Merrill Lynch Scorecard Shows Productivity Tied to Employees’ Financial Well-Being

Shawndra Russell

Thursday, July 17th, 2014

Merrill Lynch recently released their 401(k) Wellness Scorecard for the second quarter, with results showing a positive increase in financial habits from plan participants. We spoke with James Wallace and Deborah Howard, Managing Directors – Wealth Management, Global Corporate & Institutional Advisory Services, to get their take on the results of the scorecard and why more companies need to become invested in the financial well-being of their employees.

Georgia CEO: Jim, Debbie, tell us about your background.

Jim Wallace: I am a graduate of the University of Georgia and have been with Merrill Lynch for 29 years. I wanted to help people, and the brand recognition really drew me in. What I’m most proud of in my years at Merrill Lynch is that we’ve been a thought leader in the wellness and corporate space.

Debbie Howard: I graduated from Kean University in Union, New Jersey. I have also been with Merrill Lynch for 29 years and started my career in central New Jersey. For me, the decision to join Merrill Lynch felt preordained; I always had a solid financial aptitude and I was a marketing and economics major who also enjoyed public speaking.

Georgia CEO: What are some specific reasons you attribute to the positive increase in the Scorecard results from 2012 to 2013?

Howard: I attribute the positive changes to concentrated efforts regarding the design of the plan and education about how the plans work and how to save. We look at specific information, such as who is contributing two percent or less, who’s not getting a match, etc. Then, we work with the communications and marketing teams internally at Merrill Lynch and with our clients to provide guidance for how to better educate employees.

Another factor in the scorecard results is participant uneasiness. The market has changed; not only with companies facing significant changes in their stock prices with the erratic economy, but also with some cases of dual income families becoming single income families. Now we are seeing participants take more responsibility and stronger actions.

Wallace: We’ve gathered lots of data about employee participation in general, and:

  • 65% don’t feel financially well
  • 59% say they need help
  • 85% say they are not saving enough
  • 75% say they don’t feel like they are in control.

On the flip side, 81% of employers feel somewhat responsible for their employees overall financial wellness. We handle 27 of the Fortune 100 benefit plans, and they used to be very hands off regarding employee financial well-being. Now, we provide them with a service platform benefit and the results of getting more involved in their employees’ financial well-being have shown:

  • 76% being more satisfied as employees
  • 66% being more loyal
  • 55% are more productive

Georgia CEO: When did you start noticing companies taking a vested interest in their employees’ financial security?

Howard: In the past, as Jim pointed out, companies just viewed it as, ‘We offer great benefits.’ More companies are realizing that they need to educate employees about the plan. Now, they provide basic information and tools to maximize the benefits of those plans for life events and retirement. By bundling retirement information with savings behaviors, employees can use those benefits to buy a home or put their kids through college. That kind of wellness structure and holistic life event management has been an evolution for sponsors.

Wallace: Finance is the center hub of the basic life principles: family, health, leisure, home, work, and giving. That’s a comprehensive framework in one’s financial life cycle. Employees had a need for their employers to start offering financial well-being services, which was a crucial change. It wasn’t until the employers felt like they were challenged that we began to gain traction.

Additionally, the HR professionals that we deal with are challenged because they need to become financial experts themselves—a significant change in their role. Workplace studies show that HR professionals are concerned with having a strong retention program, with 75 percent struggling to attract and retain talent. So, at end of the day, they are very open to ways to add value for their employees.

Georgia CEO: Why do you think HSA’s (Health Savings Accounts) have been embraced dramatically in comparison to previous years?

Howard: Healthcare is prevalent in people’s mind due to escalating healthcare costs and what they are seeing in the news. Employers are becoming much more aware of financial life management. It isn’t just about saving for retirement anymore; meeting individual life event costs and rising health care costs is at the forefront, too. If healthcare enrollment and retirement enrollment is in one consolidated place, it makes the process easier to understand. Due to this simplification of the process, HSA participation has dramatically increased.

Georgia CEO: How is Merrill Lynch’s holistic approach different than some competitors’ approach to employees’ financial well-being?

Wallace: Employees do not want a variety of benefit providers; they want the most integrated provider who could offer other benefits downstream. Smart companies are beginning to move to fully integrated solutions.

Georgia CEO: What are some of the other key findings in the scorecard?

Howard: 83 percent of employees participated in employer-sponsored benefits, representing a three year high. This is the result of demand, an increased understanding of advice solutions and demographic-targeted internal campaigns. Looking at all of 2013, 76 percent of participants took a positive action, up three percent overall.

Georgia CEO: Anything else you’d like to mention?

Howard: We’ve seen a lot of success with auto-enrollment and express enrollment, because simplification is a huge factor in increasing financial well-being. Managed accounts that simplify auto-enrollment, with opt-out choices, drive success, especially when coupled with effective communication and solid design elements of your program.