“If you’re a CFO and you’re in charge of a company’s balance sheet, the biggest top-of-mind cost that you need to mitigate is health care,” Delaney says. “It’s no secret that older employees are more expensive to insure than younger employees. When you have an aging workforce unable to retire, what’s that going to do to your health-care costs?”
When addressing a human resources or benefits representative, advisors can argue that a lack of financial wellness contributes to employees’ stress, which impacts job performance, absenteeism and productivity.
Stress also increases health-care costs when employees visit the doctor for headaches, chest pain and even stress-exacerbated back pain and toothaches. Within employee families, a lack of financial wellness is linked to childhood diabetes, obesity and asthma, says Delaney, all of which eventually have a negative impact on a plan sponsor’s bottom line.
Delaney describes it as a missing link in retirement plan enhancement—while auto-enrollment increases plan participation and auto-escalation increases the amount that participants save within the plan, financial wellness addresses financial literacy and external priorities that may compete with saving and planning.
Delaney says that some advisors are offering wellness programs pro bono to their plan participants because it has led to new clients and increased assets among current clients.
“Some are charging a flat fee, but some are simply just adding it,” Delaney says. “They say that new business is showing up at their door because they’re credible on insights with respect to financial wellness. They’re the only advisor in their area who can talk to people about this topic.”
In other cases, plan sponsors and advisors may prefer wellness programs provided by a third party.
“The more robust offerings may go beyond what an advisor has [at] their fingertips,” Delaney says. “They’re going to cost more, too. The direction is going to depend a lot on what the advisor is willing to offer, and what the sponsor wants to do. Some sponsors really want to champion this beyond what most advisors are going to be able to do.”
According to Delaney, financial wellness programs can take two or more years to have a significant impact on employees, but the majority of existing programs have been around for three to five years at most.
One of the major outstanding issues with financial wellness programs is how new they are within the retirement plan space, explains Delaney. It’s difficult to know their true effectiveness because there are few case studies looking into them.