Speakers zero in on financial wellness at PSCA conference

Taking a holistic view of participants' financial wellness is crucial in helping employees achieve financial security before and during retirement, said speakers at the Plan Sponsor Council of America's 69th Annual National Conference in Nashville May 3-4.

“People don't think about saving for retirement in a vacuum. They think about it within the context of what else is going on in their (lives),” said Steve Smalley, managing director of client experience at Schwab Retirement Plan Services Co., speaking on a panel about launching financial wellness programs.

A major issue for young and older employees is debt — credit card debt, housing debt and college debt, said Carol Bogosian, a member of the Society of Actuaries' committee on post-retirement needs and risks.

Without a plan to manage this debt, achieving retirement security could be difficult.

“When I see debt, and you talk about retirement income adequacy, to me those two can't be in the same sentence,” said Ms. Bogosian, speaking on a panel about financial advice. “If you are already in debt, then you're already living beyond your means, so how can you be coming into a retirement adequacy position if I'm going to lower your income in retirement as you have all of this debt?”

Recognizing financial wellness goes beyond retirement decisions, more employers are looking at offering broad wellness programs to help employees lead financially secure lives before and during retirement, said Kenje Mallot, financial solutions product manager, retirement strategy and solutions at Aon Hewitt, speaking on the same panel as Mr. Smalley.

According to an Aon Hewitt survey released earlier this year, 56% percent of employers said employees' financial well-being was an initiative they want to focus on in 2016, up from 46% in 2015, and up from 30% in 2014, Ms. Mallot said.

Aon Hewitt surveyed more than 250 client and non-client plans with nearly 7 million total participants.

According to Schwab's Mr. Smalley, the components of an effective financial wellness program are assessment tools, financial literacy, and the ability for individuals to plan and execute their plans.

Employees' needs are unique, and employers should consider their employees' biggest financial stressors when developing these programs, Mr. Smalley added

Robert W. Baird & Co.'s financial wellness program is tailored to the demographics of its employees, and borrows tools and concepts from its existing physical wellness program, said Lisa Mrozinski, director of total rewards at Baird.

For millennials, Baird offers financial wellness planning, a “know your score” campaign (inspired by fitness trackers on the physical wellness side), and automatic enrollment into its defined contribution plan at a 6% deferral rate. For baby boomers, the firm provides in-person retirement sessions and “retirement experience,” which explores whether employees are financially and emotionally prepared for retirement.

Liz Davidson, founder and CEO of Financial Finesse, which provides workplace financial wellness and retirement education programs, spoke about the success of another financial wellness adopter: a mortgage company with 3,000 employees whose CEO invited employees to spend 30 minutes one day taking a financial wellness assessment and following through on the recommendations, such as raising their deferral rates. More than 90% of the employees participated, Ms. Davidson, speaking on the same panel as Ms. Mrozinski. She did not identify the company.

Taking a holistic view of employees' financial wellness also came up in panel discussions on health savings accounts and gender influences on retirement savings.

People are “looking for information about how the pieces fit together,” said Cindy Hounsell, president of the Women's Institute for a Secure Retirement, speaking on a panel about gender influences on retirement savings. And for some of those pieces, such as Social Security and Medicare, employees lack basic information about them.

According to W. Patrick Jarrett, co-founder and president at Health Savings Administrators, an HSA provider, “any comprehensive retirement strategy should include at least a discussion of the health savings account.”

A 2014 survey by the Employee Benefit Research Institute showed health-care costs for a retired couple were estimated at $147,000. HSAs can help cover those expenses and keep retirement assets for retirement and not for health care, said Tim Kohn, vice president and head of defined contribution services at Dimensional Fund Advisors, speaking on the same panel.

Dimensional Fund Advisors hired Health Savings Administrators in January to administer its second HSA program. The other is administered by Wells Fargo & Co.

Americans will have to do more to plan, save, invest and preserve for their retirement, said David M. Walker, senior strategic adviser in the global public-sector practice, at PricewaterhouseCoopers LLP and former U.S. comptroller general.

The federal government's “current fiscal and monetary policies are unsustainable,” Mr. Walker said in a keynote address. The U.S. government has “grown too big, promised too much and needs to restructure.”

In 2015, federal government expenditures were 20% of the gross domestic product vs. just 3% in 1912. Last year, the government controlled just 32% of the budget compared to 97% in 1912. The debt-to-GDP ratio with Social Security and Medicare factored in currently stands around 105%, Mr. Walker said.

In restructuring its finances, the government will have to reduce spending and raise more revenue, which means plan executives and participants will have to do more to preserve their financial futures, Mr. Walker said.

Mr. Walker also implored audience members to put pressure on their candidates in the national and state general election to make fiscal reform a priority.

The U.S. needs CEO leadership that cares about this issue, is willing to spend time on it, deals with the public and negotiates on a bipartisan basis, or “(we're) going nowhere,” Mr. Walker said.

Lifetime achievement

Just prior to the conference, PSCA presented Nancy K. Webman, retired editor of Pensions & Investments, with a Lifetime Achievement Award.

The award, presented periodically, honors individuals who have made important contributions to the growth of defined contribution industry. This year's award was sponsored by Dimensional Fund Advisors.

Ms. Webman retired as editor in 2015 after more than 33 years at P&I. The award was presented to Ms. Webman on May 2.

“Through her leadership at Pensions & Investments, Nancy Webman has had a profound impact on our industry,” said Stephen W. McCaffrey, chairman of PSCA's board of directors, said in a citation. “She has worked tirelessly to identify and cover the significant issues affecting plan sponsors, and in doing so, shed light on the major issues impacting millions of participants around the world.”

Nomination are accepted and then voted on by PSCA's board of directors. The vote for Ms. Webman was unanimous.