Fi­nan­cial well­ness push pro­mot­ing 401(k) health

Employee Benefit News - - CONTENTS - BY RICHARD STOLZ

Aon He­witt’s Rob Austin sounds off on what em­ploy­ers are do­ing to get the most bang for their ben­e­fits buck.

AS EM­PLOY­ERS START TO SEE EM­PLOY­EES STRUG­GLE with pay­ing bills and sav­ing for re­tire­ment, fi­nan­cial well-be­ing pro­grams have sprouted up across Amer­i­can busi­nesses. Rob Austin, di­rec­tor of re­tire­ment re­search at Aon He­witt, has spent nearly two decades work­ing with em­ploy­ers to im­prove the re­tire­ment out­comes of their work­ers. An en­rolled ac­tu­ary by trade, Austin says he has “a pas­sion for an­a­lyz­ing data.” As a mem­ber of the ERISA In­dus­try Com­mit­tee, he works with large em­ploy­ers to ad­vo­cate for and shape leg­is­la­tion and reg­u­la­tions on key em­ployee ben­e­fit is­sues. He spoke with Em­ployee Ben­e­fit News about his re­cent work, which fo­cuses on fi­nan­cial well-be­ing and be­hav­ioral fi­nance. This is an edited ver­sion of the dis­cus­sion.

Em­ployee Ben­e­fit News: Why has fi­nan­cial well­ness be­come such a hot topic for em­ploy­ers?

Rob Austin: Back dur­ing the fi­nan­cial cri­sis, com­pa­nies were just try­ing to keep their lights on. Although things are much bet­ter to­day, em­ploy­ers still want to get the most bang for their ben­e­fits buck. They’re say­ing, “Let’s try to find out ways that we can re­ally help em­ploy­ees out.” And here’s where I think fi­nan­cial well­ness comes in. Things like help­ing them to im­prove their bud­get­ing, es­tab­lish a lit­tle emer­gency sav­ings, and make bet­ter use of their 401(k) plan, in­clud­ing cut­ting back on plan loans, is im­por­tant.

EBN: But what is it about fi­nan­cial well­ness in par­tic­u­lar? There are other “bang-for-your-buck” ben­e­fits em­ploy­ers can of­fer.

Austin: What we saw from our lat­est sur­vey is that most em­ploy­ers are do­ing this be­cause they think it’s the right thing to do. The se­cond most com-

mon an­swer is that they are do­ing it to help in­crease em­ployee en­gage­ment. The the­ory be­hind this is peo­ple who are less stressed fi­nan­cially are go­ing to be able to be more ded­i­cated in their work, and they are go­ing to be­come bet­ter work­ers. If you have some­one who is con­stantly wor­ried about their fi­nances, those peo­ple prob­a­bly are not the em­ploy­ees most com­mit­ted to the or­ga­ni­za­tion.

EBN: How can em­ploy­ers de­ter­mine the ex­tent to which their em­ploy­ees need this kind of sup­port, at least from the em­ploy­ees’ own point of view? Is it mea­sur­able?

Austin: Ab­so­lutely. We can set up a sys­tem in which when plan par­tic­i­pants try to check their 401(k) bal­ance, they’re pre­sented with a sur­vey that asks them a cou­ple of fi­nan­cial ques­tions. The re­sults can give the em­ployer a high-level look at whether peo­ple are re­ally strug­gling with the ba­sics, like bud­get­ing, or maybe look­ing for some­thing more, like es­tate plan­ning.

EBN: Do you see a lot of vari­a­tions in the re­sponses?

Austin: Yes. It varies by in­dus­try, and also how well peo­ple are paid. We hap­pen to have a few very large re­tail or­ga­ni­za­tions as clients, and there you find peo­ple are a lit­tle bit lower on the fi­nan­cial well-be­ing scale. We also have large fi­nan­cial in­sti­tu­tions where peo­ple tend to have a lit­tle bit more fi­nan­cial acu­men.

EBN: If em­ploy­ers learn from this process that some em­ploy­ees are strug­gling fi­nan­cially not be­cause they’re fi­nan­cially il­lit­er­ate, but sim­ply be­cause they aren’t paid very much, do they con­sider changes in their com­pen­sa­tion phi­los­o­phy?

Austin: Yes, that can hap­pen. But the gen­eral idea is, we can teach some­body to fish or we can give them fish, and it’s bet­ter to have some­body learn how to deal with their money than just to give them more money. There are plenty of peo­ple who are very highly paid who are strug­gling fi­nan­cially as well, and it’s not be­cause they don’t have enough com­pen­sa­tion, but maybe be­cause they are not spend­ing it ap­pro­pri­ately.

EBN: What in­no­va­tion have you seen lately to en­gage par­tic­i­pants in their re­tire­ment sav­ings?

Austin: Em­ploy­ers are try­ing to turn it into some­thing fun, some­thing hip, to hit the pop­u­la­tion that would re­sist spend­ing time on learn­ing about re­tire­ment fi­nance. It’s about lead­ing them to an ac­tion item, and it seems to be work­ing.

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