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WORKERS LEAN TOWARD FINANCIAL COUNSELING

WORKERS LEAN TOWARD FINANCIAL COUNSELING

WORKERS LEAN TOWARD FINANCIAL COUNSELING
May 29
08:42 2018

Benefits Products & Services

MassMutual study looks at gaps in plan participants’ sense of financial security

For some time, major employee benefits providers have been beating the drum for increased simplification of enrollment methods—anything that can streamline an employee’s decision-making process, and, above all, help them see the connection between the products offered and their own personal needs.

“More lower- and middle-income workers than upper-middle-income workers are likely to say that they wish their employer did more to help them set financial priorities.”

—Jon Shuman
Leader, Voluntary Benefits Unit
MassMutual

When employees can readily see how their benefits choices affect their overall financial security, it can change the way employees view their employer. They are more likely to see the employer as a partner in their financial future. That’s good for all parties, but it has proved to be an elusive goal.

Recent research from MassMutual indicates that large numbers of plan participants, especially lower-paid employees, currently do not see how their benefits programs are doing much to improve their sense of financial security. The upside of the MassMutual study results is the finding that employees welcome a wider scope of advice from employers in making financial decisions.

MassMutual’s independently conducted research, covering American workers of all ages, shows that 58% of middle-income employees (household incomes between $35,000 and $150,000) feel “much more secure financially” or “somewhat more secure” financially because of the benefits they receive at work. The number drops to 42% for workers on the lower end of that income range. At the higher end—those with household incomes between $75,000 and $150,000—it rises to 65%.

“The study indicates there may be a knowledge gap in the understanding and use of employee benefits among certain employee populations,” says Jon Shuman, leader of MassMutual’s voluntary benefits unit. “More lower- and middle-income workers than upper-middle-income workers are likely to say that they wish their employer did more to help them set financial priorities.”

The study showed that as many as half of all employees surveyed were interested in receiving additional help or guidance from their employer on personal finances. One quarter of them said they currently were receiving financial education at work—the most common being retirement planning. The study indicated that 51% of employees wish their employer did more to educate them about saving for retirement.

Outside the realm of traditional benefits products, there were wide variances between benefits offered by employers and those that interest employees. Seventy-five percent of employees said they would at least consider help from their employer on budgeting and money management if it was offered, while 31% explicitly said they wanted such help. (The study showed that 25% of employers offer budgeting help.)

Only 15% reported receiving help with wills and estate planning, but 24% said they wish their employer offered these services.

The study found that Millennials are especially interested in receiving financial help in the workplace—70% of them would welcome financial planning services, and 60% would be interested in budgeting assistance.

Baby Boomers were most interested in Social Security counseling (65%), followed by financial planning (59%). Gen-Xers’ leading areas of interest were financial planning (70%) and Social Security counseling (57%).

Close to half of Millennials (48%) and Gen-Xers (45%) expressed an interest in debt counseling.

The lowest income group ($35,000 to $44,000) had the highest interest in retirement planning (33%) and investment advice for retirement plans (24%).

MassMutual’s strategy for boosting benefits plan participants’ sense of financial security includes devoting increased resources to benefits products education. The company is broadening the responsibilities of its retirement education specialists, training them to educate workers about how insurance benefits may complement their retirement saving as they meet individual financial security needs.

“The transition for these retirement specialists has gone smoothly,” says Shuman. “Our retirement consultants had already been emphasizing retirement as a piece of the holistic picture of a person’s financial decisions. So now having the voluntary benefits products available to these counselors allows the conversation to be a little more robust. It allows them to take action at that time instead of going back to their benefits department.

“It almost sounds counterintuitive,” Shuman continues, “but having people being able to make multiple financial decisions at one time helps put the decisions into a single perspective.”

He says MassMutual takes an “omni-channel” approach to benefits counseling. “Not everybody learns the same way. We use web and WebX, phone—either the employee scheduling an appointment or just picking up the phone—one-on-one in-person meetings and group meetings. Unlike some companies, we believe there is a place for paper—whether it’s postcards or mailers. We want to meet with people on their terms.

“When we set up self-service options for benefits enrollment, we assumed that Millennials would be the ones to be attracted to it, and that Baby Boomers would want to continue to interact with us over the phone or in person. Our data actually proves otherwise. The younger generation wants to do the research on their own and then pick up the phone or see one of our counselors and be told, ‘Hey, you’re doing a good job. That’s exactly what you should be doing.’”

For all plan participants, Shuman says MassMutual’s approach “is about helping people understand what their needs are and making decisions that meet their short-term and long-term goals. For example, for a male who makes $50,000 per year, who is single with no children and rents his home—how should he spend his benefits dollars? And a 35-year-old female who is the primary breadwinner earning $100,000, who has a mortgage and children—how should she spend hers?

“The benefits usage of these two employees is, and should be, very different. For everybody, healthcare is first.” Beyond that, he says, plan participants need to consider individual products in terms of individual needs.

Shuman emphasizes that MassMutual’s overall market approach is driven by its relationship with intermediaries. “Our products are 100% intermediary-sold—brokers, advisors, consultants,” he stresses. “We’re constantly engaged with our advisor partners, letting them know the trends we see and letting them know how they can get help from us. We want to help them be the general contractor for the employer.”

It could involve a wide range of possible products and programs, Shuman says. “For example, we might talk to the advisor about creating a wellness program, or a program for younger employees to pay back tuition.” Whatever product or service is being introduced into an employer’s mix of benefits, the broker is heavily involved in the solution.

“If you do the right things with employees at a young age, they’ll be prepared to retire when they want, not when they can afford to,” Shuman states. “So you want to help that broker and that sponsor put together a best-in-class benefits program.”

Sometimes, he says, it’s a matter of using principles of behavioral finance. “For example, in a retirement plan, if the employer can match 100% of the first 3% of the employee’s contributions, it doesn’t cost the company any more to match 50% of the first 6%. But the employee will wind up with a better retirement balance because employees tend to save to the match.”

If individual insurers, along with their plan sponsors, buy into the idea of providing plan participants with more financial advice, they will develop their own strategies for doing so. The MassMutual study indicates employees are interested in such services. Anything that can strengthen employees’ sense of financial security is worthy of consideration by plan providers, brokers and employers.

“It’s a pretty exciting time as the market continues to evolve,” says Shuman. “With the right distribution partner and the right mindset around delivering a solution, we’re confident we have a good product and can fulfill needs. I’m really looking forward to seeing where this marketplace takes us.”

The author

Thomas A. McCoy, CLU, is an Indiana-based freelance insurance writer.

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