Cerulli finds that only 24% of active 401(k) participants say they are very confident they will be able to maintain their current standard of living in retirement. However, the dearth of retirement confidence among average Americans certainly cannot be attributed to a lack of tools, products, and solutions aimed at improving defined contribution (DC) participants’ financial well-being.

According to our research, more than 90% of DC recordkeepers offer financial wellness services to clients and 71% of 401(k) plan sponsors have adopted a financial wellness program, but currently these programs are either not effective or not widely used by participants. Most financial wellness tools and services see usage rates of less than 20%. 41% of 401(k) participants rate the tool or service they used very helpful, but most (57%) are more neutral about the experience.

While most financial wellness programs contain the basic building blocks to lower user financial stress and increase retirement preparedness, these programs are often not constructed in ways that drive action on behalf of the participant. Cerulli maintains the most effective financial wellness programs include some form of guidance, financial planning, or financial coaching, and considers each 401(k) participant’s entire financial situation. In turn, effective financial wellness programs can offer return on investment for recordkeepers by bringing in richer participant data, building potential retail relationships, and winning and retaining plan sponsor clients.

To learn more, access The Cerulli Report—U.S. Retirement End-Investor 2024. In addition to covering financial wellness programs, this research offers complete sizing of the 401(k) and individual retirement account (IRA) markets, representing Cerulli’s most comprehensive investor-level retirement research and includes analysis of the savings and decision-making behavior of 401(k) participants.