T. Rowe Price PPT for 5/16 WEB Program

1. WELLNESS
WORKS
Empower your
employees with
financial wellness
David Norris – Sr Defined Contribution Consultant
T. Rowe Price

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WELLNESS
WORKS
 What is financial wellness?
 Why should you care about it?
 Is your company a good candidate for
a financial wellness program?
 Tools and resources that help you
put financial wellness into action.
Overview

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WELLNESS
WORKS Historical objectives of retirement plan education
Increase Participation Increase Deferrals Asset Allocation

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WELLNESS
WORKS
Source: T. Rowe Price Retirement Plan Services, Inc., as of 12/31/17.
Innovations to plan design and investments have helped…
of participants remain in the plan
94%
AUTOMATIC ENROLLMENT

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WELLNESS
WORKS
Source: T. Rowe Price Retirement Plan Services, Inc., as of 12/31/17.
Innovations to plan design and investments have helped…
of participants remain in the service when it’s
offered on an opt-out basis
67%
AUTOMATIC INCREASE

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WELLNESS
WORKS
Source: T. Rowe Price Retirement Plan Services, Inc., as of 12/31/17.
Innovations to plan design and investments have helped…
of participants remain in a default fund such as TDF
81%
AUTOMATIC INVESTMENT INTO A QDIA

7. 7
WELLNESS
WORKS …but have not solved the problem completely.
avoid dealing with their
financial situation
55%
expect to run
out of money
26%
can’t afford to contribute
more to their plans
48%
Source: T. Rowe Price Retirement Saving and Spending Study (2015).

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WELLNESS
WORKS There is opportunity to do more.
say they are
financially illiterate1
43%
of wages go to
consumer debt
payments2
24%
say finances are the
largest source of
stress in their life3
64%
don’t have enough
savings to cover a
$1,000 emergency4
64%
1S&P Global FinLit Survey 2015.
2U.S. Census Bureau et al. 2014.
3American Psychological Association 2015.
4MarketWatch 2015.
Of American adults…

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WELLNESS
WORKS
Sources: Aon Hewitt 2017 “Hot Topics in Retirement” Study; PSCA’s 59th Annual Survey of Profit Sharing and 401(k) Plans.
Good intentions
of sponsors said they were focusing
on financial wellness in 2017,
92%
ALTHOUGH
have a program in place
18%
ONLY

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WELLNESS
WORKS What is financial wellness?

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Why should sponsors focus
on financial wellness?

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WELLNESS
WORKS
Chart is for illustrative purposes only.
Sponsor concerns: cost considerations
TENURE
COST
WORKERS’
COMPENSATION
PAYROLL
HEALTH CARE

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WELLNESS
WORKS Strain on worker productivity
of HR professionals surveyed say financial
problems impact employee performance.1
70%
1Aon Hewitt.
2SHRM, 2014 “Financial Wellness in the Workplace Survey.”
of employers believe that offering additional guidance
on handling finances will decrease the time employees
spend at work tending to financial issues.2
44%

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WELLNESS
WORKS
1American Psychological Association, 2015.
2San Diego State University, 2012.
Strain on employees—PHYSICALLY
Finances are the #1 source of stress for Americans.1
Google searches for
STOMACH ULCERS
increased
during the
Great Recession2
228%

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WELLNESS
WORKS
Finances are the #1 source of stress for Americans.
Strain on employees
Searches for
HEADACHES
increased
193%

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WELLNESS
WORKS Strain on employees
Finances are the #1 source of stress for Americans.
Searches for
CHEST PAINS
increased
35%

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WELLNESS
WORKS #1 reason for incorporating financial wellness
of plan sponsors said they want to provide some
type of financial wellness offering because…
84%

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WELLNESS
WORKS
Source: Aon Hewitt 2016 “Hot Topics in Retirement” Study.
#1 reason for incorporating financial wellness
It’s the right thing to do.

