Success of Financial Wellness Programs Contingent on Ability to Drive Participant Actions

Success of Financial Wellness Programs Contingent on Ability to Drive Participant Actions


Education-oriented wellness programs are “not enough” to improve participant outcomes

June 2019, BOSTON. Educational content has value and serves as a building block to basic financial literacy, but plan sponsors and providers consistently describe education on its own as “not enough” to deliver an effective financial wellness program, according to new research from Cerulli Associates, a global research and consulting firm.

Recordkeepers and retirement plan advisors observe that a driving force behind their decision to create a financial wellness program or enhance their current offering is client demand. “Many employees in today’s workforce are struggling with competing financial priorities and they will often express these concerns to their employer,” states Dan Cook, a research analyst at Cerulli. “Plan sponsors have taken note—nearly one-third (32%) identify improving the financial wellness of employees as a top priority for their 401(k) plan.” This sentiment highlights the need for solutions that help address participants’ holistic financial needs, beyond just retirement savings.

However, measurement of success and return on investment (ROI) for plan sponsors is often discussed as an impediment to the adoption and effective implementation of financial wellness programs. “Plan sponsors have a broad range of goals for financial wellness programs,” says Cook. “Some goals, such as increasing 401(k) plan contribution rates, are straightforward to measure. Other goals, such as improving financial literacy, increasing workplace productivity, and decreasing employee stress, are more nebulous and/or difficult to directly attribute to a financial wellness initiative.”

By structuring participant engagements as action-oriented rather than education-oriented, providers can overcome the ROI hurdle and connect financial wellness components to workplace outcomes. “Individuals must be triggered to enact changes that impact their financial lives in a positive way,” explains Cook. “As such, providers must consistently collect data to identify engagement strategies that resonate most with specific groups and craft digital experiences through which a participant’s ‘next-best action’ is only one or two clicks away.”

Cerulli’s latest report, U.S. Retirement End-Investor 2019: Driving Participant Outcomes with Financial Wellness Programs, provides insights into the decision-making behavior of 401(k) plan participants and detailed analysis of the individual retirement account (IRA) rollover market.

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