More Plan Sponsors Executing Financial Wellness Programs

Over the past couple of years, employers have shifted from developing financial well-being strategies to executing on those strategies, according to Alight Solutions’ “Hot Topics in Retirement and Financial Wellbeing 2021” report.

In 2019, 53% said they were in the process of creating a financial well-being strategy. This year, 41% are in the process of executing their financial well-being strategy, and 15% have already fully executed it.

Alight says there are four stages that people move through on their way to financial independence: security, foundation, growth and freedom. Alight defines security as the basics: understanding income and expenses, and managing debt. The foundation stage, Alight says, is establishing savings goals, and understanding investments and insurance. In the growth stage, workers are maximizing asset growth and have come to understand investment vehicles. Finally, in the freedom phase, which is when people are retired, they shift their focus to understanding Social Security options and to estate planning.

For the past few years, employers have increasingly been focusing on the foundation stage for their workers, to the point that now, two-thirds of employers say that is the stage where they are most focused.

Employers have been adding more financial well-being tools, services and education over the past few years, Alight says. Sixty-five percent offer basics on financial markets and simple investing, 61% offer budgeting sessions, 51% offer financial planning tips and 45% help their workers with debt management. Beyond that, 44% offer their workers health care education and planning, 42% give them tips on how to prioritize savings (i.e., emergency savings versus debt reduction versus retirement savings), 41% offer assistance with saving for specific life stages and 22% offer information on post-retirement programs.

Employers are also expanding their financial well-being programs to offer information and tools covering nontraditional benefits. This includes disability insurance, with 61% of employers saying they think this is a topic that should be covered in financial well-being programs. They also say financial well-being should include information on how to obtain life insurance (63%), identity protection services (33%) and emergency savings funds (28%), as well as topics such as paying off or refinancing student loans (26%) and saving for a child’s education (24%).