Two years into a partnership between Financial Finesse and the Global Retirement Partners Advisor Alliance, a compelling distribution model for financial education programs is now being rolled out to more than 500 companies, including the New York Police Department. It’s expected to grow well into the thousands by next year with the help of this national adviser network.
There are early signs of success. As many as 40% of program participants on average used the platform in the first year and improved their financial behaviors. Liz Davidson, founder and CEO of Financial Finesse, says that while industry benchmarks on participation are difficult to pin down, most of these initiatives tend to be only in the 5% to 10% range, much like employee assistance programs.
There could be several reasons why this financial wellness effort is gaining much better traction. One is that Davidson says it involves a brief unbiased and holistic assessment that doesn’t require any personal information. Data from these personalized assessments are aggregated into a report that identifies the areas of education adviser should be focusing on with group workshops and one-on-one meetings.
Participants may receive a deposit in their health savings account as an incentive. Other key elements that encourage participation include a mobile app developed by Financial Finesse and automated marketing from GRPAA, whose partners in this program are mostly retirement plan advisers, with some larger benefits shops.
One notable success story involves GRPAA partner StoneStreet Advisor Group, LLC, which manages an annuity trust fund for lieutenants, captains and other high-ranking members of the New York Police Department’s Superior Officers Council that’s similar to a profit-sharing plan. The NYPD also sponsors defined benefit, 401(k) and 457 deferred compensation plans.
Once high-ranking NYPD officers began retiring, typically with six-figure incomes and a lump-sum distribution option, many were sold costly financial products that did not have favorable tax treatments on some of the plan distributions. Retirees who rolled their savings into IRAs or high-priced variable annuities lost their state tax exemption, which proved to be a costly mistake in New York.
Roy Richter, who headed the police union along with Lou Turco, was determined to offer financial education and literacy programs to senior-level members of the force and help them understand their retirement goals and circumvent such issues.
As an incentive to take the financial assessment, the NYPD raffled off a month’s free rent or mortgage up to $2,000, and the effort paid off. StoneStreet has received more than $100 million in assets from rollovers — an amount that could swell to $120 million by the end of 2017.
“There’s a real need for financial wellness and programs for the masses of Americans who feel that they don’t have enough money to ask for a financial planner,” says Barbara Delaney, a principal with StoneStreet.
But these programs are becoming just as valuable to advisers. “I honestly think if advisers don’t embrace financial wellness in the true sense of the word, the recordkeepers are going to do it and cut us out of the equation totally,” she adds. “I think with the new fiduciary rules, it differentiates you tremendously in the market, not only to be an adviser, but even just offering this as a stand-alone benefit, which we just began to do.”
Since many high-ranking NYPD members are in their 40s and 50s, the financial wellness program also revealed widespread concern about being able to get through the extensive, and often overwhelming, college application process for their children. Two three-hour workshops with more than 400 participants were held to help apply for grants and fill out financial aid forms. Upon further examination, financial advisers also uncovered a need for assistance with estate planning, beneficiary tracking and life insurance.
GRPAA partner Heffernan Financial Services has seen encouraging early signs of success with one of its clients, First Solar, whose employees were struggling with financial-related stress. The company, which operates many of the world’s largest grid-connected photovoltaic power plants, launched a financial education program in early October.
Using Financial Finesse’s new mobile app to help employees more easily take their personalized assessments, First Solar noticed daily use of the program for about a month. Jennifer Owen, a financial adviser and VP with HFS, was encouraged that during this period program participants were accessing the information on weekends, which she says is unusual. She credits the mobile app for generating such high interest.
HFS helped tailor presentation topics to participants with the results of the employees’ financial assessments. For example, a workshop is scheduled for the end of January at an Ohio plant where the company spotted a need to help female workers with investing options and retirement questions.
Apart from weekly phone calls leading up to the program’s implementation, Owen huddled with First Solar’s HR team to review the topic to brace for any employee inquiries.
Selling financial education as a stand-alone employee benefit can help recruit and retain top talent. Owen recalls a recent presentation to a 650-person company in the Silicon Valley area where it’s difficult to draw young talent because of high housing costs.
“They were saying how great this would be for not only retirement purposes, but for young employees because it is just so hard to get financially ahead in that area,” she says.
In this case, she notes that the client was already pleased with its 401(k) plan provider, but HFS was able to get its foot in the door with the financial education offering. Owen believes fellow brokers and advisers can employ the same winning strategy to earn new business.
“If you present it more as an employee benefit, people are a lot more receptive because they think of it in a different way than just part of your 401(k),” she says.
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