COMMUNICATION STRATEGY GUIDANCE RETIREMENT READINESS EMPLOYEE EDUCATION MANAGED ACCOUNTS RETIREMENT GAP STATEMENTS ADVICE

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1 Financial Wellness Latest Fad or HR Game Changer EMPLOYEE EDUCATION ISCEBS Dallas Chapter MANAGED ACCOUNTS ADVICE COMMUNICATION STRATEGY GUIDANCE RETIREMENT READINESS RETIREMENT GAP STATEMENTS Glenn Able Lockton Retirement Services

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3 1 in 5 Experience High Levels of Stress Extremely Stressed Moderately Stressed Not Stressed Source: Finding the Links Between Retirement, Stress, and Health, Lockton

4 Financial Stress by the Numbers 4

5 Worry Drives Up Cost and Drives Down Productivity Plan to Work to Age 66 or Older 27% 52% 5+ Unproductive Work Hours Per Week 24% 36% Use Sick Time When Not Sick 24% 48% Poor Health 5% 11% 0% 10% 20% 30% 40% 50% 60% High Stress Low Stress Source: Finding the Links Between Retirement, Stress, and Health, Lockton

6 Saving for Retirement Often Takes a Backseat, Given Competing Financial Demands 6

7 20% of Americans 65+ Today are Still Working 1 3 REASONS WHY: THEY NEED MONEY 60% of U.S. households have no retirement account. 2 THEY LIKE WORKING 36% of employees 65 or older work because they enjoy it. 2 THEY LIVE LONGER Life expectancy for highly educated men has increased 5 years+ since U.S. Bureau of Labor Statistics, Transamerica Center for Retirement Studies, Boston s Center for Retirement Research,

8 Less Retirement Education, More Financial Well-Being 1. Money drives stress, stress drives cost Two-thirds of the problem goes unserved. 3. Service providers lack incentive 71% Cite money as the top source of stress Budget Commitments: Required Notices (fee disclosure, statements ect.) Top financial concerns 2 Retirement Medical Costs/Healthcare Standard of Living Debt Account Optimization Plan Events (fund change, M&A, ect.) Enrollment (workbooks, meetings, ect.) Debt Asset Allocation New DOL Fiduciary Rule Workers reporting high stress were $413 more costly per year than those not at risk for stress Smokers were $587 more costly per year than non-smokers Target Date Target Risk Managed Accounts Model Portfolios 1 Financial Wellness at Work: A Review of Promising Practices and Policies, Consumer Financial Protection Bureau, August Economy and Personal Finance Poll, Gallup, April

9 Millennial s are the strongest proponents of automatic 401(k) plan features 9

10 Participants Want Help To What Extent Would the Following Decrease Your Financial Concerns? Help With a Financial Plan Meeting With a Financial Planner Investment Education Advice on Making a Budget Tools to Eliminate or Consolidate Debt Stress Management Education Help Planning for Healthcare Costs Advice About Medicare Programs Information About Health Savings Accounts 70% 63% 63% 61% 54% 57% 52% 49% 41% 30% 37% 37% 39% 46% 48% 47% 51% 59% Source: Finding the Links Between Retirement, Stress, and Health, Lockton % 20% 40% 60% 80% 100% Somewhat or Very Helpful Not Helpful 10

11 Designing A Financial Wellness Strategy Collaborate with retirement and health providers to: ASSESS Analyze employee demographics and evaluate the marketplace to find solutions that meet your plan s and your people s needs PROMOTE Maximize the benefits of the programs you select by encouraging engagement REINFORCE Maintain awareness and supplement education with insights 11

12 Top Objectives for Wellness Programs 59% Improving performance and productivity 49% Improving workplace safety 45% Reducing healthcare or insurance costs 56% Improving employee engagement/morale 41% Maintaining work ability 38% Promoting corporate image/brand 54% Attracting and retaining employees 49% Furthering organization value/mission 34% Reducing employee absences 26% Fulfilling social/ community responsibility 12

