According to a recent study by TIAA, less than half of US workers have enough savings to cover six months of expenses, and about 60% say they are stressed about their finances. Further, more than half of respondents in the TIAA study believe companies have a responsibility to help employees maintain financial wellness as they continue to face financial hardships in the wake of the pandemic. Another recent study by Franklin Templeton revealed that three out of four workers want their workplace to provide more resources to help them with not only retirement savings but their overall financial well-being.
Against a volatile market environment, the decline in the availability of Defined Benefit Plans, less inflation-adjusted Social Security purchasing power, longer lifespans and these increased expectations from employees, the pressure is being felt from all angles. Employers need to provide more support and solutions, and government plays a critical part in setting parameters to help provide safe and secure retirement opportunities.
Recommended For You
Legislation moves to the forefront to overcome industry challenges
As plan sponsors seek solutions for guaranteed income in Defined Contribution (DC) plans to improve retirement outcomes, Congress and regulators have been listening. 2019's SECURE Act 1.0 reduced the fiduciary risk associated with the use of lifetime income products, annuities, in a DC plan through stronger Safe Harbor provisions.
While SECURE 1.0 laid the groundwork for improved access to lifetime income, adoption lags demand. Few 401k plans have access to in-plan annuities, yet research shows the majority of plan sponsors agree there's a need for these options. It's believed uptake would be aided by advisor and plan sponsor education, comparative data and due diligence tools to facilitate selection and monitoring of retirement income offerings. A new Retirement Income Consortium was launched in early 2022 to help address those challenges. Separately, many product and platform providers have launched new offerings aimed at addressing some of the biggest objections targeted at these offerings (including portability). The financial services industry has a role, and opportunity, in addressing execution needs beyond the reach of regulators.
As many pundits predict the passage of SECURE 2.0 this year, the success of that Act will be dependent on industry engagement as well. For example, SECURE 2.0 is expected to make many more small businesses require retirement savings plans; finding an efficient means of connecting payroll systems to recordkeeping platforms will be a meaningful challenge to address.
Opportunity for employers to meet financial wellness needs
In addition to retirement plan concerns, employees are increasingly looking to their employers to provide holistic financial planning tools that better assist with financial wellness outcomes.
To meet these needs, many companies will have to change the way they think about key parts of their employee benefit plans. Most corporate benefit packages focus on helping workers accumulate assets through employer-sponsored retirement plans. Although improving outcomes for DC plan participants remains a critical priority, it's becoming apparent that many employees want companies to take a more holistic approach.
By adopting a financial wellness orientation, companies help employees manage day-to-day personal financial issues, from maintaining a budget and building up savings to paying off student loans and covering emergency expenses. The most effective wellness programs seek to improve long-term outcomes by offering pragmatic products and solutions, and by helping employees understand the benefit options they have, both outside and inside the retirement plan. That means providing better educational materials and sessions, and more targeted advice, delivered through both in-person and digital channels.
Using next-gen technology to deliver new solutions
For employers, rolling out financial wellness programs requires investments of both resources and time. Fortunately, companies have a host of partners ready to assist. Recordkeepers, advisors and growing numbers of fintech providers are using technology to deliver new solutions that help employers build out and scale a financial wellness program. For example, some fintechs are using powerful data analytics that help advisors and plan sponsors analyze workforces and segment employees into groups based on financial needs. Education, digital advice, or human advisor engagement can then be directed based on those identified needs. Increasingly, we're seeing advisors lead the charge with implementation of Financial Wellness programs; expanding their wealth management reach with technology as they provide a meaningful service to employers.
By helping employees address personal finance challenges and make better decisions over the course of their careers, employers are positioning workers to improve their retirement readiness and reduce stress, leading to more focused and effective employees.
Retirement income availability and financial wellness programs are not panaceas, but they can go a long way towards providing better financial outcomes for employees. Adopting a financial wellness perspective is not merely an altruistic strategy for employers. At a time of historically tight labor markets, companies that help employees maintain a state of financial wellness are likely to benefit from increased rates of hiring, retention, job satisfaction and productivity. Those advisors, and service providers, that help solve these challenges stand to gain as well.
John Faustino is head of Broadridge Financial Solutions' fiduciary certification and training solutions.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
