They can have it all—and manage it for employees.

According to a SPARK Institute report conducted by Cerulli Associates, financial wellness programs can open the door for defined contribution recordkeepers.

How? By becoming holistic providers, managing not just employees' DC plans but also such aspects of their finances as financial budgeting, emergency savings accounts, cash flow management and debt optimization.

Mass-market plan participants—those with less than $100,000 in investable assets—as well as those in the middle market—$100,000–$500,000 in investable assets—are less likely than those in higher pay grades to turn to a financial advisor to help them answer knotty questions about their financial well-being. As a result, they either look to the providers of their retirement plans for help or simply say they have “no source” for financial advice, says the report.

And this means that those providers are poised to provide information to participants that can seriously improve their financial behavior—if providers choose to do so.

It has to go beyond mere education, since that's not enough to induce behavioral changes, but recordkeepers can also use technology not just to help participants improve but also to track how successful their efforts are.

“There is increased awareness among retirement industry stakeholders that plan participants do not save for retirement in a vacuum,” Dan Cook, a research analyst at Cerulli Associates, is quoted saying. Cook adds, “The average participant has several competing financial priorities, which can be challenging to manage without access to personalized financial advice.”

Having access through a recordkeeper can make all the difference. In fact, says the report, in 2018, “multiple firms launched initiatives to improve their positioning to capture assets in transition from the employer-sponsored retirement plan market to the retail IRA market.”

Among them was Goldman Sachs' financial planning subsidiary Ayco, which “announced plans to expand to middle-market and mass-market investors (Ayco's planning services were previously exclusive to corporate executives).”

MetLife, for its part, has teamed with E&Y financial advisors to provide a workplace financial wellness solution.

And both the MetLife and Goldman Sachs efforts “combine elements of digital and human advice and have the potential to use the workplace savings arena (i.e., DC market) as an avenue to build relationships with investors, and, eventually, acquire retail clients.”

Thirty-five percent of recordkeepers plan to add resources to support participant communications, and recordkeepers are also beefing up IT/technology—including cybersecurity—or plan to.

And recordkeepers' ability to track participant behavior can be invaluable to plan sponsors as a measure of how effective their plans are for employees.

Poor engagement hinders financial wellness programs

Financial wellness in the age of anxiety

Instant Insights /

Financial wellness programs give retirement plan recordkeepers holistic opportunity

More From HR Executive

Related Stories

Recommended For You