PLANSPONSOR - May - June 2023 - 17

Traverse agrees. " If we were having this discussion in 2015
or 2017, it would have been different, " he says. " At that time,
financial wellness programs, for example, were [commonly]
offered on third-party platforms. So plan sponsors would have to
work with that third-party provider in addition to their existing
relationships. That's not necessarily the case now. Recordkeepers
have brought those services into their offering. "
This may also be true of the plan's adviser firm; however the
setup may look slightly different. " Adviser-driven plans, which
are often smaller plans, can usually add on financial wellness or
advice, but it's going to be much more hands-on, " says Traverse.
In that case, the adviser might work with participants directly on
financial wellness or financial advice, compared with larger plans,
which might have a more technology-driven offering through an
online portal or via a call center. Adviser-driven plans may also
offer a pathway for participants to transition to a traditional wealth
management relationship once they have retired, so they can
remain with the advisory firm they already know.
Financial coaching has emerged as an offering, as well-
sort of a level between basic financial literacy education and
traditional financial advice, Fairbanks says. Typically , financial
coaches are certified financial planners who can answer questions
on topics such as debt consolidation or college savings
plans but without a traditional wealth management component
that might involve investing, lending or insurance. Employers
might work with a third party for financial coaching, " someone
who can provide advice on big milestones or short-term financial
needs, " he says.
Finding the R ight M ix
Once plan sponsors have the participant and provider data available
to aid them in decisionmaking, the next step is putting
everything in place. That could be as straightforward as working
with an existing recordkeeper to add on services, or it may mean
contracting with third parties. There are also some common
pitfalls to avoid.
Kennedy says his firm's data show that plan sponsors
are inclined to work with existing providers, if possible, when
adding on new benefits. He says the cost to adopt programs
such as financial wellness is usually low and, in some cases,
recordkeepers have built exclusive relationships with financial
wellness program providers and use that as a differentiator
to keep or win new business. As a result, there may be some
benefits to working within an existing relationship , if that is
an option.
Plan sponsors may decide to wait and see if their present
provider eventually offers everything they want, Fairbanks says.
" We don't see a lot of movement from plan sponsors. They often
aren't willing to jump to another provider unless there are also
other issues such as higher fees, or if there are indications that
they could get more total services for the same price elsewhere. "
If a plan sponsor does decide to start working with a
third party for any of these programs, due diligence should be
involved. Financial wellness programs are still available as standalone
programs vs. part of a recordkeeping offering. Financial
coaching or advice can also be contracted through third-party
providers. Sources emphasize that plan sponsors should comparison
shop and take a close look at not just the programs but the
credentials of the providers.
" There are new providers coming to market all the time, "
Kennedy says. " This is a very competitive part of the market, and
providers are looking for ways to differentiate. Plan sponsors
have a lot of choice now, but they also have to look carefully at the
differences between those offerings. "
Where plan sponsors might especially scrutinize thirdparty
relationships is in regard to financial advice or retirement
income. Sara Vipond, senior associate for defined contribution
and financial wellness research at Mercer in St. Paul, Minnesota,
notes some unique issues to consider when it comes to advice.
" There are limits to what a recordkeeper can or will do within an
advisory capacity, " she says. " They don't want to be seen as recommending
specific products, because that can create conflicts. "
This is also true for retirement income solutions if those
include referrals to insurance providers or to other products not
already within the plan, sources say.
Adviser-driven plans may be able to work around some of
this by virtue of being managed by advisers, but giving advice
can still be problematic. Different providers perform different
roles. A 3(21) co-fiduciary adviser can help participants understand
investment choices, but the plan's sponsor has full fiduciary
liability. A 3(38) adviser will assume investment fiduciary
liability for the plan and may be able to provide more specific
advice if doing so is in the best interest of a plan or its participants.
Plan sponsors have to decide how hands-on or hands-off
they want to be if they plan to work with advisers in this capacity.
" Employers often don't want to look like they are recommending
specific products, firms or financial plans, " Vipond
says. " There can be risks involved with that. So plan sponsors
need to look closely at what meets the needs of their participants. "
Whether it is through financial coaching or a more formal
relationship with an advis e r, how advice is made available to plan
participants could be the next big shift within retirement plans.
" I think advisory services are the next area where we're
going to see an evolution, " Vipond says, noting it is clear that
participants want advice. Plan sponsors have to strike the right
balance, though, she says. " We could see some trial and error
while sponsors work that balance out.
" There's a point where you have to look at not just education
and savings but what is the plan actually delivering on? " she
continues. " What is the value provided to the participant? That's
what we're trying to get to with these services, and it's still very
much in flux. " -Bailey McCann
PLANSPONSOR.COM May - June 2023 17
http://www.PLANSPONSOR.COM
PLANSPONSOR - May - June 2023

Table of Contents for the Digital Edition of PLANSPONSOR - May - June 2023
