A Roadmap of the Financial Wellness Ecosystem

by on Dec 06, 2018

Financial wellness has emerged as perhaps the most important trend impacting the retirement plan industry today. There is a growing consensus that employees’ personal finances not only impact individual workers and their families but also their employers and the nation as a whole. In this climate, employers and benefits providers are increasingly expected to help employees improve their financial well-being, with financial wellness programs a key component in these efforts.


Corporate Insight is proud to announce the release of its newest study—A Roadmap of the Financial Wellness Ecosystem—which provides a comprehensive examination of the financial wellness landscape. The study leverages data from a survey of over 1,500 workers on a myriad of topics related to personal finance, communication and content preferences. It gathers insights from in-depth interviews with a number of innovative plan sponsors to provide both the employee and retirement plan administrator views on financial wellness. It also profiles 13 leading financial wellness program providers which help to round out this unique exploration of the current state of the financial wellness ecosystem.


Our survey was able to pinpoint some critical findings regarding financial confidence levels versus actual preparedness, employee financial wellness programs and their desirable features, and gaps between program demand and availability.


Employees are over-confident that they will be able to achieve their retirement goals. Among the respondents who answered that they plan to retire at some point, 80% stated that they are at least somewhat confident in their ability to afford the retirement lifestyle they desire. However, considering how much these respondents currently have saved, how much they are contributing to their retirement plan(s) and whether they have adequate emergency savings, their confidence is misguided. Just shy of 30% of the response share reported having under $10,000 in current retirement savings, the most common response to that question. The most commonly reported salary deferral rate was between 4% and 6%, far below the industry recommendation of 10%. Only 55% of respondents indicated that they have a dedicated emergency savings fund, and about 38% of that group either does not know how long their savings could last them in the event they can no longer work or believe their emergency savings would last under two months. This gap between retirement confidence and preparedness suggests a need for more widespread financial wellness assistance.


Sponsors are very interested in financial wellness programs. Six of the eight sponsors we surveyed currently do not offer a formal financial wellness program to their employees; however, all six of these sponsors stated that they either recently have researched programs to offer employees or are currently in the process of doing so. Four of these six sponsors have concluded their research on financial wellness programs but, due to either competing priorities or budgetary restrictions, they are unable to move forward at this time. The two sponsors from smaller organizations expressed frustration with the pricing and general lack of solutions that are scalable to smaller organizations, but they did both mention that they found a few programs that could fit in their budget and meet their organization’s needs.


Sponsors look for similar traits in a financial program offering. When asked about the traits they are looking for in a financial wellness program for employees, seven of the eight sponsors (88%) specifically referenced an intuitive digital platform and a wide-ranging suite of educational content. With regard to a digital portal, one sponsor stated, “We are looking for a digital-first strategy; if you can’t do it online, we don’t want to do it.” Regarding educational content, another sponsor noted, “Awareness and knowledge I think is very important, and the biggest part of any financial wellness program.”


The demand for employee financial wellness programs far exceeds their current availability. Only 14% of the 1,544 survey respondents stated that their employer currently offers a financial wellness program or resources aimed to improve their financial well-being. When financial wellness resources are made available to an organization, the majority of employees use them. There is a large gap between availability and demand, and there should be ample opportunity for financial institutions of all types, including banks, brokerages, recordkeepers and third-party financial wellness program providers, to work with organizations to help close this gap.