Plan Providers Need to Prove Value of Financial Wellness Programs

November 15, 2023 — Boston

Cerulli recommends providers evaluate participant interaction to deliver a more personalized experience

Financial wellness programs have grown to become a key component of the defined contribution (DC) plan value chain, with close to 90% of recordkeepers presenting a financial wellness program that either is proprietary or offered in conjunction with a strategic partner, according to the latest Cerulli Edge—U.S. Asset and Wealth Management Edition. However, given the difficulty in measuring the success of these programs, plan providers will need to demonstrate the value they provide for plan sponsors and participants.

Among plan sponsors that currently do not use a financial wellness program, the top reason for not doing so across all plan asset segments is the expectation that employees would not take advantage of it (32%). Providers are responding to plan sponsor concerns, evaluating measurable participant activity.

Recordkeepers tell Cerulli they are focused on measuring digital interactions to drive intelligence evaluating website activity (94%), DC participation and/or contribution rates (89%), and scores on overall financial wellness assessments. However, participant interviews and/or surveys are used less often (61%).

Cerulli recommends financial wellness providers and recordkeepers consider conducting more qualitative assessments to get the “on-the-ground” story of how people use these programs and how they feel about them. If more-or-less standardized questions are used across time, a sense of progression can be assessed.

Moreover, sentiment-based survey data analyzed in conjunction with quantitative participant-level metrics may yield richer insights into how financial wellness engagements impact plan participants. These insights, in turn, can drive adjustments to these programs that enhance their benefits.

“Modern financial wellness programs are becoming unrecognizable compared with earlier iterations, which mainly consisted of libraries of PDFs or links to generic videos that explained basic financial concepts,” says Elizabeth Chiffer, analyst. “Today, plan providers have the technology infrastructure and data capture capabilities to fine tune their approach to participant outreach. Providers that can leverage data to deliver a personalized experience that aligns with participant goals and planning horizons will prove valuable to plan sponsors and participants.”

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