Financial Wellness for 2019
Prior to 2019 Financial Wellness was and is a “catch phrase” and other than understanding that it meant “a better and healthier financial condition”, most people misinterpret what Financial Wellness truly is and why people should pay more attention. Over the past year I’ve had many people in both Human Resources and Finance approach me to discuss Financial Wellness or want to discuss their initiatives to providing this program to their participants (employees). My findings and opinion are the following; most people are getting it wrong, but that doesn’t mean their efforts will not help. Many of these plans are very generic and vanilla, but at least cover the key points at a high-level.
Areas that need and should be addressed in a Premier Financial Wellness Program:
- How-to Budget and Understand Where your Spending is Going.
- Investing 101 – Long-term investing, Investment Product Basics.
- 401(k) / 403(b) Plan Investment Options (specific to your company retirement plan).
- Emergency Fund – Why it is important and how to determine how much you should have.
- Education Fund – What are your options and how it should be funded.
- Tips on Paying Down Student Debt.
- Understanding the “Vicious Life Cycle”.
- How to say no to family and friends when they ask for money.
These are just some of the Sessions that Atlas provides to their clients and the areas that you need to offer to your participants (employees). These areas encompass the majority of the stress that comes with trying to achieve Financial Wellness. It is amazing and you may think it is so simple to make and adhere to a budget. You may even know exactly how much to contribute to your 401(k) plan, while most people don’t and are afraid to ask for help. Most of the time people don’t want others to know what they don’t know and financial and investment matters is right at the top of that list. It’s frustrating to talk about and discuss with a friend or family member, let alone an Advisor that you may not have a business relationship with. Many times we have found that many people get their advice and knowledge from a co-worker. On the surface that is not a bad idea if the co-worker is knowledgeable in that area, but if they don’t have an extensive investment background or know the right questions to ask you that is specific to your “Life Stage” and “Risk Profile”, they could be steering you in the wrong direction. People get alligator arms when it comes time to ask a question, but participating in a comprehensive Financial Wellness program will answer the majority of their questions.
How do you get started? If you aren’t receiving these services from your current 401(k) Service Provider or you anticipate hiring an outside group, you need to ask your group several questions about your participants (employees) that will need these services:
- Send a 5-7 Question Survey to them that is simple and quick to fill out.
- You don’t need a 10 module and 12-week program if the majority of your participants need 3-4 modules as a general consensus.
- Offer both “Group” and “One-on-one” Financial Wellness programs along with Investment Guidance.
- What type of incentives do you offer if they complete the program?
Lastly, just by offering a Financial Wellness program and filing the documentation on the offering to the participants (employees), you are satisfying your Fiduciary Responsibility. You are accomplishing this because you have documented the “offer” of education, along with financial and investment guidance.
In Summary, a good 401(k) Service Provider should provide financial and investment guidance both in group and one-on-one formats on a frequent basis. The Financial Wellness program is obviously more comprehensive and a welcomed benefit. If you bring in an outside vendor, it will cost your company money, but money well-spent if it is taken advantage of by the participants (employees). If it is included with the 401(k) Service Provider’s Investment Management fee, then you need to take advantage of it sooner than later.
Great Investing starts with Great Knowledge!
Ronald E. Lang, Principal
Atlas 401(k) Retirement Specialists
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