Bread Financial

Rebecca Moore (left), Lindsay Madaras (right); Photo by Matt Kalinowski

When T. Rowe Price was going through the request for proposals process with hopes of becoming recordkeeper for Bread Financial, the team knew immediately that it wanted to partner with the Columbus, Ohio, financial services company.

Shaun McCloskey, relationship manager at T. Rowe Price, describes his future client’s retirement team as “passionate, knowledgeable, forward-thinking and just great people.” The recordkeeper was hired last September and then worked alongside BrightPlan, Bread Financial’s financial wellness partner since 2021, to help the sponsor implement sweeping changes.

Switching recordkeepers was one step the firm took last year to completely overhaul its 401(k) plan to address a gap in its associates’ retirement saving.

Over a quarter of Bread Financial’s associates were saving nothing for their retirement, and they were stressed about their finances. In a survey, half of the associates had said they felt “very” or “extremely” stressed on a typical day, money being the top reason.

To start, the team moved the 401(k) plan under the company’s internal LivingWell umbrella. The holistic wellness program was already well known to associates, but the 401(k) plan had been separate. “We didn’t want the 401(k) to be a typical corporate benefit,” says Lindsay Madaras, senior manager, associate well-being at Bread Financial. “Our associates know and trust the LivingWell brand, so we incorporated the 401(k) into that program.”

For another important change, Bread Financial adjusted its match, previously 100% of up to 5% deferred. A year ago January, the company moved to a 50% match of up to 6% and added a 3% nonelective employer contribution.

Further, the company removed the six-month eligibility waiting period and began covering the plan’s recordkeeping fees. It already offered a self-directed brokerage account option.

Madaras says she believes the 3% nonelective contribution makes the 401(k) plan “inclusive for all associates” and that it nudges nonparticipants into the plan to help set a foundation for retirement. When associates receive communications about the free-money deposit, she says, they are also being reminded that the company offers a match. This can “inspire” them to start contributing a portion of their own pay toward retirement, she adds.

In tracking participant outcomes, T. Rowe Price noted that participation had grown significantly since last September. At year-end 2022, participation had hovered around 64%.

“When I think of their program, it’s extremely comprehensive, well thought out and very pro-associate,” McCloskey says. “And their marketing to associates is second to none.” With participation up, the sponsor wants to keep the associates invested. The firm has thus expanded its relationship with BrightPlan for financial wellness solutions, including free advice from a certified financial planner, and a survivor support benefit.

—Corie Hengst