PLANADVISER - July/August 2022 - 18

plan design / cover story
Raising Awareness
One way to help participants decide where to put their next
dollar is simply to make them aware of all their benefit
options. While increasingly companies offer financial benefits,
only about half of workers take advantage of them,
beyond the retirement plan, according to a TIAA study.
" It seems that everyone could benefit from a refresher on
the types of accounts available and the tax treatment of those
accounts, " Collinson says. " The tool kit has been expanding. "
Even the conventional wisdom to start by contributing
enough to your retirement account to get any employer
match may require further clarification for employees who
have access to both a Roth and a 401(k) and are unsure how
to allocate between the two, says John Majors, a principal
with SageView Wealth Management in Knoxville, Tennessee.
The decision becomes even more complex for employees
with high-deductible health plans who have access to a
health savings account that also has an employer match.
" That brings in the added dimension of saving for healthcare
expenses down the road in retirement, " Collinson says.
" And the research shows that many people may not fully
understand those accounts yet. "
In some cases, the best allocation of funds is not within
One Adviser's Approach
workplace benefit accounts at all. " Where the next dollar
should go is going to really depend on the
individual's financial situation and the tools
available to that person, " Collinson says. " For
example, if an individual has a balance on a
high-interest-rate credit card,
it could very
KATHERINE GOLLADAY at OneDigital uses a three-step framework
to help plan participants understand where they should allocate
the money they have to save. We also talk about other financial
priorities, as well, " she says. " What other savings goals do they
have? Do they want to save in a 529 plan? Are they hoping to take
a big vacation next year or save for a down payment on a house? "
The approach and allocation of savings is different
for each
participant, Golladay says. The best path forward depends not
only on their financial goals but also on what types of benefits
their employer, or perhaps their spouse's employer, offers.
STEP 1
Build the Foundation
This includes building an emergency fund-Golladay recommends
three to six months' worth of expenses-paying down
high-interest debt such as that on credit cards and contributing
enough to get any available employer match.
STEP 2
Max Out Tax-Advantaged Savings
Golladay recommends that participants gradually contribute
to a health savings account if they have access to one and
increase their 401(k) contributions until they are at least socking
away 10% to 15% of their income or hitting the maximum amount
allowed. If there is more to save after that, she suggests opening
an individual retirement account.
STEP 3
Factor in Other Goals
While the first two steps are a good starting place, Golladay says
she may tweak the guidance depending on the individual financial
goals of the plan participant. -BB
18 | planadviser.com July-August 2022
well be the top priority to pay that down and
not let it spiral out of control. "
That said, a holistic approach to financial
wellness can lead to better retirement
outcomes.
The TIAA report found that 54% of
workers who participated in a financial wellness
program at work are confident they will
retire when they want to, compared with
just 32% of those who do not participate in a
financial wellness program.
Here are several ways advisers and their
plan sponsor clients can help participants
determine where their next dollar should go:
Provide Topic-Specific Content
OneDigital works with sponsors to offer a
range of webinars, group meetings and online
tools aimed at reaching plan participants as
they go through specific financial stages.
Such programs make a difference when it
comes to retirement readiness. An Employee
Benefit Research Institute study earlier this
year found that workers who attended a
budgeting webinar were likely to increase
their defined contribution plan contributions,
and older workers who attended an
emergency fund webinar were less likely to
take a loan from their retirement account.
Offer One-on-One Support
Jim Keenehan, a senior consultant with AFS
401(k) Retirement Services in Washington,
D.C., uses a step-by-step process to help plan
participants figure out where to allocate all
of their assets.
" We start at the beginning with helping
them make a budget, " he says. " Then, if they
don't even have a dollar to spare, we have
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PLANADVISER - July/August 2022

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