Field of Dreams? Measuring the Impact of Financial Wellbeing Initiatives on 401(k) Plan Utilization

Summary

In the movie Field of Dreams, the Kevin Costner character was advised that “if you build it, they will come.” And indeed, employers who are increasingly offering and implementing financial wellness initiatives clearly signal that this is their expectation. According to the Employee Benefit Research Institute’s 2021 Employer Financial Wellness Survey, employers seek — through financial wellness initiatives — to address a host of considerations around employee retirement preparedness, health care costs, and financial-related stress. And more and more of these programs are reported to be holistic in nature and derive from a formal plan to improve employees’ financial wellbeing. In other words, the programs are not simply being offered to check the box on benefits that may attract or retain workers. Instead, employers are seeking to move the dial on worker behavior, whether that is improved overall worker satisfaction, reducing employee financial stress, increasing employee productivity, or improving employee use of existing benefits such as retirement plans. In this Issue Brief, we examine the extent to which webinars intended to educate employees on a variety of financial wellness topics change behavior in one specific area: the use of the available 401(k) plan.

We find that:

• The likelihood of a financial wellbeing webinar being used varies significantly by participant characteristics across age and 401(k) contribution levels (a proxy for income).
• The estimated increase in 401(k) contribution levels after attending any financial wellbeing webinar was between $649 and $988, depending on age and initial contribution level.
• Attending a budgeting webinar was positively related to increased employee 401(k) contributions for all cohorts examined.
• Attending an emergency fund webinar was associated with a reduction in new loans for older employees, while health savings account (HSA) webinars had the opposite association for younger employees.
• Attending a webinar on investments is associated with an “improved” asset allocation for older employees with lower contributions.

In other words, getting people to come to the Field of Dreams of financial wellness initiatives can be challenging for certain worker cohorts. However, for those workers who do engage in certain webinars, changes in 401(k) behavior may be evident.