In the wake of the COVID-19 pandemic—and ensuing market volatility, employment anxiety, and a historic economic stimulus package—financial wellness programs can help participants navigate through uncharted territory. However, there is mounting pressure for these services to prove their worth and transition from generic education to personalized advice, according to The Cerulli Report—U.S. Retirement End-Investor 2020.

Participants face myriad questions, such as: Should I take a withdrawal from my 401(k)? Are my retirement investments adequately diversified? Should I rebalance my account? To answer such questions, many retirement investors lacking a professional source of financial advice turn to their employers and retirement plan providers. Plan sponsors, therefore, play a vital role in establishing trust, vetting third-party services, and introducing participants to additional financial resources—often at minimal cost from the benefits budget through wellness programs.

For several years, plan sponsors have emphasized the need for broad financial wellness initiatives, recognizing that retirement savings alone cannot adequately prepare participants for all of life’s financial challenges. According to Cerulli’s report, 43% of 401(k) plan sponsors indicate that financial wellness is a top priority. From the employer’s perspective, financial wellness programs can pay dividends in the form of reduced employee stress, increased morale and productivity, retention, and better savings outcomes—including retirement readiness.

However, there is growing demand for these programs to deliver specific, actionable recommendations as retirement investors balance their needs for short-term solvency against long-term financial goals. “The current dynamic of economic uncertainty paired with more flexible access to retirement funds could result in pronounced outflows from defined contribution (DC) plans—at a time when markets are significantly down from their first-quarter peak and withdrawals are, in essence, locking in losses,” says associate director Anastasia Krymkowski.

On the whole, DC recordkeepers note a shift toward more conservative investments in response to recent market volatility. That said, early data indicates that while participants are in more frequent contact with their retirement providers, the activity within plan accounts has been modest. Providers have been quick to adapt to the volume and content of inquiries, communicating more proactively with their clients while working to evaluate and implement provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

As participants face hardship and financial anxiety during this crisis, plan sponsors must contend with uncertainty and economic volatility. For employers with limited resources or pressing budget constraints, retirement plans have ceded the spotlight to health benefits, business continuity, and other issues directly impacting operations and short-term solvency. “Nonetheless, retirement providers play a critical role in steering the financial conversation, educating and advising investors, and—most importantly—helping individuals progress toward long-term goals while meeting short-term obligations,” says Krymkowski.