Participants June 1, 2017

Finances Stressing Workers Out

A survey definitively found that employees want and expect their employers to help them manage their finances.
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Fifty-six percent of employees are stressed out over their financial situation, Bank of America Merrill Lynch found in a survey. This is causing people to spend a median of two hours a week, or 100 hours a year, parsing over their finances while at work. Millennials spend an average of four hours a week on their personal finances; Gen X, two hours; and Baby Boomers one hour.

Among the 56% who say they are financially stressed, 53% of them say it is interfering with their ability to perform their job. Bank of America Merrill Lynch believes the solution to this is for employers to offer formal financial wellness programs, so that their employees can get their financial houses in order.

“Stress over personal finances extends into the workplace, impacting employees’ productivity, health and overall well-being,” says Lorna Sabbia, head of retirement and personal wealth solutions at Bank of America Merrill Lynch. “This confirms our dedication to working with employers to help employees navigate financial concerns and improve their financial wellness.”

One dichotomy that the survey found is that, while many employees are financially stressed, 87% are optimistic about their financial future. The top three reasons for this optimism are living within their means (51%), being in good health (49%) and having a well-paying job (45%).

However, even optimistic employees have concerns, particularly women. Among all employees, the top concern is running out of money in retirement, cited by 64%. The next concern is having to work longer than they had hoped for, cited by 61% of women and 51% of men. That is followed by not being able to work due to a serious illness (58% of women and 52% of men), not being able to pay for a child’s education (57% of women and 52% of men) and losing their job (45% of women and 46% of men).

NEXT: Life events
 
The 1,200 people who were polled said that certain life events impacted their finances, most notably buying a home (22%), losing a job (18%) and dealing with a serious illness (9%). When asked how they would deal with these challenges, more than half said they would have saved more money. Bank of America Merrill Lynch, in its “2017 Workplace Benefits Report,” says that “taking the time to educate employees about the potential impact of major life events can help them better prepare and estimate the financial impact of future events and potentially minimize the impact on other aspects of their lives.”

Another source of financial stress for employees is managing health care costs. Seventy-nine percent of employees said they dealt with rising health care costs in 2016, up from 69% in 2015. These significant costs are causing 72% of women and 59% of men to spend less on recreation or entertainment, and 63% of women and 62% of men to curtail their retirement savings. 

“Managing health care costs and retirement savings go hand in hand and can exert significant influence on each other,” Bank of America Merrill Lynch says. “As employees start to save less for their future needs to cover their health care costs today, their ability to fund the future and retirement they envision is placed at risk.”

NEXT: Looking to their employersThe survey definitively found that employees want and expect their employers to help them manage their finances, with 50% ranking retirement savings as the top priority. Other concerns vary by age, with Millennials and Gen X also being interested in good general savings habits and paying down debt. Baby Boomers are also interested in planning for health care costs and paying down debt.

Forty percent of employees of all ages would like their employer to bring in financial professionals to provide education. An even greater percentage, 86%, said they would participate in a financial education program if their employer made it available. 

“Employers can be a powerful resource in helping employees pursue their financial goals beyond retirement and reduce the financial stress they are feeling,” Bank of America Merrill Lynch says in its report. “Making slight changes to retirement plan design and offering access to an action plan can help employers establish a culture of financial wellness that can help reduce employee stress, help employees save more for retirement and help put them on a path towards retirement success.”

The Bank of America Merrill Lynch 2017 Workplace Benefits Report can be downloaded here.
Participants June 1, 2017

Technology Reshaping Participant Communications

A new study finds plan providers are turning to cloud-based technology and other solutions to enhance targeted communications toward different age groups.
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The retirement savings gap in America stands at $7 trillion, according the latest research by Broadridge Financial Solutions. The firm also finds that 45% of working American households have no retirement assets at all. But even when offered workplace retirement plans, several employees aren’t contributing.

To address these issues, Broadridge finds several providers are reimagining targeted participant communication by leveraging data analytics, participant preferences, and multimedia campaigns.  

