PSNC 2018: Health Meets Wealth

According to Nathan Voris, managing director for business strategy at Schwab Retirement Plan Services, and Michael Kane, managing director of Plan Sponsor Consultants, there is an increased recognition among employers that employees’ stress about debt and finances can be just as detrimental to physical health and job performance as a serious illness.

The pair shared their outlook during a panel discussion on the final day of the 2018 PLANSPONSOR National Conference, held last week in Washington, D.C. As Voris and Kane explained, the vast majority of retirement plan officials they speak with feel financial stress is significantly impacting participants’ daily lives, diminishing their ability to plan effectively for retirement and resulting in a lack of productivity.

To combat the challenge, employers are looking for new ways to help employees with monthly budgeting, planning for college savings or medical costs, and reducing debt.

“All of these are crucial and interrelated financial decisions, and they should have an impact on what health care plan employees select,” Voris observed. “It really doesn’t make sense from the participant perspective to bifurcate these issues, health and wealth. And from the employer’s human resources perspective, these two subjects must be linked for effective service.”

Kane agreed, observing that one important purpose of offering more holistic benefits and education that links health and wealth concerns for employees is that it “prevents the 401(k) plan from being treated like a checkbook.”

“There a numerous academic studies out there demonstrating the various ways financial stress impacts productivity and absenteeism, leading to delayed retirements,” Kane said. “Just take the prevalence of 401(k) plan loans for people with less than $60,000 per year in income—it’s something like 60% or more. The statistics show the wellness need is huge.”

Voris and Kane noted that retirement plan recordkeepers and advisers each can help plan sponsors build a plan for better linking health and wealth topics.

“A big part of this effort will be building out a marketing plan,” Kane suggested. “We have seen plan sponsors have success getting participants to go through education modules or take specific actions by using gift card giveaways, for example. What is the most impactful thing you can do? Have your CEO write a letter directly to employees and explain why this is important and that employees’ physical and financial health are valued. If this is tied to a digital rollout it can be incredibly powerful.”

Voris added that “picking goals and metrics for measuring the performance of any new programming will be very important.”

“When it comes to setting goals and designing a strategy, I always recommend starting with the data and bringing together the stakeholders,” Voris noted. “This will include the recordkeeper, the health care provider, and maybe even your insurance providers as well. The goals, strategy and time frame are different for everyone, so getting the objectives set and mapping out the required data is key.”

Kane concluded that “the use of an adviser or coach is huge here.”

“In our experience, the adviser will be critical in getting these programs created and actually rolled out,” he said. “You may also consider integrating the efforts of customer relationship managers from the recordkeeper for the financial wellness topic.”