Financial Wellness: Making sure your employees are financially fit which will lead to more productivity

Transcription

1 Financial Wellness: Making sure your employees are financially fit which will lead to more productivity November 2, 2017 One Hundred Northfield Drive, Windsor, CT Toll Free:

2 Introduction

3 Important Disclosure It is the role of Fiduciary Investment Advisors, LLC ("FIA") to assist the Plan sponsor with the selection of investment alternatives for Plan participants to consider and choose from (which may include specific asset allocation programs devised by FIA) and to provide corresponding general informational materials and educational sessions to Plan participants, so as to enable each participant to direct the investment selection for his/her own Plan retirement account. FIA has not been engaged to provide initial or ongoing individual personalized investment advice to Plan participants. Accordingly, no Plan participant should assume that any general informational materials or educational sessions devised and/or provided by FIA serve as the receipt of, or as a substitute for, personalized investment advice from FIA, or from any other investment professional. To the extent that any participant requires initial or ongoing personalized investment advice, he/she is encouraged to consult with the investment professional of his/her choosing. Please Remember: Past performance may not be indicative of future results. Moreover, no current or prospective Plan participant should assume that future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in any general informational materials or educational sessions (including the plan investment alternatives), will be profitable or equal any corresponding indicated historical performance level(s). Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a participant's retirement portfolio. FIA is neither a law firm nor a certified public accounting firm and no portion of this educational content should be construed as legal or accounting advice. Information sourced from Morningstar is believed to be reliable and has not been independently verified by FIA.

4 Education Provided by Fee-only investment advisory firm Independent and unbiased 100% employee-owned institutional clients $62 + Billion under advisement

5 Why Financial Wellness?

6

7 Retirement Risk: A shift in risk from DB to DC Source: MassMutual

8 Retirement Risk: Your balance sheet isn t any lighter Source: MassMutual

9 Labor Force Source: MassMutual ¹ Data Provided by The Federal Reserve, July 2015

10 Labor Force Source: MassMutual ¹ Data Provided by The Conference Board Consumer Confidence Survey

11 Labor Force Source: MassMutual

12 (a)

13 Financial Wellness: A Holistic Approach to Participant Education In addition to auto-features, plan sponsors are adopting modernized communication & education programs to promote financial wellness. Studies indicate that these programs enhance employee satisfaction, while also increasing participant engagement. A variety of strategies are being used to break down the everyday obstacles that get in the way of saving, investing, and planning for retirement. Sponsors should consider targeted campaigns, multi-media outlets, educational forums, etc. What is certain is that plan sponsors, along with their recordkeepers, play a critical role in guiding these outreach efforts. Employees want help pursuing healthy financial habits¹ 75% believe they are not financially secure 55% need help managing their finances 60% feel somewhat or very stressed about their financial situation 30% say they have an unmanageable amount of debt 69% have experienced an increase in health care costs in the past two years 52% want employers to provide access to a one-on-one relationship with a financial professional Plan sponsors should use a holistic approach to financial wellness to help their participants save for retirement and pursue financially healthy habits. Saving for Retirement Debt Management Budgeting Planning for Health Care Costs ¹Source: 2016 Bank of America Merrill Lynch Workplace Benefits Report

14 Financial Wellness: Why it Matters¹ ¹Source: 2017 Bank of America Merrill Lynch Workplace Benefits Report

15 Financial Wellness: The Bottom line 500 Employees x 21% Extremely Distracted = 105 Extremely Distracted Employees = 10 Employees Extremely x 5 Hours Per Week x 46 Work Weeks/yr = 24,150 Distracted Employees Hours Lost 6 $ $ $$$ 24,150 x $17.24 Per Hour = $416,346 Lost Hours Lost Average Wage Per Year

16 Education Consider developing an integrated and modernized communication, education and advice program geared toward promoting overall financial wellness. Participant Education Then Plan-Specific How does my Plan work? Static One-and-Done Process-Focused How do I enroll? Participation-Based Evaluation Enrollment Rates Financial Wellness Now Broad & Holistic Let s evaluate your strategy Interactive On-demand and On-going Goal-Oriented How am I doing? Outcomes-Based Evaluation Retirement Readiness

17 CPPF Managing Your Money November 2, 2017 One Hundred Northfield Drive, Windsor, CT Toll Free:

18 Today s Agenda Lesson 1 Lesson 2 Lesson 3 Lesson 4 Lesson 5 Sound Money Management Develop a Financial Plan Manage Debt Protect What You Have (not shown today) Stay on Track (not shown today)

19 Sound Money Management

20 Sound Money Management is SAVING SPENDING Financial Wellness The road to INVESTING

21 Financial Wellness is It means different things to different people because what we value is personal, but Having financial stability a sense of control over finances Living within your means not spending more than you can afford to pay back Planning ahead for short-term and longterm needs and wants Knowing what you have and what you owe

22 Where Did My Money Go?

23 Plugging Spending Leaks Track Expenses Create a spreadsheet or download a mobile app Free app = Mint or Spendee YouNeedaBudget.com Mvelopes.com Quicken (Deluxe $55, Premier $75) Drip Drip Drip

24 Fixed Variable Occasional Types of Expenses Car Loan Rent or mortgage Bus/train pass Insurance Student loans Cable/internet Subscriptions Clothing Groceries and personal items Gasoline Utilities Phone Dining out Entertainment Car oil change, tires or repairs Home repairs Insurance Property taxes Gym Gifts Vacations

25 I Don t Do Budgets Try the 2-checking account system Fixed Expenses Direct deposit exactly what you need to cover fixed expenses to 1 st checking account Variable Expenses Direct deposit the rest to 2 nd checking account for variable expenses Step 1 Step 2 This method ensures you know what s left for variable expenses allowing you to make better choices!

26 Develop a Financial Plan

27 The Value of a Financial Plan Where You Are Now and Where You Want To Be Specify your financial goals Save and invest to achieve those goals Measure progress from time to time Prepare for the unexpected Correct course as needed

28 How Do I Fill the Gap? Brainstorming Exercise Potential Reward Hard Level of Difficulty Easy Big Downsize home/lifestyle Go back to school/degree Start a business Trim fixed expenses Cut transportation costs Sell antiques/collectibles Small Do home repairs yourself Get a 2 nd job Find a roommate Clip coupons/shop sales Eat at home/bring lunch Have a yard sale

29 Simplify Your Finances Use direct deposit Automate savings Automate recurring bills Explore online banking solutions Check out high yield savings accounts at DepositAccounts.com

30 Manage Debt

31 Managing Debt means 1. Knowing difference between good and bad debt 2. Using credit wisely 3. Conquering excessive debt 4. Maintaining a good credit history

32 Use Credit Wisely Shop around for best deals at LowCards.com Understand the terms/rewards Pay off balance each month Opt out of unsolicited offers at optoutprescreen.com Check your credit score at creditkarma.com Get credit counseling if needed at Justice.gov Credit.org offers free credit counseling services

33 Conquer Excessive Debt Stop using any more credit Prioritize your debt repayments Logical: pay down highest cost debt 1 st (also known as Avalanche Method) Emotional: pay down smallest balances 1 st (also known as Snowball Method) Seek lower borrowing rates 0% offers: watch out for deferred interest charges and transfer fees Check out debt payoff calculator on bankrate.com

34 Remember These Don ts Don t shop on payday Don t shop when you re tired or hungry Don t shop without a list Try not to buy if you re in a hurry You don t have to buy it today It s not a bargain if you don t need it Don t buy if you feel pressured Don t buy because you have a coupon Don t buy a new car just because you paid off the old one

35 Questions? Thank you!