CHICAGO--(BUSINESS WIRE)--Getting a handle on genuine financial wellness, and in particular on a company's plan participants' budgeting, is key to freeing up sufficient amounts to grow their 401(k) accounts and ultimately achieve retirement readiness, asserts Michael Chard, President of ProManage LLC.
In a recent article published on Employee Benefits Plan Review, Chard explains "If a holistic view of one's financial position is critical to achieving this, and I believe it is, including managed accounts within a financial wellness program may be key to providing effective support in pursuit of such goals."
This combination of financial wellness and managed accounts accommodates participants’ individual financial vulnerabilities, he adds, professing such a combination often improves an employee's financial acumen overall. "Quite simply," he writes, "when people truly understand their financial situation and how it can look going forward, they’re better positioned to develop an actual strategy and manage it, and as a result make realistic progress toward their goals."
Chard's article then covers how effective budgeting guides participants toward finding the cash to contribute an amount to their 401(k) plan that enables them to save what their managed account program suggests will be sufficient to fund their retirement. Because stand-alone managed account programs don't really help with budgeting, emergency funds or managing debt, he says, they need to couple with a financial wellness program that incorporates preparing for retirement with other functions.
"Simply put," he writes, "a financial wellness program can coordinate and prioritize the budgeting, which is crucial as it can seem daunting for a person to navigate contributing to an emergency fund vs. paying off debt vs. funding their 401(k)."
The article also explores how the connection between financial wellness and managed accounts can change how employees plan for the future, a dynamic that is happening "just in time." The defined contribution industry has long struggled over the best way to assist participants with electing how much to save, he writes, despite "guidance" that has taken many forms but has not succeeded in solving the basic problem.
"It’s a problem I call 'divorced siloes," Chard maintains; that is, when recommendations are divorced from what employees feel they can comfortably contribute, producing a predictable response that overwhelms employees with savings recommendations beyond their capacity to meet their goals. Chard concludes that the combination of managed accounts and financial wellness appears to be the most realistic solution.
About Michael Chard
Michael Chard is President of ProManage, LLC. He has devoted his 40-year career to the qualified retirement plan industry with a specialization in defined contribution plans.
About ProManage, LLC
Headquartered in Chicago, ProManage, a subsidiary of Smart USA Co., is a federally registered investment adviser, which has been in business since 1998 (first as Strategic Financial Concepts, Inc., then ProManage, Inc. and ProManage, LLC). Registration with the United States Securities and Exchange Commission (SEC) does not connote a certain level of skill or training. Past performance is not a guarantee of future returns. Individual results will vary. All investing involves risk, including the risk of loss of principal.
ProManage, LLC is the creator of BeFine® and the retirement solutions, the ProManage PROgram® and Vision.
About ProManage's BeFine App
ProManage's BeFine® financial wellness app can give employees a holistic view of their benefits, retirement readiness and financial accounts in one place. BeFine employs a behavioral finance approach to suggest reasonable goals—and the occasional nudge—to help guide users on a path to financial wellness. By allowing them to include a range of their financial information in one app, employees can see where they stand today and start making progress toward their future. The tools can include:
1. a holistic picture of an employee's finances via a Financial Wellness Score
2. assistance in setting up an emergency fund savings goal and the requisite understanding of an effective plan to achieve it
3. steps to take to pay down debt
4. a review of employees' insurance needs to ensure that home, vehicle and family have protection
5. assistance with building and maintaining a budget including tracking of transactions connected to both bank and credit cards
6. access to retirement readiness data to assess preparedness for life after work
To learn more or to obtain a complimentary copy of the full article or more info on BeFine, contact Michael Chard's PR Rep Ken Lizotte at ken@thoughtleading.com or visit ProManage at https://promanageplan.com/.
