Cogent Syndicated: Plan Sponsors’ Use of Financial Wellness Offerings Reaches Historical High

June 23, 2021

New data from Cogent Syndicated find plan sponsors are sharpening their focus on reevaluating their investment menus and incorporating financial wellness programs. Unlike last year, plan sponsors are dedicating less energy on reducing plan costs and adequately preparing participants for retirement. As a direct response to the COVID-19 pandemic, plan sponsors are now increasing access to investment guidance and financial wellness programs to better support their participants. These and other findings are from Retirement Planscape®, an annual Cogent Syndicated™ study from Escalent, a top human behavior and analytics advisory firm.

“Access to financial wellness programs is at an all-time high,” said Sonia Davis, senior product director at Escalent and lead author of the report. “Plan sponsors of all sizes are dramatically expanding their wellness offerings, showcasing the level of commitment organizations are extending to the overall financial health of their employees. This growing use of financial wellness offerings highlights an opportunity for plan providers to distinguish themselves.”

Financial wellness programs designed to help employees achieve financial well-being by managing day-to-day finances, achieving important long-term goals and protecting against key financial risks are now offered by 49% of Micro plans, 66% of Small–Mid plans and 87% of Large–Mega plans. In addition, a greater number of DC plan sponsors are relying on plan provider financial wellness programs (50% vs. 40% in 2020), with Large-Mega plans citing the greatest reliance (61%).

Tracking the Growth: Plan Sponsors with Financial Wellness Programs

Plan Size 2019 2020 2021
Total 45% 44% 52%
Micro (<$5M) 42% 40% 49%
Small–Mid ($5M–<$100M) 60% 65% 66%
Large–Mega ($100M+) 82% 79% 87%

Source: Escalent. Cogent Syndicated. Retirement Planscape®. May 2021.

“Without question, DC plan providers are using financial wellness programs as a key lever to broaden their plan sponsor relationships and strengthen client loyalty,” said Linda York, senior vice president at Escalent. “These offerings are becoming more sophisticated, going beyond basic calculators and debt trackers, and are being crafted to help project future healthcare expenses and address more holistic household and family needs.”

Once financial wellness programs are established, the study reveals that nearly half (45%) of DC plans measure the overall success of these offerings based on 401(k) enrollment rates. Employee surveys and direct feedback serve as secondary evaluation criteria of program success, cited by one-third of plan sponsors (34%). 401(k) hardship withdrawals also serve as an important barometer among Small–Mid and Large–Mega plans, coinciding with the desire of these plan sponsors to retain assets in-plan.

About Retirement Planscape®

Cogent Syndicated, a division of Escalent, conducted an online survey of a representative cross section of 1,453 401(k) plan sponsors from February 17 to March 24, 2021. Survey participants were required to have shared or sole responsibility for plan design, administration or selection and evaluation of plan providers, or for evaluating and/or selecting investment managers/investment options for 401(k) plans. In determining the sampling frame for this study, Cogent relied upon recent Form 5500 filings as maintained by ALM’s Judy Diamond Associates. To ensure the population for this research is representative of the universe of 401(k) plan sponsors, quotas were set during the data collection phase around key firmographic variables including total plan assets, number of plan participants, industry and geography. Minimal weighting was applied to adjust for purposeful deviations from the actual marketplace distribution. The data have a margin of error of ±2.52% at the 95% confidence level. Escalent will supply the exact wording of any survey question upon request.

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