An Easy Solution to Financial Wellness: 401(k) Plans
Despite what may be significant demand from employees for financial wellness programs, small businesses may simply not have the resources to implement a specific program targeting this type of benefit. However, a reasonable solution may be right in front of them – in the form of their 401(k). I believe that 401(k)s are one of the most cost effective ways for many to access sound financial resources and tap into professional advice.
Every plan sponsor should be holding an annual 401(k) enrollment meeting, which serves many purposes. First, participants need to learn about the benefit and how to access it for themselves. Second, employees gain by understanding how others are using the benefit, which is a huge motivator to changing behavior. Finally, some employees may need to talk to someone (who is not their boss) regarding basic financial issues.
How to Set Up a Financial Wellness Process
I recommend the following steps to get the process right:
- Regular Contact: I believe an annual 401(k) enrollment meeting is very important for every company. In the beginning, it is important for participants to understand how their 401(k) works. However, it is still important to hold these meetings, as participants needs to see and hear how their peers are using this human resource benefit.
- Increase Ease of Access: Any 401(k) meeting with an investment adviser is not a comprehensive financial assessment, but they can be incredibly helpful to employees who need more personalized and refined financial resources. If nothing else, it is an opportunity for an employee to be pointed in the right direction by a professional.
- One-On-One Meetings: It is my personal experience that employees’ value one-on-one meetings with an investment adviser more than the annual meetings (NB: these can be “virtual” online meetings!). One-on-one meetings are private & confidential, and participants are much more likely to bring up what is on their mind than in a group meeting. Just one effective conversation can start a process that can markedly change an employee’s financial picture over the long term.
- Empower with Technology: For many of the participants in plans that I manage, they have access to online IT tools that can help them visualize what they need to do to gain a stronger financial footing. In some cases, these tools can be accessed without involving the financial adviser.
I strongly believe that there is nothing more powerful than a human adviser – who the participant can see, hear and contact – to help change behavior. It is a connection of trust that participants develop over time that will affect sound, long-term financial habits that help create a sense of well-being.
What If These Services Aren’t Available?
As a plan sponsor or participant in a 401(k) plan, you may already have access to these services. However, many 401(k) plans and investment advisers simply don’t offer this level of service, as it takes too much time and effort. If you are an employee that feels you would benefit from better service, ask your HR department why it isn’t available. For plan sponsors who want to get the most out of their existing benefit dollar, it is probably time to start thinking about making some changes.
