pandemic, such as reducing debt or creating an emergency fund. That’s where financial wellness programs can help.
“The past year has shown us how many have been struggling,” says Gretchen Day, a vice president with the AIA Alera Group, an insurance consulting firm. “Many had medical emergencies, student debt and caregiver issues with aging parents. Employers needed to think more holistically about these employee issues.”
The original aim of financial wellness programs was to help employees save more for retirement, mostly through company-sponsored 401(k) plans. In recent years, though, the plans have shifted from serving as long-term savings vehicles to providing employees with advice on emergency savings and college debt, and even giving paycheck advances in times of immediate need.
“Now most wellness programs offer solutions beyond guidance and investment advice,” said Alison Borland, an executive vice president with Alight Solutions. “They can help employees answer the questions: How is your budget today, how much should you save for the future and how can you prepare for the unexpected?”
If you have a wellness suite at work, what’s the best way to use it? Ann House, director of the Financial Wellness Center at the University of Utah, says the first step is to ask your human resources department what benefits are offered and how they work. Then assess what you need most. Do you need counseling to reduce debts? Are you overspending and not saving enough for retirement?
“Few adults have budgets,” Ms. House, an accredited financial counselor, said she had found. “One of the foundations of financial wellness is knowing how much you need to live on. It’s a real eye-opener.”
Although wellness plans offer soup-to-nuts tools for personal financial progress, there are areas where they may come up short. Employees may not want to share the fact that they are experiencing financial difficulties, even though the information isn’t shared with their employers. While it may be relatively easy to get employees to save more for retirement in auto-enrollment 401(k)s, it’s difficult to get them to reduce their spending, especially when facing myriad emergency expenses and looming debts.
“Employers recognize that personal finance is such a private issue, and many don’t feel comfortable asking employees to share details,” Ms. Day said.
Having third-party services segregates these specific issues from the employer-employee relationship. Mr. Kapoor, who was concerned about privacy before signing up, said his “employer has zero visibility in my personal finances.”
“That was my very first question before I even created their account,” he added.
During the pandemic, employees needing cash dipped into their 401(k) accounts, a move that can delay retirement if the money isn’t replaced. “Many tapped savings in 401(k)s, and the money didn’t come back into the plans,” Ms. Borland said. Three in 10 employees polled said they took money out of their 401(k) or individual retirement accounts during the pandemic, mostly for medical expenses and auto and home repairs, according to a recent survey.
Another potential downside to these employee programs: Some of the more complex issues many employees face, like paying for elder and child care and estate planning, remain unaddressed.
“There’s not enough child care for working parents,” Ms. House said. Helping employees figure out how to pay for it “is still not addressed in most wellness plans,” she added.
It’s natural to have some shortcomings with any digital platform when it’s rolled out, no matter how good the data collection and analysis are. Mr. Kapoor found that even after consolidating his financial accounts, he needed to restore the connection between his BrightPlan dashboard and some bank accounts manually, “which is a minor inconvenience with some accounts,” he said.
Mr. Kapoor said he also would like more tailored guidance from his wellness platform to enable him to “easily estimate his best estate planning needs — what and why this specific life insurance or other policy is good for you.”
Although most wellness plans are paid for by employers, they are not entirely free. Investment accounts for mutual and exchange-traded funds and brokerage accounts usually carry additional charges. The BrightPlan managed investment account, for example, charges an annual fee of 0.25 percent of assets. Employees who leave the company can obtain BrightPlan services and pay for them out of pocket; the first three months are free, then run $15 per month for the full suite and unlimited access to a financial adviser.
Despite all of the new financial offerings, some parts of these programs are more popular with employees than others. In a gauge of how successful employer defined-contribution retirement plans are (the core offering of most wellness plans), half of employees surveyed by Alight said “investment performance” was most important to them while only 24 percent said “managing risk” topped their priority list. As in the rest of the retail financial education universe, conveying complex concepts such as risk/reward trade-offs, postretirement income, investment fee impact and estate planning is a perennial challenge.
How to get healthier
It’s possible you’re feeling overwhelmed by the thought of drilling down on your finances and you don’t want to use your employer’s resources. If that’s the case, it might be helpful to use an independent nonprofit source not linked to your workplace. The federal Consumer Financial Protection Board offers a tool, which Ms. House recommends, that can help you identify what you need to do.
Your employer may not offer a financial wellness program — so take a D.I.Y. approach. Focus on your most pressing problems. If you need debt relief, consider the nonprofit National Foundation for Consumer Credit, which offers a free online assessment and referrals to counseling agencies. Also consider an accredited financial counselor. Referrals can be found through the Association for Financial Counseling and Planning Education.
Staring down some big college loans? Consider refinancing to lower your monthly payments. Want to build a retirement plan? Numerous retirement planning calculators online are geared toward expected longevity and savings, but for a more customized approach, you can also engage a fee-only, certified financial planner, who doesn’t work on commission but charges a flat fee or retainer instead.
At the very least, embrace some honesty when creating your financial wellness plan. Are your finances hurting your ability to be productive? If so, seek some help. It never hurts to ask.
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