Step 5 Toward Fiduciary Wellness: Participant Interests First

Over the last few days we have talked about fiduciary wellness steps that could, at first glance, be considered to serve the primary purpose of mitigating fiduciaries’ risk. It is true that those steps should very well have that effect. Taken together and so long as implemented on an ongoing basis, they strike at the heart of the duty of prudence.

But what happens when we overlay those steps with fiduciaries’ duty of loyalty, which features the responsibility to make decisions in the interests of participants? We arrive at a participant-driven approach to fiduciary responsibilities with a different primary purpose: better services, better investment solutions, and better outcomes for your participants.

A participant-driven approach separates the great fiduciaries from those who are merely good. In turn, it separates the likelihood of positive participant outcomes from those that are merely left to chance. There is a significant overlap between the wellness levels of your fiduciaries and participants.

Your Participants Need Help. A shockingly high number – 88%, in fact – are not confident about their financial future.[1] More than half don’t have healthy spending habits or behaviors.[2] And 43% say they are stressed about their financial situation.[3]

Your Participants Want Help. American workers are asking, almost begging, for their employers to help them with their finances. They want access to a better 401(k) plan and an investment advisor to help them with their savings and investments. They also want bigger picture help; 86% of employees think it is important for their employers to offer financial wellness programs.[4]

It’s in Your Company’s Best Interests to Help Them. There are so many good reasons to care about your employees’ financial wellness.

  • One reason is obvious and somewhat old-fashioned: simply because you care about them. That’s as good a reason as any.
  • Another is the short-term impact on your company’s performance. Financially well employees are more present – mentally and physically.[5] This improves productivity and efficiency.
  • There’s also the mid-range impact on your company’s performance. Financially comfortable employees are not only more productive and efficient, but they’re more loyal.
  • In the long term, your company suffers greatly if employees are not in a position to retire when they and your company are ready. This costs you in terms of productivity, holds back younger employees from advancement, and significantly increases health insurance costs.

Appreciating the Link. Finally, we believe that prioritizing your participants’ interests will improve their wellness levels and, in turn, improve your fiduciaries’ wellness. What does that really mean? It means that your fiduciaries can best manage their risk levels by ensuring that they don’t make decisions from a defensive or CYA-focused perspective, but instead, recognizing their ultimate responsibilities to participants. We’ll highlight tomorrow – National Fiduciary Day – how this participant-driven perspective should dictate your desire to implement the five-step process we’ve outlined.


[1] Fidelity Participant Marketing Analytics, Financial Wellness C&E Campaign, June 2016.
[2] Id.
[3] Id.
[4] Id.
[5] 25% of employees have missed work to handle a financial matter. State Street Global Advisors, Biannual DC Investor Survey, March 2015.

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