Power your practice with financial wellness

Transcription

1 Power your practice with financial wellness Patrick Delaney Vice President, T. Rowe Price June 13, 2016

2 Overview What is financial wellness? Why should employers care about it? Who may be a good candidate for a financial wellness program? Tools and resources that help you put financial wellness into action. 2

3 Historical objectives of retirement plan education Increase Participation Increase Deferrals Asset Allocation 3

4 Innovations to plan design and investments have helped AUTOMATIC ENROLLMENT 96% of participants remain in the plan Source: T. Rowe Price Retirement Plan Services, Inc. as of 9/30/2015 4

5 Innovations to plan design and investments have helped AUTOMATIC INCREASE 66% of participants remain in the service when it s offered on an opt-out basis Source: T. Rowe Price Retirement Plan Services, Inc. as of 9/30/2015 5

6 Innovations to plan design and investments have helped AUTOMATIC INVESTMENT INTO A QDIA 96% of participants remain in a default fund such as TDF Source: T. Rowe Price Retirement Plan Services, Inc. as of 9/30/2015 6

7 but have not solved the problem completely. 55% 26% 48% avoid dealing with their financial situation expect to run out of money can t afford to contribute more to their plans Source: T. Rowe Price Retirement Saving and Spending Study (2015) 7

8 There is opportunity to do more. Of American adults 43% 24% 64% 64% say they are financially illiterate 1 of wages go to consumer debt payments 3 say finances are the largest source of stress in their life 2 don t have enough savings to cover a $1,000 emergency 4 1 S&P Global FinLit Survey American Psychological Association U.S. Census Bureau at al MarketWatch

9 The opportunity for you ALTHOUGH 89% of sponsors said they were focusing on financial wellness in 2016 ONLY 20% have a program in place Source: Aon Hewitt 9

10 What is financial wellness? 10

11 Why should sponsors focus on financial wellness? 11

12 Sponsor concerns: cost considerations HEALTHCARE COST PAYROLL WORKER S COMPENSATION TENURE Chart is for illustrative purposes only. 12

13 Strain on worker productivity 70% of HR professionals surveyed say financial problems impact employee performance. 1 44% of employers believe that offering additional guidance on handling finances will decrease the time employees spend at work tending to financial issues. 2 1 Aon Hewitt 2 SHRM, 2014 Financial Wellness in the Workplace Survey 13

14 Strain on employees PHYSICALLY Finances are the #1 source of stress for Americans. 1 Google searches for STOMACH ULCERS increased 228% during the Great Recession 2 1 American Psychological Association, San Diego State University,

15 Strain on employees Finances are the #1 source of stress for Americans. Searches for HEADACHES increased 193% 15

16 Strain on employees Finances are the #1 source of stress for Americans. Searches for CHEST PAINS increased 35% 16

17 #1 reason for incorporating financial wellness % of plan sponsors said they want to provide some type of financial wellness offering because 17

18 #1 reason for incorporating financial wellness It s the right thing to do. Source: Aon Hewitt 2016 Hot Topics in Retirement Study 18

19 Financial wellness works for everyone Advisors Financial advisors work with employers to match them to the right financial wellness provider. Employers Employers provide the support employees need to make better decisions about their personal finances. Employees Financially healthier employees are happier, healthier, and more productive, which can translate to greater business success and increased retirement plan contributions. 19

20 ROI for employers: reduction in healthcare costs 19.4% Increase For Non-Users $2.5m Total Employer Savings 4.5% Decrease For Programs Users Financial Finesse. Data gathered over a two-year period ending

21 ROI for employers: reduction in absenteeism hours hours $914,727 Total Employer Savings Non-users (Average) Program Users (Average) Financial Finesse,

22 ROI for employees: reduction in stress and distractions FINANCIAL STRESS 29% 34% 33% 20% 12% 5% Overwhelming Stress High Stress Some Stress FINANCIAL DISTRACTIONS AT WORK 37% 18% 12% 13% 21% 22% Very Often Distracted Often Distracted Sometimes Distracted Source: SmartDollar program users, At start of program 2-5 years later 22

23 ROI for employees: improved outlooks IMPROVED EMOTIONAL OUTLOOK Scared Confused Indifferent Confident Secure Before 39% 22% 22% 14% 3% Current 9% 6% 10% 63% 12% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% RETIREMENT PREPAREDNESS % retirement of program participants who are saving 15% of their salary for after two years Source: SmartDollar,

24 ROI for you Retention & Referrals Increase in Plan Assets 24

25 MAKE THE LEAP FROM INTENTION TO ACTION 25

26 Tools and resources Price Perspective The what, why, and how of using financial wellness to build business. Pitch Points Tips and strategies for pitching it to sponsors. sponsors. Financial Wellness Discussion Guide Questions that pinpoint employers financial wellness needs. needs. Financial Wellness Program Evaluator Solutions to match employers with the right provider.. 26

27 The what, why, and how of financial wellness Understand what it is Know why it matters and to whom Formulate how you will integrate it into your practice and into your clients benefits plans 27

28 Pitch it to prospects and clients DATA/TREND PITCH PERSPECTIVE 28

29 Identify appropriate candidates for financial wellness Prioritize which clients can benefit from a financial wellness program Develop a process to identify clients that have the best potential Follow a framework to structure the discussion. 29

30 Plan data 96% 66% Are employees retiring on time with adequate savings? Are participants opting out of autoenrollment and auto-increase? Is there a high-volume of plan-specific web traffic or calls regarding loans, hardships, or access to money? 30

31 Employee demographics Does the company have a high proportion of young employees who may have significant debt? Is this company in an industry (law firm or medical practice) that may hire young employees with a significant amount of college debt? Does the company have an aging population that may need assistance with tax strategies, estate planning, etc. as they approach retirement? 31

32 Corporate culture and philosophy Is a primary reason for offering a competitive benefits package to recruit, retain, and reward top talent? Is the employer very paternalistic, wanting to give their employees the best opportunity for replacement income ratios that are superior to the industry? Is the employer willing to devote the time and resources to supporting a robust financial wellness program? 32

33 Navigate the provider landscape Learn the predominate style categories that financial wellness programs adopt Consider how to match an employer s needs with different styles Recognize that there is not necessarily a right answer there may be several good choices today, or there may be one for now and a different one for later 33

34 Five styles of financial wellness Education and Literacy Services and Products Tools Coaching and Behavioral Enhanced Employee Education Program 34

35 Thank you Access all of our financial wellness resources: troweprice.com/wellnessworks C1ESEDIA2 T. Rowe Price Investments Services, Inc US /16 35