Recognizing the precariousness of employees’ financial safety nets during the pandemic, new survey results show that supporting employee financial stability and sustainability has gained momentum within many organizations.
According to Gallagher’s 2021 Retirement Survey Report, 67% of employers have either launched a formal financial wellbeing program (37%) or are considering this benefit (30%) to provide employees with financial stability. From an industry standpoint, those that already offer financial wellbeing opportunities range from 26% in health care to 52% in manufacturing and 53% in financial services.
Additionally, the survey found that the intent to implement a program in the future is more prevalent among health care (34%) and manufacturing (29%) employers than those in financial services (19%).
The pandemic also shifted how employers offer financial education. Among the 55% of employers that prioritized financial education during the pandemic, 17% primarily relied on adviser resources, 18% used recordkeeper resources and 20% combined both options.
Having direct access to a financial advisor seemed to help alleviate some stress. Gallagher notes, for example, that phone support (63%) and educational webinars (63%) were the most common delivery routes in 2020 compared to onsite group meetings in the prior year. Still, despite logistical challenges related to health concerns, onsite group meetings (51%) and individual face-to-face meetings (44%) also remained relatively popular.
“Many individuals went into the global pandemic crisis underprepared, with no option other than to just try and make ends meet,” observes John Jurik, Gallagher’s Retirement Plan Consulting National Practice Leader. “It is a sobering reminder of the importance of offering a flexible financial wellbeing program that’s centered on the employee.”
Plan Decisions
Moving beyond financial wellness, Gallagher also found that recommendations from advisors and recordkeepers are key influences on plan sponsor decisions. In fact, 9 out of 10 sponsors ranked advisor recommendations as a top-three driver of investment menu changes.
The rate was somewhat lower for recordkeepeer recommendations, at 80%. For a period last year, CARES Act compliance questions and decisions about the feasibility of contribution matching took precedence over standard fiduciary priorities, such as investment fund reviews. But for most of 2020, market volatility captured the attention of plan sponsors on their responsibility to manage retirement plan investment risks, the study notes.
Additional findings show that all but 15% of employers work with an independent retirement plan advisor:
- Co-fiduciary under section 3(21) of ERISA (42%)
- Discretionary fiduciary under section 3(38) of ERISA (16%)
- Unknown fiduciary status (28%)
- None (15%)
Those that go it alone are likely missing out on shared liability that mitigates risk, as well as supportive process documentation, the study suggests.
The findings are based on responses collected from 277 organizations in an online survey conducted between August and September 2020 on a range of questions involving retirement and financial wellbeing.
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