EBRI: Financial Wellness Efforts Lead To Increased Retirement Plan Assets

An increasing number of employers are offering financial-wellbeing programs to their employees as they seek to improve overall worker satisfaction, reduce financial stress, increase productivity, and make improvements to retirement plans and other employee-benefit programs.

During a webinar hosted recently by the Employee Benefit Research Institute (EBRI), several industry executives shared some information on how workers use and benefit from these programs and practical approaches for improving their utilization and impact.

Effects Of Financial Programs

One of the executives was Lori Lucas, EBRI’s president and CEO. Lucas unveiled EBRI’s first study that examines empirical data, which shows how financial-wellbeing initiatives may be impacting workers’ use of their 401(k) plans.

According to Lucas, much of EBRI’s research is based on the information in the organization’s interconnected participant-level databases, including 11 million HSAs, 2 million flexible spending accounts, 20 million IRA account holders, and 27 million participants in over 100,000 employer-sponsored 401(k) plans.

The research is taking a multi-phased approach, Lucas added. Phase 1 integrates the use of financial well-being webinars during 2018, with 401(k) data from 2017, 2018 and 2019. Future phases will focus on additional types of financial-wellbeing programs, including emergency savings funds, student loan debt help, and financial coaching.

According to the study, for workers in the ages 45 and older cohort, regardless of their contribution level:

• The higher the assets, the more likely they were to attend webinars.
• The older the individuals in this cohort, the more likely they were to attend a Social Security or retiree health cost webinar.

For workers in the below-age-45 cohort:

• The greater their age, the more likely they were to attend an estate planning webinar, regardless of their contribution level.
• Higher loan balances were negatively related to attendance at estate planning, health care choices, investments, and Social Security webinars for those contributing at levels above the median.

The following is a brief summary of the survey’s findings, according to Lucas:

• The likelihood of financial-wellness webinar usage varies by participant characteristics across age and 401(k) contribution-level cohorts.
• The estimated impact of attending any financial-wellness webinar increased employee contributions between $649 and $988, depending on the cohort.
• Attending a budgeting webinar had a statistically significant impact on employee (401)k contribution levels for all cohorts examined.
• Attending an emergency fund webinar had an impact on reducing new loans for older employees, while HSA-webinars had the opposite impact for younger employees.
• Attending webinars on investments “improves” asset allocation for older employees with lower contributions.

'Where They Are'

Another executive featured during the webinar was Kathleen Floyd, senior vice president, education and wellness, with Church Pension Group, a financial-services organization that serves The Episcopal Church.

The mission statement of the organization’s Education and Wellness Initiative is to inform, engage and inspire all active and retired clergy and lay employees of The Church Pension Fund Clergy Pension Plan and their spouses through education and wellness resources that support lifelong learning.

The organization’s baseline data points include information on 403(b) participation, 403(b) loans, lay employees’ retirement readiness, as well as participants’ financial fragility and financial knowledge.

Among the lessons the organization has learned so far? In 2021, there was a 7% participation increase in 403(b) plans and 22% of participants increased their funding. In 2020, loans from 403(b) plans were 7.3% for lay employees and 4.3% for clergy. This is lower than the national average of 15, 2%.

The organization is undertaking several initiatives to get employees to increase their participation in financial-wellness initiatives, Floyd added. For instance, it:

--Offers podcasts.
--Hosts webinars.
--Provides e-learning and in-person programs.
--Hosts a Planning for Wellness Conference.

The organization still has a long way to go in increasing employee use of financial-wellness initiatives, according to Floyd, but tracking employee behavior helps it determine the next steps.
For many employees, Floyd added, a key barrier to making use of financial-wellness programs is lack of time.

To address this issue, the organization sends session recordings to registered attendees so that they can access the information at their convenience. “We try to reach them where they are,” she said.

To improve employee usage of financial-wellness programs, firms should personalize their programs as much as possible, follow up after the events, and work with affinity groups.

Ayo Mseka has more than 30 years of experience reporting on the financial-services industry. She formerly served as Editor-In-Chief of NAIFA’s Advisor Today magazine. Contact her at amseka@INNfeedback.com.