A Plan Sponsor Implements a Financial Wellness Program

Roy Richter, deputy inspector of the New York City Police Department (NYPD) and president of the Captains Endowment Association, is the trustee for the Senior Officers Council (SOC) Annuity Trust Fund.

It has always been important to Richter to educate plan members about the value of their financial health and how to use all of the retirement plans offered by the city to achieve financial security and, ultimately, retire well. He noticed that members were not aware of how much they had available to retire, or how much it really would require. Many were in a position of being able to retire but didn’t know it.

The plan adviser with whom Richter works, Barbara Delaney, principal at StoneStreet Advisor Group, saw an opportunity to further Richter’s mission and bring the SOC plan members a full financial wellness benefit through Financial Finesse. “Financial Finesse is one of the programs we utilize,” Delaney tells PLANSPONSOR. “It provides an in-depth way to find out the needs the program should address and to measure results.”

The SOC plan has $334 million in assets. Only the city contributes to the plan, and members are defaulted into the SOC Balanced fund which is a custom fund with a 60/40 mix of stocks and bonds; however, members can change their asset allocations. There are 1,700 active and 3,100 retired members participating in the plan.

Richter tells PLANSPONSOR, the financial wellness program started with a survey that asked plan members to rate how concerned they were with certain areas of finance. Liz Davidson, chief executive and founder of Financial Finesse, explains that the company’s model starts in the Financial Finesse online wellness center; employees can get a personal assessment about their financial priorities and vulnerabilities and on what they need to focus. From that, Financial Finesse can provide employers with a rollup of all employees that participated and identify key issues based on age and income level.

The program had a very successful launch in April 2014. Members were engaged with a personal letter from Richter encouraging them to participate in the program; posters were put in precincts throughout the city, and even put in the bathrooms of some. Active members also received an email about the program. The SOC offered an incentive of one month free rent/mortgage up to $2,000, given to one member drawn from all who completed the financial wellness assessment. This incentive was offered again this year to encourage more members to participate.

Employers use the information from Financial Finesse about the assessment to develop their financial wellness education program. When the SOC implemented its program, the data from the assessments revealed plan members were interested in college education planning and budgeting.

Delaney worked with Richter to develop workshops based on the needs revealed by the assessment. For example, in one workshop, officials from New York State and college finance product providers talked about college financial planning, the financial aid application process, preparation for entrance exams and 529 college savings plans. Richter says about 400 plan members attended and brought their children. And, even though it was a five-hour workshop, all attendees were actively engaged the whole session.

The SOC also offers a half day planning workshop for retirement, as well as workshops about budgeting and investing. They also offer some unique workshops focused on planning for life after members retire from the NYPD, which helps them with resume writing and other skills.

Richter notes one area in which the financial wellness program helped: retirement plan investing. According to Richter, plan members become overwhelmed with plan investment choices and may get too aggressive or not aggressive enough with retirement planning. They can choose from a variety of large U.S. equity funds, small to mid-sized U.S. equity funds, international funds, short-term fixed income funds, and other fixed income funds—19 funds in total. The city made available at no cost managed accounts on the Principal Financial Group platform, powered by Ibbotson Associates, so members can get personalized help with investment allocation. The financial wellness program has encouraged more members to use this tool.

Davidson tells PLANSPONSOR that in the first assessment completed by employees, 42% expressed they were comfortable with investment allocations; that increased to 52% in the second year. In the first assessment, 23% said they were prepared to replace 80% of income, or their goal, in retirement. In the second year, following the financial wellness education, that number is 36%. The most significant jump in retirement confidence was seen among members ages 45 to 54, from 25% to 52%.

Davidson also notes that more plan members are engaging in the financial wellness program. Before the education started, 252 members took the financial wellness assessment; 383 did so in the second year, and others visited Financial Finesse’s online wellness center without doing an assessment.

From his experience implementing a financial wellness program, Richter says he would tell other plan sponsors considering implementation, “An educated participant is a better employee.”