PLANSPONSOR - June/July 2020 - 16

COVER STORY | REVISITING WELLNESS
Of course, most of these conversations-between the sponsor
and its adviser, or between participants and either one-happen
virtually these days, as many Americans continue to avoid personal
contact due to COVID-19 wreaking havoc through the country. As
more Americans have become comfortable with conducting business
online, they may be more open to receiving finance-focused
education, information and guidance online, including by email,
webinars and virtual meetings.
Here are some of the actions sponsors can take to encourage
their workers to pursue financial wellness.
Promote Coaching and Other Holistic Benefits.
With most of the country under stay-at-home orders for at least
part of the spring, personal discretionary budgets were automatically
slashed. As some workers head back to the " new normal, "
financial coaching can help them evaluate their spending priorities
and re-evaluate their budgets. Here is the chance for employers
with a financial wellness program to put it to use-and for those
without such a program to consider implementing one.
" It's important when selecting a financial wellness provider
to find one that addresses the full spectrum of needs related to
individuals and their money, " Patterson says. " It's also important
that the provider have effective and engaging tools and educational
content to enable individuals to take action and improve
their overall financial situation. "
While more than half of employers offer a financial wellness
program, fewer than a third of employees with access to
one in 2018 used it, according to Bank of America Merrill Lynch.
" Employers offer these benefits as a way to attract and retain
great talent, and they've done the hard work of selecting the
benefits and making them available, " Stevenson says. " Now the
next step is to promote those benefits. "
The pandemic may be prompting more sponsors to do just
that. Over six in 10 say that, since the virus hit, they have promoted
their existing financial counseling resources, including their
401(k) vendor and plan adviser, to their workers, and another 20%
may do so, according to a Willis Towers Watson survey.
" There's a big desire to help a big chunk of participants whose
question is: 'Where do I put my next dollar?' " says Tim Rouse, executive
director of SPARK [Society of Professional Asset Managers
and Recordkeepers] Institute in Washington, D.C. " 'Should I put
it in a liquid vehicle, in a retirement plan, in my health savings
account [HSA] or pay off student loans?' It really involves a whole
discussion about financial wellness. "
To capture employee attention now, communications
promoting such benefits might relay success stories about how
these have helped individual workers or highlight issues relevant
to today's economy, such as how to handle a spouse's job loss or a
medical emergency. Plan sponsors might also tailor their communications
to the needs of individual groups.
Stress the Importance of Saving. Even before the coronavirus
crisis, most American workers-75%, according to the
16 PLANSPONSOR.COM June - July 2020
American Payroll Association-were living paycheck to paycheck,
and record layoffs and furloughs have likely exacerbated the issue.
But those who have been able to hold onto their job may be wellpositioned
to begin making progress toward savings goals.
With lower spending on leisure activities such as dining
out or travel under stay-at-home rules, savings rates have actually
increased in recent months. Americans saved 33% of their
income in April, up from just 8% in February, says the Bureau
of Economic Analysis.
Plan sponsors can encourage workers to build on that
momentum by helping them set achievable goals-saving $1,000
to start, for example, rather than enough to cover six months of
expenses-and automating future contributions into an emergency
savings account. They might also promote using a sidecar
emergency savings vehicle, if their company provides one.
" Even having one or two months' worth [of such savings]
could make a big difference if times get tough, " Patterson says.
Participants who have a separate emergency account are less
likely, in a financial crisis, to turn to 401(k) loans or withdrawals-options
that can hinder their long-term retirement
security, he says.
Explain Risk. Taking an online quiz about your " risk appetite "
is different than seeing the value of your retirement nest egg
sink 30%, as some plan participants have recently experienced.
Most investors managed to stay the course in terms of asset
allocation during this year's first quarter, but 6.2% did adjust
the asset allocation of their portfolio. That is more than made
changes in the first quarter of 2008 when stock prices also fell,
according to the Investment Company Institute (ICI).
The recent dip and then quick recovery make this an ideal
time to check in with participants about how they are handling
the volatility and whether they are well-positioned if it continues.
" If people panicked during the market downturn, that's a
good indication that they were too aggressive, " Stevenson says.
If participants should make any changes-for instance,
if some older workers are over-invested in equities-the plan
sponsor can help by making sure they make those adjustments
with a clear head, rather than in reaction to market events.
Sponsors should also take some time to re-educate participants
who hold target-date funds (TDFs) on how those funds
work, why their balances can fluctuate along with the market, and
the importance of avoiding rash decisions about asset allocation.
Focus on Capital Preservation. While younger plan
participants may be concerned about the current value of their
portfolio, those nearing 65 may be afraid their nest egg will not
last through their retirement. To help assuage such concerns,
sponsors should make sure they have appropriately conservative
investment options for such investors and consider whether it
makes sense to introduce an annuity product.
An April Gallup survey found that more Americans now
expect to rely on Social Security income for retirement, with 88%
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