Experts in Personalized Retirement Plan Design & Administration

“Best in Class” Approach for Financial Wellness

"Best in Class"

A recent article suggests that there is a trend toward financial advisory practices of scale with designated specialists. As BPP is a strong proponent of the “Best in Class” approach (or team approach), we feel this trend greatly benefits all parties involved with retirement plans, especially the participants. This trend is likely due to the fact that Americans have a diverse set of financial concerns, saving for retirement only being one of them. What about paying bills, buying a home, and saving for children’s college education, to name a few? A plan sponsor may need a qualified team to provide the holistic service their employees need.

What is “Best in Class?”

According to “the highest current performance level in an industry, used as a standard or benchmark to be equaled or exceeded. Also called best of breed.

In other words, what we mean by a best in class approach is that we believe a client and/or participant is best served when a team of “best of breeds” is used versus a single party performing at an average performance level.

Jason Chepenik, managing partner of Chepenik Financial in Winter Park, Florida, says aiding plan sponsors in meeting their goal—i.e., to help their employees become better financial stewards—should be the primary objective of a financial wellness program.“The average employee changes jobs three to five times in his career. I can set employees up for their future by making them better savers, but, knowing they have real lives and they’re not average, the real heart is to teach financial skill sets,” he says. “[The needed education] can’t all be done by me.”

Aon Hewitt’s Hot Topics in Retirement and Financial Well-Being survey found:

  • 55% of large employers now offer help to workers in at least one category of financial wellness—maybe budgeting, debt management or the financial aspects of health care.
  • By the end of this year, Aon Hewitt predicts that more than three in four (77%) large employers will have at least one financial wellness program in place.

In addition, Americans are worried that health care costs in retirement will eat up the money they have saved for other expenses. A 65-year-old couple retiring in 2016 will need an estimated $260,000 to cover health care costs throughout retirement, according to Fidelity’s Retiree Health Care Cost Estimate.

4 Key Article Quotes & Takeaways:

  • Utilizing milestone goals and gifts may be a good way to encourage individuals to make the necessary next steps toward their financial goals.
  • It is important that the plan sponsor receives the majority of credit for financial wellness tools and initiatives. This aids in building trust among the employer and their employees.
  • Advisers can and should leverage resources from recordkeepers, TPAs, defined contribution investment only providers (DCIOs) and investment managers, as well as their broker/dealer and registered investment adviser partners.
  • Extensive vetting should be a done before one becomes a referral partner on your team. For example, you should ask yourself: “Would I use them? Are they proven and reputable?” It may even be wise to test the services internally before offering them externally.

Click here to read the full article


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