Power in Numbers: 3 Ways Data Can Drive How You Address Your Employees Financial Wellbeing By: David Martin
Like most workplaces these days, higher education institutions are looking for ways to reduce costs, streamline processes, and have a more efficient operating model. Yet at the same time, it’s critical to attract and retain the best talent. Thus, benefits managers often have the difficult role of streamlining costs, while still offering competitive benefits to its employees.

Driving toward a secure financial future remains a top priority for companies and individuals alike. In fact, a recent survey of 1,000 higher education professionals reveals that saving for retirement is a top financial priority. As a leading retirement savings plan provider in the not-for-profit higher education market, Fidelity has access to a wealth of data that helps us better understand the retirement savings practices in this industry, and we also conduct research to learn how employees in higher education are feeling about their financial situations.

Here are three ways institutions can learn from data to address the financial wellbeing of its employees. 
1. Know Your Employees’ Savings and Investing Behaviors. While it’s valuable to understand trends in retirement savings in your industry as a whole, being able to dig deeper into the specific behaviors of your employees can give you valuable insights into the areas they may need the most help. This data can help you refine a retirement savings program through plan design, communication, and educational offerings. When looking at your employees’ retirement savings plans, here are some questions that would be helpful to answer:

  • Overall participation: who is currently contributing to their retirement savings plan, and more importantly, who is not participating?
  • Contribution rate: If they are contributing, how much and is it enough to help meet their goals? While an employee could have strong contribution amounts, Fidelity suggests 15% of your annual salary (including employer contributions).
  • Asset Allocation: Your employees may not be allocated appropriately. It’s important to understand an employee’s goals, timeline and risk tolerance to help them select an appropriate investment mix.

Key Learning: The more data you have about your workforce’s investing behaviors, the better informed your decisions will be on how to help their financial wellbeing. Ask your retirement savings plan provider if they can assist in getting you this data, and then analyzing it.

2. Employer Match Drives Voluntary Employee Contribution Rates. Recently, we analyzed data[1] from our higher education clients and noticed a pattern: plans with a large core contribution and no mandatory employee contribution significantly underperformed when compared to plans that have match only. In fact, voluntary contribution rates were as much as 26% higher in match-only versus core-only plans.

For those already committed to a match in their retirement plans, they need to decide between a 1:1 (100%) match or a 1:2 (50%) stretch match. After looking at 600 retirement plans, our findings suggest that a 50% on the dollar up to a 6% of salary match design outperforms a 100% up to 3% match design by driving higher employee contribution rates. In addition, implementing the 50% up to 6% design may be less expensive as well.[2]

Key Learning: If your institution does not offer a retirement savings plan with a match, consider adding one to drive more employee contributions to their retirement savings plans. Furthermore, consider a stretch match of 6% or higher.

3. Understand the Financial Education Your Employees Want. Beyond understanding your employees’ behaviors, it’s also important to know where they are lacking confidence, because grasping a financial concept can bring greater peace of mind and reduce stress. 

We recently surveyed 375 higher education faculty members to better understand the areas of their finances that could use more help and attention. And while this group of educators feels comfortable with fundamental financial concepts like budgeting, there are other areas that they don’t feel as confident. For instance, 29% of faculty members aren’t sure of their asset allocation of their retirement savings[3], suggesting their investments may not even be aligned to a specific goal and timeline. In addition, when asked which areas they needed help, top responses for faculty members included Medicare/health care costs and choosing specific investments.

In the same survey, the needs of non-faculty members differed slightly. Non-faculty members expressed needing help assessing their overall and day-to-day financial picture; in addition to their retirement savings. In fact, 64 percent of non-faculty members reported that they often worry about their financial situation, compared to just 44 percent of faculty members.

Key Learning: Consider offering education, such as on-site workshops, or 1:1 appointments, or on demand webinars on financial topics addressing asset allocation, Medicare, health care costs, and reducing debt.

While data and research can help inform decisions throughout your workplace, it’s also important to communicate to and hear directly from your employees. No two employees and no two financial journeys are exactly the same, so be open to adjusting a retirement program as needed.

[1] Fidelity Investments, “Efficient and Effective Retirement Plan Design for Higher Education,” February 2017
[2] Fidelity Investments, “Efficient and Effective Retirement Plan Design for Higher Education,” February 2017
[3] Fidelity Investments, “2017 Higher Education Faculty Study,” March 2017

Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.

Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the author and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.
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