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Thinking Ahead: How The Employer-Employee Retirement Plan Relationship has Changed

Today, employers face critical business decisions requiring that they regularly evaluate their benefits offerings and what is expected to adequately support their workforce.


These are unprecedented times, which were unfortunately predicated by a continuing decline in personal savings rates and increasing indebtedness at the household level. COVID-19 has moved beyond a health crisis and is now impacting Americans' finances at an alarming rate. 

As a financial advisor, it is painful for me to think about the fact that half of all Americans (50%) would experience financial hardship if they had to cover an emergency expense of $1,000 or less in the next 30 days. But stats like this are also a call to action for financial professionals that can engage with individuals to make strategic behavioral changes and improve overall financial literacy. Our actions can now mitigate the long-term impact that COVID-19 will have on people struggling to make it through this challenging situation. 

How can we, as an organization and an industry, mobilize to serve more people?

According to a recent survey conducted by Charles Schwab, nearly two-thirds (63%) of U.S. adults chose financial education as the most important supplementary graduation requirement. Additionally, a recent SoFi at Work survey found that almost 60% of respondents feel it is more important now that employers offer financial wellness benefits due to the COVID-19 pandemic.

Financial advisors have been interacting with employers for decades, offering services surrounding 401(k) retirement plans in the form of investment advice and financial education. Still, many employers realize that it is time to take the next step into offering a financial wellness program. A survey released by the Employee Benefit Research Institute shows that about half of companies with more than 500 employees now offer some financial wellness program. 

Employers recognize the impact of a financial wellness benefits program could be an invaluable resource to their employees, as financial stress is currently at a record high. A recent MetLife study on employee benefits trends found that 2 in 3 employees stated they are feeling more stressed than before the COVID-19 pandemic. 

How do we make sure that financial wellness support is effective and individualized? 

I believe that group financial education and online tools can only take us so far. With conversations that are very technical and often highly emotional, human interaction and accountability can take many employees from knowing what they "should do" to change behavior, automate contributions and stay focused on meeting their goals. 

Today, a financial advisor's role is not just to talk about the provisions of the retirement plan or investment options but also: 

  • make sure that short-term financial needs are taken care of
  • ensure that there are adequate emergency savings on hand
  • get debts consolidated and stick to a plan for paying them off 
  • finally, help the employee set up regular contributions into an account that is invested appropriately based on time until retirement. 

What steps should employers take towards introducing a financial wellness benefit?


First, employers should recognize that if their employees are stressed about their finances, they are likely less productive at work because they are distracted. They may also be experiencing stress-related health issues that can also impact absenteeism and the company’s bottom line. 

A recent PwC survey found that when asked what causes them the most stress, more employees cite financial matters than any other life stressor combined, and 50% of the stressed employees said finances have been a distraction at work.  Fifty-three percent (53%) of respondents to a SoFi at Work survey said they would feel less stressed about their overall financial situation if they had financial well-being benefits.

Second, start a conversation with an advisor that can help you better understand the types of available programs and how best to engage your employees based on your specific industry and workforce demographics. Most often implemented, financial wellness benefits include a 401(k) retirement plan with or without a match, student loan repayment assistance, 529 College Savings plans, and access to financial counseling. 

The economic and societal impacts of coronavirus are going to be devastating and longer-lasting than anyone had anticipated. Still, there is also an opportunity for the retirement and wealth industry to step-up and help our multi-generational workforce increase their financial literacy, improve their individual savings rates and ensure that retirement outcomes can be successful. 

There is no denying that financial stress and workplace productivity are linked. At OneDigital, we are positioned to help employers engage in a holistic benefits conversation that recognizes the convergence of health and wealth as a part of a broader workforce strategy. For more information on the important steps businesses should take during this uncertain time, contact your local OneDigital strategist.

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