Financial wellness research and insights.
Financial wellness research and insights.
Saving for retirement is the most commonly cited financial goal among employees, coming ahead of many short-term goals, including eliminating debt and creating an emergency fund.
We found that saving for retirement is a goal for the majority, 56%, of employees surveyed. Saving for retirement came in far ahead of the second most popular financial goal, which was chosen by 40% of employees.
In the latest issue of Financial Wellness Insights, we discuss the top five goals among employees. Check out the full study here: https://retiremaphq.com/financial-goals
Highlights of the issue include generational differences, financial motivations across different income groups, and tips for talking to employees about their top financial goals.
When it comes to retirement planning, our analysis suggests that the problem is not with employee intention but with knowledge. By empowering employees with the right tools for long-term planning, advisors can effectively help employees achieve their financial goals.
Retiremap’s Financial Wellness Insights is a bimonthly research series that helps employers and advisors better understand employees. Each issue offers a blend of in-depth analysis of employee data and highlights of research from throughout the industry. As always, Retiremap is happy to offer Financial Wellness Insights with white-labeling for advisors to present and distribute.
Employees at large companies have better access to retirement benefits than employees at small companies, but small companies are rapidly improving their employees’ retirement confidence, according to the 16th Annual Transamerica Retirement Survey. The survey, which included responses from 4,550 workers nationwide, defines a small company as having 10-499 employees and a large company as having 500 or more employees.
74% of employees at large companies have access to a 401(k) or other self-funded plan by their employers, compared to 56% of employees at small companies. Unsurprisingly, employees of large companies are more likely to rely on their retirement accounts as a primarily source of income, 40% compared to 34%. The participation rate for those offered a 401(k) or similar plan is around 80% for both groups. The plan contribution rate, however, is higher for employees at large companies, 8% of their annual pay, compared to small company employees’ 7%.
Despite differences in access to retirement benefits, employees at large and small companies have similar sentiments about retirement. 60% of all employees feel “somewhat” or “very” confident about retirement, and both groups have similar expectations about age of retirement. Concerns about retirement are consistent as well. 80% of both groups agree that their generation will have a harder time achieving financial security than their parent’s, and 75% are concerned that Social Security will not help them.
While small companies still have some catching up to do in terms of offering competitive retirement benefits, multiyear data suggests that small companies have made more gains in the last few years in improving employees’ retirement confidence. Employees at small companies who felt “somewhat” or “very” confident about retirement grew 23% from 2011 to 2015; the cohort that felt “very” confident grew 88%. In comparison, employees at large companies who felt “somewhat” or “very” confident about retirement grew 13%; the cohort that felt “very” confident grew just 17%.
It is clear that employees at both large and small companies need more financial guidance. The majority of workers “guessed” at their retirement savings needs; less than 10% used a retirement calculator. 61% of all employees agree with the statement “I would like to receive more information and advice from my company on how to reach retirement goals.” However, a startlingly 41% of small company employees and 37% of large company employees agree with the statement “I prefer not to think about or concern myself with retirement investing until I get closer to my retirement date.” Interestingly, employees at small companies are somewhat more likely (37%, compared to large company employees’ 33%) to use a professional financial advisor to help manage their retirement savings. Yet, the data suggests that the vast majority of employees at large and small companies could benefit from either more advice on how to achieve financial goals or simply guidance on how to start thinking about retirement investing.
Employers and financial advisors are increasingly eager to learn about and provide more robust assistance with employees’ financial wellness goals. In response, Retiremap has launched Financial Wellness Insights, a research series that will focus on a different theme in the financial wellness landscape every month. This month’s research on Millennials can be found here:
Offering a unique blend of in-depth analysis of employee data and highlights of research from throughout the industry, each issue of Financial Wellness Insights will provide timely and actionable information to help employers and advisors better understand employees and how they can strengthen their financial wellness offerings. Case studies and industry best practices will also be included in the research.
