Workplace Financial Wellness What Employees Want and Need. CUPA-HR NNE Chapter Fall Conference November 5-6, 2015

Transcription

1 Workplace Financial Wellness What Employees Want and Need CUPA-HR NNE Chapter Fall Conference November 5-6, 2015

2 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.

3 Material Presented by Mary Legg, CEBS, CFP Financial Educator Mary leads the firm s participant education initiatives. She is a Certified Employee Benefit Specialist (CEBS) and a Certified Financial Planner. Mary has over 25 years of experience in the private sector managing corporate employee benefit programs, including managing corporate defined benefit and defined contribution retirement plans (qualified and non-qualified). She works with FIA s clients to design and deliver education programs to meet their retirement plan and financial wellness goals. Prior to joining FIA, she was Director, Global Benefits for Waters Corporation, Stream Global Services, and Teknor Apex. Education/Credentials: Assumption College, BA Mathematics (Summa Cum Laude) IFEBP, Certificate in Global Benefits Management Center for Creative Leadership, Women s Leadership Development Program Bryant University Executive Development Center, Certificate in Financial Planning IFEBP and the Wharton School of the University of Pennsylvania, CEBS Certified Financial Planner Board of Standards, Inc., CFP mlegg@fiallc.com

4 TODAY S AGENDA 2014 Stress in America Survey What is Financial Wellness? The Value Proposition How to Get Started FIA s RetirementSUCCESS Services

5 Stress in America Today 5

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7 Participating with Poll Everywhere How to vote via text messaging From any browser From a text message Standard texting rates apply It may not be free if you don t have a texting plan CODE (e.g ) Your phone number is completely private You will text the code that corresponds with your answer to 22333

8 Live Polling Question #1 How many of us are stressed over personal finances at least sometimes? Text to now 1 out of every 4 Americans (346497) 2 out of every 4 Americans (346498) 3 out of every 4 Americans (346499) 4 out of every 4 Americans (346500) 8

9 Why Financial Wellness Money worries could have a significant impact on American s health and well-being 72% of adults stressed over financial worries at least some of the time 26% report feeling stressed most or all of the time, and 22% experience extreme stress With almost 3 out of 4 adults feeling stressed sometimes, it s inevitable personal money worries find their way into the workplace each and every day 71% of parents and 70% of Gen Xers say they have just enough or not enough money to make ends meet SOURCE: 2014 Stress in America Survey, American Psychological Association 9

10 Stress in America Today Key Findings from 2014 APA Survey Top 3 sources of financial stress: 1. Unplanned expenses 2. Paying for essentials 3. Saving for retirement For those living in lower-income households, both finances and stress about money stand in the way of a healthy lifestyle SOURCE: 2014 Stress in America Survey, American Psychological Association 10

11 Effects of Stress Lack of motivation, irritability, anger Headaches, depression, anxiety, digestive tract problems Muscle tension, neck and lower back pain Sleeplessness, fatigue, trouble concentrating Absenteeism and turnover Poor performance Accidents and injuries Physical and mental disabilities Delayed retirements Theft and embezzlement Violence 11

12 Costs of Stress Over $300 billion annually (American Institute of Stress, 2015) $5,000 PEPY (Federal Reserve Bank of Kansas, 2010) Up to $15,000 per affected employee per year (Financial Literacy Partners, LLC, 2005) 20 hours PEPM (AmEx Guide to Workplace Financial Education and Advice, 2004) More loans and hardship withdrawals Lower participation and savings rates 401(k) discrimination issues Limited HCE tax deferral Auto enroll/increase or safe harbor match = $$$ 12

13 Hypothesis: If financial worries are #1 stressor, then isn t it logical that financial wellness should be a key component of any workplace wellness program? 13

14 What is Financial Wellness? 14

15 Sound Money Management is Knowing how to plan, save and invest your money so that you can successfully work toward achieving your financial goals Budgeting Credit report and score management Debt management Financial goal setting Asset protection Savings and investments Retirement and health care planning 15

16 Financial Wellness is Subjective, but Sound money management (holistic and comprehensive) Preparing for the future= being able to pay your bills with some left over to save for short- and long-term goals Financial stability and a sense of control Process not an event One size does NOT fit all 16

17 Financial Wellness in Context SOURCE: The MetLife Study of Financial Wellness Across the Globe,

18 The Value Proposition 18

19 The Value Proposition For Employees Awareness of financial situation Improved financial decision-making Decreased stress and improved health Job satisfaction and engagement Improved credit scores and decreased debt Increased confidence about retirement planning 19

20 Live Polling Question #2 Employees want their employers help with personal finance matters. Text to now True (346491) False (346492) 20

21 What Employees Need 2013 BoA Workplace Benefits Report Source: Bank of America Merrill Lynch Workplace Benefits Report, June

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23 The Value Proposition For Employers Lack of knowledge Bad decisions Personal finance education More knowledge More knowledge Better decisions Better decisions Better financial outcomes Better financial outcomes More productive workers & reduced fiduciary liability Increased productivity Good for the bottom line & reduced liability 23

24 It s Good for the Bottom Line 70% of American workers are not engaged or actively disengaged and are less likely to be productive Disengaged employees cost the U.S. between $450 and $550 billion each year in lost productivity --Gallup s 2013 State of the American Workplace survey Source: Bank of America Merrill Lynch 2015 Workplace Benefits Report 24

