Soni Kapoor wanted to stay ahead of his personal finances and retirement planning. As director of product marketing for Silicon Valley tech company Synopsys, Mr. Kapoor kept meticulous records of his expenses and investments in a personal spreadsheet.
Last year, however, his company offered a new benefit that simplified his financial life: a “financial wellness” program, called Luminous Plan, which allows him to keep track of his finances in one place, from pension contributions to his health savings account balances. A dashboard feature gave him access to most of his accounts with just a few clicks.
âI have attached all my financial accounts to the dashboard and I can do everything from budgeting to portfolio performance with one click,â said Mr Kapoor, 34. “I use it everyday.” Help with debt repayment or building a retirement portfolio can come from digital tools or from a professional – human advisor.
Employee financial stress is a major problem for American employers. According to a recent PwC study, 63 percent of American workers said their financial stress has increased since the start of the pandemic. More than half of respondents to PwC’s survey just before the pandemic said money was already a big constraint.
Large employers who have recognized some of these challenges, especially in areas like debt and retirement savings, have embraced and expanded financial wellness programs. A wide variety of companies, although usually the larger ones, like Delta Air Lines and SunTrust Banks, now offer such plans. Independent companies such as GO Plan101, Best money movements and Enrich build and operate well-being platforms.
More than half of companies surveyed in 2019 by the Employee Benefit Research Institute said they offer financial wellness initiatives to their employees. Another 20 percent were setting them up and 29 percent were interested in offering such programs.
A global benefits administrator, Alight Solutions, conducted a survey this year showing that about 80% of American workers have taken a specific action to better manage their money due to the pandemic, such as reducing debt or setting up a fund. emergency. This is where financial wellness programs can help.
“Last year has shown us how many people have had difficulty”, says Gretchen’s Day, vice-president of the AIA Alera Group, insurance consulting firm. âMany have had medical emergencies, student debt and caregiver issues with aging parents. Employers needed to think more holistically about these employee issues. “
The original goal of financial wellness programs was to help employees save more for retirement, primarily through company-sponsored 401 (k) plans. In recent years, however, plans have shifted from serving as a long-term savings vehicle to providing advice to employees on emergency savings and college debt, and even providing cash advances. paychecks in case of immediate need.
âMost wellness programs now offer solutions beyond advice and investment advice,â said Alison Borland, executive vice president at Alight Solutions. âThey can help employees answer the questions: How much is your budget today, how much should you save for the future, and how can you prepare for the unexpected? “
If you have a wellness suite at work, what’s the best way to use it? Ann House, Director of University of Utah Financial Wellness Center, says the first step is to ask your human resources department what the benefits are and how they work. Then assess what you need most. Do you need advice on how to reduce your debt? Are you overspending and not saving enough for your retirement?
“Few adults have budgets,” said Ms. House, a certified financial advisor, whom she had found. âOne of the foundations of financial well-being is knowing how much you need to live. It is a real revelation. “
While wellness plans offer nut soup tools for personal financial progress, there are areas where they may be insufficient. Employees may not want to share the fact that they are experiencing financial difficulties, even if the information is not shared with their employers. While it can be relatively easy to get employees to save more for their retirement under 401 (k) automatic enrollment, it is difficult to get them to cut back on spending, especially when faced with to a myriad of emergency expenses and impending debt.
Daily business briefing
âEmployers recognize that personal finances are such a private matter, and many don’t feel comfortable asking employees to share details,â Ms. Day said.
Having third-party services separates these specific issues from the employer-employee relationship. Mr Kapoor, who was concerned about privacy before enrolling, said his “employer had no visibility into my personal finances.”
“It was my very first question before even creating their account,” he added.
During the pandemic, employees needing money drawn from their 401 (k) accounts, a move that can delay retirement if the money is not replaced. âMany have used savings in the 401 (k) and the money has not returned to the plans,â Ms. Borland said. Three in 10 employees surveyed said they had withdrawn money from their 401 (k) or individual retirement accounts during the pandemic, mostly for medical bills and auto and home repairs. according to a recent poll.
Another potential downside to these employee programs is that some of the more complex issues many employees face, such as paying child care and child care expenses and estate planning, go unanswered.
âThere is not enough child care for working parents,â Ms. House said. Helping employees figure out how to pay for it “still isn’t covered in most wellness plans,” she added.
It is natural to have gaps with any digital platform when it is deployed, no matter how well the data is collected and analyzed. Mr Kapoor found that even after consolidating his financial accounts, he had to manually reestablish the connection between his BrightPlan dashboard and certain bank accounts, “which is a minor inconvenience with some accounts,” he said.
Mr Kapoor said he would also like more personalized advice from his wellness platform to allow him “to easily estimate his best estate planning needs – why and why this or other life insurance. font is right for you “.
While most wellness plans are paid for by employers, they aren’t completely free. Investment accounts for mutual funds and exchange traded funds and brokerage accounts usually have additional fees. The BrightPlan Managed Investment Account, for example, charges an annual fee of 0.25% of assets. Employees leaving the company can obtain BrightPlan services and pay for them out of pocket; the first three months are free, then $ 15 per month for the full suite and unlimited access to a financial advisor.
Despite all the new financial offerings, some parts of these programs are more popular with employees than others. As a measure of the success of employer-defined contribution pension plans (the base offering of most wellness plans), half of employees polled by Alight said “investment performance” was most important to them, while only 24% said “risk management” exceeded their expectations. priority list. As in the rest of the world of retail financial education, conveying complex concepts such as risk / reward trade-offs, post-retirement income, the impact of investment costs and estate planning is an ongoing challenge. .
How to be healthier
You may feel overwhelmed by the idea of ââdigging into your finances and you may not want to use your employer’s resources. If so, it may be helpful to use an independent, nonprofit source unrelated to your workplace. The Federal Council for Financial Consumer Protection offers a tool, which Ms. House recommends, which can help you identify what to do.
Your employer may not have a financial wellness program, so take a DIY approach. Focus on your most pressing issues. If you need debt relief, consider the association National Consumer Credit Foundation, which offers a free online assessment and referrals to consulting agencies. Also consider a certified financial advisor. References can be found through the Association for Financial Advisory and Educational Planning.
Are you considering big college loans? Consider refinancing to reduce your monthly payments. Do you want to build up a retirement plan? Many online retirement planning calculators focus on expected longevity and savings, but for a more personalized approach, you can also hire a certified financial planner, which does not work on commission but instead invoices a flat rate or a provision.
At the very least, take some honesty when creating your financial wellness plan. Are your finances hampering your ability to be productive? If so, get help. It never hurts to ask.