Tavares | Winter Park | The Villages

Financial wellness complements retirement

Slowly but steadily, saving for retirement is returning to professionally managed funds with automatic features. That’s been the trend the past 15 years, says Michael Case Smith, co-founder and managing director of Edge 401k Funds, based in Winter Park, Fla. “We want good things happening when people do nothing,” he says.

Still, Smith says, many employees need more than auto features to help them save enough for retirement. That’s why his company offers financial wellness services via its 401(k) plan.

Three times a year, plan participants are contacted by phone with an update about their fund and are given an opportunity for one-on-one financial coaching to help them plan for anything they might need for retirement. “Reaching out to people every four months and holding them accountable … is where you get behavior change,” Smith says.

The fee for this service is inside in the fund, which benefits employers who already have to pay for medical insurance, Smith says. “We’ve taken away hard-dollar costs,” he says.

“The other big hurdle is engaging the uninvolved,” Smith adds. “They call them ‘uninvolved’ for a reason. They don’t go to websites.” That’s why individual coaching so crucial, he says, but it’s unfortunately missing from a lot of 401(k) funds.

Financial wellness important to employers

Employers are placing more importance on financial wellness. This year, 93% of employers are “very or moderately likely to create or broaden their efforts on financial wellness topics in a manner that extends beyond retirement decisions,” according to Aon Hewitt’s 2015 Hot Topics in Retirement report. Nearly half, 49%, of those surveyed said that “financial wellness has become more significant in the last two years. Only 1% feel it is less important.”

Smith realizes that many people aren’t concerned with retirement — they’re focused on immediate bills such as paying rent and student loans. “They’re not listening to the 401(k) guy,” he says.

That makes automatic features and one-on-one coaching even more important, Smith says. “That’s what financial wellness needs.” Helping people get their finances in order translates into more productive employees, less turnover, fewer claims and less absenteeism, he says.

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