25 Changing the Conversation Oftentimes, we make the benefit program the focus of education Employees may miss out on important benefits offered More comprehensive financial education programs can provide employees with important context about the value of their benefits and how to optimize them In addition to providing the required information, employers have a real opportunity to do more If employers can do a little more to engage employees, employees may have a better chance of moving toward financial wellness 25

26 Promising Workplace Practices Education and Support Attitudes and Feelings Financially Healthy Behaviors 26

27 Live Polling Question #3 Percentage of employers offering financial wellness benefits to their employees. Text to now 20% (346501) 40% (346502) 60% (346503) 27

28 What Employers Provide 28

29 Best Practices in Workplace Financial Education Comprehensive entire financial picture Dynamic no two of us are the same Easily accessible when and how it s convenient for me Personal shift the focus from the technical and mechanical Relevant adults only listen if it s a problem they need help with Two-way offer one-on-one guidance if possible On-going needs change over time Actionable simplify the decision-making process 29

30 Promising Practices A PFEEF Exemplary Employer Who: Why: How: What: CF Industries Help employees in crisis and those in need of retirement and investment education Partnership with financial experts at EDSA Group Top quality financial education programs Solution: Live after-hours workshops, one-on-one meetings during work hours, and access to comprehensive online tool Result: Participants highly value the education they receive and attribute positive changes in behaviors to the program Source: PFEEF s Exemplary Employers, pfeef.org 30

31 Promising Practices A WLIFE Award Winner Who: Why: How: What: NYSE Euronext Educate employees about personal finance, increase financial literacy and preparedness, and decrease financial stress Partnership with financial experts at Vanguard and MetLife Full range of information and tools Solution: MoneySense website, youth mentoring programs, developed free toolkit for other employers Result: 1 of 9 firms chosen due to results, innovation, effective tactics and a significant scope in increasing employee financial wellness Source: Workplace Leader in Financial Education, AICPA,

32 Promising Practices A MetLife Case Study Who: Why: How: What: EMC Attract and retain the best employees and keep EMC positioned as an employer of choice Integrated financial and physical wellness platform Cutting-edge HR information technology Solution: WealthLink individualized site with personalized, actionbased tools to understand, model and optimize their EMC compensation and benefits Result: Employees who use WealthLink make better long-term financial decisions SOURCE: The MetLife Study of Financial Wellness Across the Globe,

33 Promising Practices A Partnership Approach Who: Why: How: What: Aetna Employee questions to the 401(k) call center indicated stress over finances; increased withdrawals Start out slow Wellness assessments, counseling, workshops and webcasts to targeted employees, 5 minute videos Solution: Grow Your Money program with Financial Finesse; planners on-site 2-3 days per week Result: 88% of program participants have taken at least 1 step to improve their finances; 66% have taken 2 or more steps Source: What s Working, Benefits Magazine, Sept

34 Promising Practices A One-on-One Approach Who: State of Delaware Why: How: What: Develop state-wide program for employers in sectors that traditionally hire lower-wage workers Support employees need for complete confidentiality as they tackle personal financial challenges One-on-One financial coaching Solution: $tand by Me a joint venture with United Way and private foundations; coaches employed by independent, non-profit organizations; employee incentives for financially healthy behaviors through FinFit program Result: Now serving 1,200 employees at 50 different employers Source: CFPB s Financial Wellness at Work, A Review of Promising Practices & Policies, Aug

35 Promising Practices A Technology Approach Who: Why: How: What: Staples Very low 401(k) participation rates; executives concerned employees giving up free money Adaptable enough to be delivered effectively in different work settings on a global basis Basic financial management skills Solution: Bite Club a video game where employees get to manage a nightclub for vampires, while competing against other employees and other regions Result: 80% engagement Source: CFPB s Financial Wellness at Work, A Review of Promising Practices & Policies, Aug

36 How to Get Started 36

37 Leverage Existing Benefits 37

38 It s Not Just an Employer Issue National Financial Literacy Resources US Treasury: FDIC: FRB: FTC: NEFE: AICPA: EBRI: EBSA: MyMoney.gov Money Smart (fdic.gov) FederalReserveEducation.org ConsumerFinance.gov MyRetirementPaycheck.org SmartaboutMoney.org FeedthePig.org 360FinancialLiteracy.org ChoosetoSave.org DOL.gov/savingmatters 38

39 Considerations Survey employees Be creative how will you differentiate? Plan a Financial Wellness or Financial Resources Day Consider financial wellness champions 39

40 FIA s RetirementSUCCESS Services 40

41 Client Case Study Background Large university located in Queens, NY 1,300 employees 403(b) plan with university match Client s education needs and goals: Managing day-to-day cash flow (consumption today vs. saving for tomorrow) Establishing a rainy day fund for emergencies Saving for multiple priorities Using credit cards wisely & managing debt Protecting income in the event of injury/illness Protecting what you have from identity theft/fraud 41

42 Client Case Study Solutions Financial Wellness Week 2 days: 3 group sessions per day to accommodate faculty schedules Managing Your Money workshop (60 minutes) 2 days: one-on-one personal financial coaching appointments 30 minutes each SUCCESS measured on: Increased financial awareness (simple and relevant) Quality (practical and actionable) Participation & Feedback (survey) 42

43 Client Case Study Results Participation: 68 employees attended group sessions 30 employees requested a one-on-one appointment Financial awareness and quality: 100% felt material was relevant and practical for them personally 99% would attend another FIA program 98% said it was worth their time to attend 96% said it increased their financial awareness/knowledge 88% came away with actionable personal financial goals 43

44 THANK YOU!!