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Measuring Effectiveness Of Financial Wellness – An Industry At A Cross Roads

No doubt that there’s excitement by defined contribution (DC) plan sponsors as well as the retirement industry professionals about financial wellness. But there’s also growing concern that the momentum behind financial wellness programs will be wasted unless we can show returns on an investment which is still largely missing. 401kTV asked industry entrepreneur Matt Iverson, Founder of Retiremap, what plan sponsors can do to make their financial wellness programs effective.

Beyond participants attending meetings and logging onto websites, DC plan sponsors need to set specific measurable goals to determine the success of financial wellness programs before they are instituted. In another words, as Sam Walton said, you can manage what you cannot measure.

According to Iverson, ultimate success is increased participant account balances as well as signing up for the right benefits for them like HSAs. He warns against a “waterbed” effect or just moving money from one account to another.

What’s missing, according to Iverson, is accountability which is hard for most people unless there’s a third party like a physical trainer. So the key for financials wellness is an engaged and experienced advisor.

Costs have led to the robo-advisor movement but these firms mostly create asset allocation programs leveraging technology. Iverson suggests that technology can enable live advisors through text reminders, for example. Having someone to be accountable to at a reasonable price leads to confidence through short term accomplishments.

So before plan sponsors rush to create costly financial wellness programs, it’s essential to set manageable goals that result in returns for the company and their employees – just like any other initiative. What are the goals of your financial wellness and have they resulted in measurable returns? Which are good questions to ask before you start a fincial wellness program.

Fred Barstein

Fred Barstein

Founder & Editor-in-Chief at 401kTV | TRAU | TPSU
Fred Barstein is the Founder & Editor-in-Chief of 401kTV. Fred is also the Founder and CEO of The Retirement Advisor University (TRAU), a collaboration with UCLA Anderson School of Management Executive Education and The Plan Sponsor University (TPSU).Mr. Barstein was also Founder and Editor-in-Chief of NAPA Net.
Fred Barstein