As retirement planning has shifted from defined benefit plans to 401(k)s, employers have looked to find ways to support their employees with financial planning. Many 401(k) providers offer access to financial advisors, educational sessions, and online tools, but the reality is that 401(k) providers are very different from what comprehensive financial wellness benefits have to offer.
401(k) providers have deep expertise when it comes to retirement, but often don’t have the ability to support employees through all of their financial concerns. The modern worker requires solutions that go beyond explaining what the retirement plans offer, seeking guidance on how these plans fit into their overall financial picture.
Financial wellness programs offer personalized financial guidance and resources that address a broad spectrum of financial goals, helping employees achieve both short-term stability and long-term security. Oftentimes, employees have to make decisions about paying down debt, budgeting, managing student loans, saving for education, insurance, and more. All of these involve trade offs that must take into account how much a person earns and what their spending needs are. Financial wellness programs can help employees prioritize their goals and tackle a wide range of financial issues.
Unlike 401(k) providers that focus on selling services and increasing the utilization of a specific product, financial wellness programs act as fiduciaries. The financial professionals working within these programs focus on providing sound, unbiased, financial expertise. By considering the full picture of an employee’s life and financial pain points, an unbiased financial professional can provide tailored insights to the individual without the motivation to sell products.
Traditional 401(k) plans are advantageous for long-term planning, especially with employer contributions. However, focusing solely on retirement takes away from other key financial topics. Indeed, research shows that 42% of workers might tap into their retirement account for other expenses before they retire, likely due to needing support managing other aspects of their financial lives. Today’s employees demand more than just retirement help– they need comprehensive financial planning.
When comparing what your 401(k) provider offers with that of a financial wellness benefit, know that it’s not an either/or. Financial wellness plans can actually work with traditional 401(k) providers. Some providers will even offer integrated support and co-host events focused on saving for retirement.
Many financial wellness benefits providers offer tailored education about your company’s benefits. For example, if your company offers a retirement match, the provider can educate employees on how to maximize this benefit.
While it may be tempting to think your 401(k) provider is the same as a financial wellness benefit, the two are actually quite different. Financial wellness offerings like Addition Wealth are customized to your company to support your employees with the financial topics that are most relevant to them. While that will likely include retirement, it will also bring in other topics, giving employees comprehensive, holistic support that enhances their overall financial well-being.
While all employees desire health coverage and retirement assistance, these are just the basics of what benefits can address. The true strength of financial wellness lies in its holistic focus and personalized approach. This not only enhances employee well-being but also drives organizational success through improved morale, productivity, and retention.