PLANADVISER - July/August 2019 - 23

Guaranteed Income Is Important
Advisers fail to realize the topic should be addressed
THE fifth annual " Guaranteed Lifetime
Income Study " by Greenwald & Associates
and CANNEX shows significant
differences in perception between
advisers and clients regarding retirement
income discussions.
Advisers said they discuss income
strategies with an average of 79% of
their clients, but only 55% of clients
reported having such conversations.
Advisers also consistently underestimated
client interest in guaranteed lifetime
income products, the study says.
Two-thirds (67%) of those close to
retirement or in its early stages said
they highly value guaranteed income
to supplement Social Security. When
guaranteed lifetime income products
were mentioned as part of a retirement
portfolio strategy to supplement Social
Security and cover essential expenses,
71% said they think this would be a
good strategy for their own retirement.
The research also reveals growing
evidence
that
consumer
sentiment
appears to fluctuate based on the
prevailing market environment, dropping
as stocks rise and increasing
when the market experiences sharp
volatility. In addition, the research
highlights that the top retirement
concerns driving interest in guaranteed
income include paying for longterm
care, meeting health care needs
and not running out of money.
Among the respondents who
reported owning a guaranteed lifetime
income product, six out of 10 said they
are satisfied with them, and threequarters
said they would recommend
them. They also claimed to be less
concerned about day-to-day expenses
in retirement, reported being able to
budget more effectively and said they
spend more on discretionary items.
Product owners are less worried about
losing savings during a downturn, they
said. -Rebecca Moore
Inspirational Financial Wellness
To succeed, these programs must prompt workers to take action
TO TRULY help participants, financial
wellness programs need to advance
beyond mere education. They must
truly motivate participants to take
action to improve their financial
outlook, Cerulli Associates reports in
" U.S. Retirement End-Investor 2019:
Driving Participant Outcomes With
Financial Wellness Programs. "
" Many employees in today's workforce
are struggling with competing
financial priorities, and they'll often
express these concerns to their
employer, " says Dan Cook, a research
analyst with Cerulli. " Plan sponsors
have taken note. Nearly one-third,
32%, identify improving the financial
wellness of employees as a top priority
for their 401(k) plan. "
But rather than looking to move
the needle for participants, most plan
sponsors focus on their return on
investment (ROI), which can be hard
to measure, Cerulli says in its report.
" Plan sponsors have a broad range of
goals for financial wellness programs, "
Cook
says.
" Some
goals
such
as
increasing 401(k) contribution rates
are straightforward. Others such as
improving financial literacy, increasing
workplace productivity and decreasing
employee stress are more nebulous
and/or difficult to directly attribute to
a financial wellness initiative. "
The way to help employees improve
their financial situation, the report
advises, is for plan sponsors to move
past ROI to make their financial wellness
programs action-oriented. " Individuals
must be triggered to enact
changes that affect their financial lives
in a positive way, " Cook explains. " So,
providers must
consistently
collect
data to identify engagement strategies
that resonate most with specific groups
and craft digital experiences through
which a participant's 'next best action'
is only one or two clicks away. "
The report says participants'
primary sources of financial stress are
health care expenses, cited by 30.5%,
insufficient retirement savings (25.7%),
monthly bills (10.7%), inadequate
emergency savings (10.6%), credit card
debt (8.4%), and student loan debt
(4.7%).
It says health savings accounts
(HSAs) could help participants with
their health care expenses, but few
participants know much about them,
particularly that they can use the
accounts to invest. Plan sponsors
should educate participants about using
HSAs as a retirement benefit, starting
with their triple tax advantages, Cerulli
says. Moreover, sponsors should not
just try to educate participants about
HSAs at the annual benefit enrollment
period but throughout the year.
Cerulli also says that when making
changes to their 401(k), older participants
prefer
to interact with a call
center representative and younger
ones prefer chat features.
As to what motivates people to
open a 529 college savings plan, only
15.1% credited the advice of a financial
professional. -Lee Barney
planadviser.com July-August 2019 | 23
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PLANADVISER - July/August 2019

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