Financial wellness programs must go beyond education: survey

While educational content is a key component of financial wellness programs, they must also be measurable and embrace technology to help defined contribution plan members move easily from ambition to action, according a new report by the SPARK Institute and Cerulli Associates.

The report, which combined feedback from 26 U.S. record keepers representing $5.9 trillion in DC plan assets, found the majority (71 per cent ) of respondents measure the effectiveness of their financial wellness programs by the level of participation in education sessions. An additional 67 per cent said they use website activity, such as click rates and website interactions as a measure of effectiveness.

Read: Four steps to building a successful financial wellness program

“There are a variety of ways to track the progress of a financial wellness initiative,” said Dan Cook, a research analyst at Cerulli Associates, in a press release. “For record keepers, it’s important to focus on key metrics that are most relevant to each plan sponsor’s top priorities.”

While the report noted the term ‘financial wellness’ can be ambiguous, at its most fundamental level it emphasizes holistic advice and goes beyond a participant’s workplace retirement savings plan to include budgeting, emergency savings accounts, cash flow management and debt optimization.

“There is increased awareness among retirement industry stakeholders that plan participants don’t save for retirement in a vacuum,” said Cook. “The average participant has several competing financial priorities, which can be challenging to manage without access to personalized financial advice.”

DC plan members with less than $100,000 up to $500,000 in investable assets are less likely than their more affluent peers to select ‘financial advisor’ as their primary source of retirement advice, the survey found. “As such, DC record keepers play a key role in providing guidance to this group of underserved individuals,” said Cook. “Oftentimes, a financial wellness program is the most effective framework through which to deliver this guidance.”

Read: Financial wellness programs boost employee retirement readiness: study