“We are excited to be offering our new Insights series to share the broad financial wellness trends we are seeing through Retiremap implementations with advisors,” said Matt Iverson, CEO at Retiremap. “The Insights series is designed to help advisors demonstrate thought leadership by sharing the latest financial wellness research with clients and prospects.”
As with Retiremap’s other communication and research pieces, Retiremap is happy to offer Financial Wellness Insights with white-labeling for advisors to present and distribute.
In the inaugural issue, “How Millennials Rank on Debt, Savings and Investing,” Retiremap finds that Millennials stack up surprisingly well against Baby Boomers and Gen X-ers across a number of key financial wellness indicators, including debt and savings rates. Millennials have far less liquid savings than Baby Boomers and Gen-Xers but are steadily catching up with an overall monthly savings rate of $425. Even though a higher percentage of Millennials carry debt across all categories measured, Millennials have less debt, in dollar amount, than Gen X-ers do.
“The research reveals that Millennials are aware of their responsibilities, which is a crucial first step in the path to financial security.” said Julia Chen, Researcher at Retiremap. “It’s also a strong signal for advisors that Millennials want to be engaged and educated around financial issues.”
“With all the concern about Millennials, it’s refreshing to see the data showing how they are paying attention to savings and addressing debt,” said Iverson. “We’ve found that the key to engaging Millennials is focusing on their financial goals, while providing a visual planning process.”
American workers are expecting more help from their employers in regards to retirement planning, according to a new study from American Century Investments. The survey, which included responses from over 2,000 defined contribution plan participants, found that retirement is top of mind for employees but they still need more help.
80% of participants believe that they would have saved more if their employer had given them more of a “nudge.” Participants were especially interested in investing help.
Employees are also open to more aggressive saving targets; 70% support automatic enrollment at 6% and nearly 80% support automatic contribution increases. 90% of participants had at least some regret about retirement savings.
Not saving enough for retirement was mentioned more frequently than not doing better in careers or personal relationships.
Other studies support Americans’ desires for more financial guidance and growing trust in financial professionals. The Allianz LoveFamilyMoney study found that 92% of respondents who have used financial professionals said they believe that the relationship is helping them achieve their financial goals, and 74% believe that the extra guidance is worth the cost.
Even respondents who have never used a financial professional believe that professionals are helpful in achieving financial goals.
The differences in behaviors and feelings of financial well-being between those who use financial professionals and those who do not are clear: 12% of those who have never worked with a financial professional are unsure of how to fund their retirement, compared to 3% of those who have worked with a financial professional.
60% of respondents who work with an advisor feel very secure about their retirement, as compared to 32% who do not, according to Deloitte.
Working with a financial professional also encouraged more savings, investing, and long-term goal-setting.
Deloitte also found that 78% of consumers surveyed in 2014 trusted their own financial professional, compared to 68% in 2012, indicating an ongoing upward trend. The positive sentiment towards financial professionals and openness towards receiving help should be good news to plan sponsors.
However, employers still have a lot of room to expand their engagement and guidance. Only 14% of respondents believed that their employers had done everything possible to help with retirement planning, and employers underestimate the amount of employees that want at least a “slight nudge,” according to American Century Investments.
SAN FRANCISCO – August 14, 2015 – LPL Financial has selected Retiremap for inclusion in its new Vendor Affinity Program*. The Retiremap program, designed specifically for retirement plan advisors and their plan sponsor clients, expands upon the employee engagement and financial wellness solutions available to LPL advisors.
“We are excited to work with LPL and their retirement plan advisors to deliver the first financial wellness program created specifically to maximize advisor value with their plan sponsor clients,” said Matt Iverson, CEO and Founder for Retiremap. “With a full-service program that makes plan advisors measurably more impactful, Retiremap’s unique engagement process combines today’s technology and behavioral economics to help employees achieve their financial goals.”