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The firm notes that providers are moving away from costly “legacy platforms” that rely heavily on custom coding to modify campaigns, as well as on IT support. Instead, providers are finding value in cloud-based technology that allows managers to streamline content and easily make changes across multiple communication channels including digital, mobile, and print.

With that said, it’s important for employers to understand the participant demographics and demands of their workforce in order to create or improve segmentation programs.

According to the U.S Bureau of Labor Statistics, Millennials make up more than one-third of the American working population. That figure is expected to jump to 50% by the year 2020, making this generally tech-savvy generation the fastest growing cohort. Still, there are more than 60 million Gen Xers or those born between 1965 and 1979 in the workforce. And people are staying there longer. Today, a record number of Baby Boomers older than 65 are still working, with 12% reporting they don’t plan to retire at all. More than 30% of those between the ages of 65 and 74 expect to still work in 2022.

“You have to communicate differently to each one of those groups,” says Tim Slavin, senior vice president, Retirement at Broadridge Financial Solutions. “People want to be able to be communicated to in a way that’s easy for them. They may not want just an email and they certainly don’t want just paper. But they do want to get information that’s more meaningful to them and matters to their age group.”

He tells PLANSPONSOR that multi-channel communication strategies should revolve around segmentation of different plan populations based on various factors such as communication preferences and the type of information they seek, whether it be current plan health or ways to generate retirement income. 

“Millennials may get documents talking about the challenges of having a long life ahead of them,” he explains. “And while retirement may seem like it’s 40 years away, the only way they’re going to be able to retire is to start planning now.” In such a case, younger participants may be encouraged to save more if they see digital, yet simple, graphics depicting what they could be generating by increasing contributions by even a small amount.

“That’s not the same thing someone who is 65 and still in the plan would be getting,” says Slavin. “That person may be looking for information on how to turn their savings into retirement income.”

Of course, a big part of developing these campaigns would rely heavily on the strength of a provider’s analytics capabilities. For example, Slavin points out that plan sponsors would be particularly concerned with identifying participants who are not contributing enough. Messaging targeted at this group could revolve around several key points like the amount they could potentially earn if they were to increase savings rates by a certain amount, what they could be missing in company matches, or whether they are eligible for perks like being able to make catch-up contributions. However, this kind of communication needs to be ongoing.

“One reminder is not enough,” suggests Slavin. “It’s something I think needs to be delivered quarterly or twice a year. Because inertia can slow people down, it has to be a little more aggressive to make sure participants continue to contribute.”

Furthermore, strong data analytics can offer insight into intricate participant details such as how often they engage with plan information, and even when they consume it.

“People get the information when they want to get it,” says Slavin. “They don’t want to wait for their paper to arrive.”

NEXT: Benefits of a Strong Communications Strategy

According to its internal data, Broadridge says participation can increase 30% by effectively delivering personalized communication through multiple channels. Moreover, the firm writes that a “hybrid approach of digital, print and personalization strategies can save between 10% and 20% in annual communication costs.” Its research also indicates that open rates in well-targeted email campaigns exceed 22%, especially among people between the ages of 18 and 34.

Furthermore, Broadridge points out that online microsites and opt-out programs for participants can reduce the need for call center support while keeping print material focused on only the main points. In its study, it found that only 7% of participates chose to opt-out of a program when presented with a microsite, where they needed to opt-out by clicking a button reading, “I will not accept free money.”

To evaluate existing and new campaigns, Broadridge recommends rating them on a series of score cards based on factors like cost efficiency, communication effectiveness and overall outcomes.

Fortunately for plan sponsors, it seems technology in this space is quickly becoming more sophisticated.

“I’ve been in the industry for a very long time and I’ve never seen such activity around communications as I have in the last 18 months,” says Slavin. “Delivery of information is changing and we see it in the retirement communications space also.”

“Transforming the Participant Experience: Innovative Strategies for Improving Outcomes” by Broadridge Financial Solutions can be found at Media.Broadridge.com.

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