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WELLNESS
WORKS Financial wellness works for everyone.
Employees
Financially healthier employees are happier,
physically healthier, and more productive,
which can translate into greater business
success and increased retirement plan
contributions.
C-suite
As health care concerns continue to
mount, providing robust financial
wellness solutions could empower
employees to retire on time.
Human Resources
A more robust benefits package can
add a new “R” to the traditional three:
Recruit, Retain, Reward, Retire!

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WELLNESS
WORKS
Source: Financial Finesse. Data gathered over a 2-year period ending 2012.
Less spent on health care
for users
$2.5MIncrease
for nonusers
19.4%
Decrease
for program users
4.5%
Return on investment: reduction in health care costs

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WELLNESS
WORKS
Source: Financial Finesse, 2012.
Return on investment: reduction in absenteeism
10.80
hours
14.79
hours
Program Users
(Average)
Nonusers
(Average)
fewer absentee hours for users
27%

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WELLNESS
WORKS
Source: SmartDollar® program users, 2015.
Return on investment: reduction in stress
and distractions
37%
18%
21%
12% 13%
22%
Very Often Distracted Often Distracted Sometimes Distracted
FINANCIAL DISTRACTIONS AT WORK
FINANCIAL STRESS
20%
29%
34%
5%
12%
33%
Overwhelming Stress High Stress Some Stress
At start of program 2–5 years later

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WELLNESS
WORKS
39%
9%
22%
6%
22%
10%
14%
63%
3%
12%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Before
Current
Scared Confused Indifferent Confident Secure
IMPROVED EMOTIONAL OUTLOOK
Source: SmartDollar, 2015.
Return on investment: improved outlooks
RETIREMENT PREPAREDNESS
of program participants who are
saving 15% of their salary for
retirement after two years39%

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Make the leap from
intention to action.

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WELLNESS
WORKS
 Evaluate how your company
can benefit from a financial
wellness program
 Identify challenges and
resource needs to support a
program
 Follow a framework to structure
the discussion
Determine if you’re a good candidate.

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WELLNESS
WORKS
 Are employees retiring on time with
adequate savings?
 Are participants opting out of auto-
enrollment and auto-increase?
 Is there a high volume of
plan-specific Web traffic or calls
regarding loans, hardships, or
access to money?
Plan data
96%
66%

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WELLNESS
WORKS Employee demographics
 Does the company have a high
proportion of young employees who
may have significant debt?
 Does the company have an aging
population that may need assistance
with tax strategies, estate planning,
etc., as they approach retirement?
 Is the company in an industry (e.g., law firm
or medical practice) that may hire young
employees with a significant amount of
college debt?

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WELLNESS
WORKS
 Is a primary reason for offering a
competitive benefits package to recruit,
retain, and reward top talent?
 Is your company paternalistic, wanting
to give employees the best opportunity
for replacement income ratios that are
superior to the industry?
 Are you willing to devote the time and
resources to supporting a robust
financial wellness program?
Corporate culture and philosophy

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WELLNESS
WORKS
 Learn the predominant style
categories that financial
wellness programs adopt
 Consider how to match your
needs with different styles
 Recognize that there is not
necessarily a right answer—
there may be several good
choices today, or there may be
one for now and a different one
for later
Navigate the provider landscape.

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WELLNESS
WORKS Five methods to address financial wellness
 Enhanced Employee Education Program
 Education and Literacy
 Services and Products
 Tools
 Coaching and Behavior Modification

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WELLNESS
WORKS
 Develop a list of top needs or
priorities
 Compare your list of needs
against the offering of various
financial wellness providers
 Create a “Request for
Information” to gather data
from providers to enable a
more informed decision-making
process
Considerations for selecting a provider

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WELLNESS
WORKS Considerations for selecting a provider
Budget or cost
Business model
Communication frequency
Multimedia resources
Data-reporting capabilities
Integration with other benefits

33. WELLNESS
WORKS
Empower your
employees with
financial wellness
3/18
T. Rowe Price Investment Services, Inc.
CKFGX1ATK
201803-442871