The Importance of Financial Wellness

Two years ago, DC specialists were far less sanguine than sponsors about plan participants’ retirement readiness. Those views have begun to converge, with DC specialists less pessimistic and sponsors less optimistic. Both DC specialists and sponsors see the need to improve retirement outcomes for plan participants.

The evolving concept of financial wellness takes into account participants’ current and future financial resources; it weighs not only the sustainability of retirement income but also emergency reserves and participants’ financial acumen. In tandem with their evolving views, many sponsors are coming to see participant education as an important aspect of financial wellness.

Sponsors regard online tools and participant education as key elements of financial wellness programs

Line bar chart outlining various financial wellness programs offered to employees

 

Obstacles to Adopting Financial Wellness Programs

A rising percentage of plan sponsors recognizes poor retirement readiness among participants and views financial wellness as a way to address this concern. Nonetheless, adoption of most financial wellness programs remains modest, mainly because of cost; sponsors also cite challenges such as complexity and measuring program effectiveness. Another limiting factor is that costs are quantifiable and immediate, whereas the benefits of financial wellness programs tend to be more qualitative and accrue over time, e.g., a more focused and productive workforce, greater employee engagement and lower absenteeism and turnover.

As baby boomer retirements accelerate and the millennial generation approaches retirement, demand is rising for investment solutions with potential for predictable retirement income. The notion of financial wellness probably should encompass a greater focus on retirement income solutions that seek to mitigate longevity risk. This unfolding need represents an opportunity for plan advisors to get ahead of a rising issue, and in the process, underscore the value they bring to client relationships.

Call to Action

Sponsors get the challenges of increasing plan participation, educating participants and improving retirement outcomes. They likely will recognize the importance of financial wellness but may not understand the cost-benefit analysis of such programs. Use your next client meeting to introduce this rising issue — frame your educational presentation as a risk-reward assessment.

Let Voya Help You

Voya is dedicated to meeting the unique requirements of DC specialists. Our primary goal is to support your needs and those of your clients. We are committed to developing long-term partnerships and enhancing the effectiveness of your business. To learn more, contact your local Voya Investment Management representative or call (800) 334-3444 and ask to speak with a Voya DCIO specialist.

Survey of the Retirement Landscape: Insights from Current Research

Voya Investment Management recently released the second edition of its survey of retirement plan sponsors and plan advisors, to identify and better understand the current service needs of sponsors and help DC-focused advisors better align their offerings and priorities to meet those needs. Though some perceptions have changed since the initial survey in 2016, views on a few key issues have evolved and several new issues have arisen. We present key findings of the study in this series of insights. For all the research results, read Survey of the Retirement Landscape: Challenges and Opportunities for Advisors.

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Retirement Landscape

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