Financial wellness programs in 401(k)s seem to work. But few advisors and plan sponsors have the time and resources to keep up with them, so firms like Merit Financial Group are stepping up with solutions.
This month, Alpharetta, Ga.-based Merit, an LPL office of supervisory jurisdiction with nearly $1 billion in assets under management, announced that it is launching a financial wellness platform for plan sponsors and advisors.
“I feel like there’s now a clear way that we can all make a difference with a platform that listens to participants,” says Rick Kent, founder and CEO of Merit Financial Group. "They’ve been left out of the equation when we try to figure out the best way for implementing a 401(k) plan.”
The Worksite Financial Wellness Platform is a turnkey solution designed to help workers meet their retirement goals using a defined contribution plan, while helping employers and advisors track their financial wellness program’s return on investment.
Over the past few years, 401(k) sponsors, advisors and recordkeepers have moved to adopt financial wellness programs to boost participant saving rates.
“I’m hearing of this more as a growing need,” says Kent. “More importantly, we’re just now starting to see the return on investment from the first financial wellness programs, and we’re going to start seeing more interest when these results are digested.”
Mere plan participation is not enough, according to Bethesda, Md.-based retirement consultant AFS 401(k). AFS found signs of poor financial health in a recent survey of plan participants. While most contributed to their plan, 71 percent did not have a 3-month emergency fund, 62 percent were unable to pay off their credit card debt on a monthly basis and 36 percent struggled with both student loan and credit card debt.
Wellness plans attempt to address all of those problems, helping participants to pay down their debt and establish a budget to maximize their savings potential. A financial wellness program’s value proposition is that it will enhance employee productivity, reduce regulatory risk to employers and in the long run positively impact sponsors’ bottom lines.
“Wellness changes outcomes for participants, and it works when it’s done right, but the plan sponsor has to be involved,” says Kent. “That’s the challenge. There has to be enough information available to convince plan sponsors.”
Retirement researchers have found that a handful of simple, automated plan attributes, like auto-enrollment or auto-escalation for participants, greatly increases the likelihood that workers will save in their plans.