13 Knowledge Is Power Percentage of Respondents Who... Low Financial Stress High Financial Stress Know Their Credit Score 91% 73% Use a Personal Budget 57% 39% Know Their Debt-to-Income Ratio 60% 31% Have More than 6 Months Living Expenses Saved 51% 7% Source: Finding the Links Between Retirement, Stress, and Health, Lockton

14 Employee Needs and Market Assessment Research Workforce Needs Evaluate Program Options Design Your Strategy Measure Results 14

15 Product Comparison Financial Literacy Retirement Financial Planning Comprehensive Programs Engaging Experience Appropriate Methodology Viable Organization 10 Firms Double Net Pay Enrich Dave Ramsey Guide Financial Mint Pete the Planner Retirement Map Smart Dollar Student Loan Genius Honest Dollar 5 Firms Blooom Financial Engines Financial Solutions Future Advisor Morningstar 6 Firms Betterment Financial Finesse Ayco Company Guidespark LearnVest Mariner 15

16 Engage Employees With the Programs You Offer Simple Messages Choice of Styles 16

17 Reinforcing the Message Through Multi-Media NEWSLETTERS PRESENTATIONS ONLINE 17

18 The Lockton Life Game Makes Financial Assessment Fun Education specific to individual participant needs. Easy as 1, 2, 3: 1 In less than a minute, players create family avatars and a financial profile. 2 3 Faced with real-world decisions, players see how their savings, investing and borrowing choices change their net worth and retirement readiness. Based on in-game decisions, players receive tailored guidance, links to tools and interactive education, and access to discounted one-on-one advice services. 18

19 Employer Benefits 19

20 PLANSPONSOR Best in Class Retirement Plans BEST IN CLASS PLANS ALL OTHER 401(K) PLANS Saving and Budgeting 72% 34.5% Investing Basics/Strategies 88% 50.3% Credit/Debt Management 36% 15% Home Buying 24% 7.8% Saving for College 52% 11.9% 20

21 Measuring Your Return on Investment 21

22 Case Study Financial Well-Being Global Benefits Consulting Firm THE OBJECTIVE Improve retirement readiness and overall financial well-being. Higher utilization of retirement planning tools to provide better insight into employee retirement readiness. Improve savings rates Update beneficiary elections electronically THE LOCKTON SOLUTION Integrated financial wellness program & behavior to corporate wellness program by offering rewards towards healthcare premiums for attending meetings. Launched associate Twitter campaign on health and financial wellness topics. Restructured plan design to double automatic enrollment defaults and add automatic savings escalation to 10%. THE RESULT 40% of employees attended one-on-ones: 29% adopted voluntary automatic increase. 50% increased deferrals. 87% elected beneficiaries. Exceeded all stated goals. 22

23 Our Mission To be the worldwide value and service leader in insurance brokerage, risk management, employee benefits, and retirement services Our Goal To be the best place to do business and to work RISK MANAGEMENT EMPLOYEE BENEFITS RETIREMENT SERVICES Lockton, Inc. All rights reserved. Disclaimer: The communication is offered solely for discussion purposes. Lockton does not provide legal or tax advice. The services referenced are not a comprehensive list of all necessary components for consideration. You are encouraged to seek qualified legal and tax counsel to assist in considering all the unique facts and circumstances. Additionally, this communication is not intended to constitute U.S. federal tax advice, and is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing, or recommending any transaction or matter addressed herein to another party. This document contains the proprietary work product of Lockton Financial Advisors, LLC, and Lockton Investment Advisors, LLC, and is provided on a confidential basis. Any reproduction, disclosure, or distribution to any third party without first securing written permission is expressly prohibited. Securities offered through Lockton Financial Advisors, LLC, a registered broker-dealer and member of FINRA, SIPC. Investment advisory services offered through Lockton Investment Advisors, LLC, an SEC-registered investment advisor. For California, Lockton Financial Advisors, LLC, d.b.a. Lockton Insurance Services, LLC, license number 0G13569.