Based on research by leading behavioral economist and NY Times bestselling author, Dan Ariely, Retiremap engages employees and creates a personalized plan to help them achieve their financial goals. Designed with retirement plan advisors in mind, Retiremap is a branded, turnkey program that both saves advisors time and increases revenue. For plan sponsors, Retiremap increases employee engagement and improves financial wellness, while reducing fiduciary liability. For employees, Retiremap’s personalized program gets them financially on track, while also increasing plan enrollments and savings rates.
“We recognize that technology is a major contributor to creating increased efficiency and driving greater productivity in our clients’ businesses,” said Victor Fetter, LPL Financial managing director and chief information officer. “Being able to connect LPL clients with leading technology solution providers adds a new dimension to the level of service and support we can provide to clients to help them manage and grow their businesses.”
“What sets Retiremap apart is complete alignment with the plan advisor’s business model along with a service model where each advisory firm has their own Retiremap relationship manager,” said Iverson. “Retiremap’s aspirational, holistic approach doesn’t just focus on consumer debt, but also encourages employees to save more in their retirement plan while accomplishing their financial goals.”
For retirement plan advisors working directly with employees, Retiremap facilitates deeper employee engagements through the fun goal-setting process, personalized emails and automated appointment setting. Designed to increase plan advisor efficiency and deliver a highly personalized employee experience, Retiremap’s Advisor Management Interface allows advisors to review an employee’s financial goals and household profile prior to any interaction.
* The Vendor Affinity Program is a new initiative designed to help advisors reduce the complexity and costs of running their businesses. by offering a centralized repository of vendors that have agreed to provide their products and services to LPL advisors at discounted prices.
Retiremap partners with retirement plan advisors and their plan sponsor clients to provide an award-winning financial wellness program that helps employees achieve their financial goals. Retiremap’s web and mobile software applications are based on research by leading behavioral economist and NY Times bestselling author, Dan Ariely, and drive positive changes in employee behavior, including higher savings rates and greater engagement in the retirement plan. Retiremap’s customized Plan For Your Future iPad workshops help employers drive the retirement plan concept in fresh new ways, while measuring plan advisors’ positive impact with employees. For more information, visit www.RetiremapHQ.com
About LPL Financial
LPL Financial, a wholly owned subsidiary of LPL Financial Holdings Inc. (NASDAQ:LPLA), is a leader in the financial advice market and serves $485 billion in retail assets. The Company provides proprietary technology, comprehensive clearing and compliance services, practice management programs and training, and independent research to more than 14,000 independent financial advisors and more than 700 banks and credit unions. LPL Financial is the nation’s largest independent broker-dealer since 1996 (based on total revenues, Financial Planning magazine, June 1996-2015), is one of the fastest growing RIA custodians with $105 billion in retail assets served, and acts as an independent consultant to over an estimated 40,000 retirement plans with an estimated $120 billion in retirement plan assets served, as of March 31, 2015. In addition, LPL Financial supports approximately 4,300 financial advisors licensed with insurance companies by providing customized clearing, advisory platforms, and technology solutions. LPL Financial and its affiliates have 3,352 employees with primary offices in Boston, Charlotte, and San Diego. For more information, please visit www.lpl.com.
Financial wellness programs are becoming more and more prevalent as employers, large and small, rethink the importance of helping their employees achieve financial goals and become retirement ready.
According to Bank of America Merrill Lynch, most companies feel somewhat responsible for the financial wellness of their employees, and most companies believe that financial wellness programs will be standard in 10 years. Employers’ growing concerns over their employees’ financial situations make sense, especially since 20% of employees report that issues with personal finances have been a distraction at work. Financial stress causes employees to be less productive in the day-to-day and more dissatisfied with their employers in the long run. Financial wellness programs are not only good for employees; they can also help improve the bottom line for employers.
The Financial Wellness Trends one-pager summarizes key findings from four major studies released earlier this year. It provides essential information for quickly understanding the current state of financial wellness, from the perspective of the employer and employee.
Retiremap is a research-backed employee financial wellness program designed with renowned behavioral economist Dan Ariely and his team from Duke to help employees achieve their financial goals.
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