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Financial Wellness Programs vs. 401(k) plans: What’s The Difference?

You offer a 401(k) plan—why bother with a financial wellness program? We explain the difference

March 16, 2023

You’ve heard about financial wellness programs. But you haven’t looked into them because you already offer your employees a 401(k) plan, and they’re essentially the same thing, right? Nope! Contrary to popular belief, financial wellness programs and retirement programs are two very different benefits. We’ll explain why in this post.

What’s the difference between a financial wellness program and a 401(k) retirement plan?

First, let’s establish a few definitions. A retirement program helps employees put aside money that they can use when they’re retired. A financial wellness program offers tools and resources to help employees with various goals—whether that’s managing cash flow, saving up to buy a house, or paying off debts. Let’s dive a bit deeper. Below is a breakdown of the different features of a 401(k) retirement plan and a financial wellness program:

A retirement plan:

  • Only supports retirement goals

  • Helps employees plan for the long-term

  • Offers an advisor who specializes in retirement accounts

  • Typically refers to a single account

A financial wellness program:

  • Supports various financial goals

  • Helps employees plan for both the short-term and long-term

  • Offers an advisor or planner who provides holistic guidance

  • Comes with a variety of resources, tools, and materials

How does a financial wellness program help with retirement?

Now that you understand the difference between the two programs, you may be wondering: which one should I offer—a financial wellness program or a retirement program? Ideally, both! Retirement planning is an essential piece of financial well-being, but financial wellness benefits can enhance your offering in many ways:

Fill in the gaps

As we mentioned before, a 401(k) account is a fantastic way for employees to save for the long term. The problem? 42% of workers report that they’ll likely end up using money from their retirement account for expenses other than retirement. This tells us that employees are struggling to address their immediate financial needs, such as budgeting enough money to pay for rent each month or having an emergency fund. A financial wellness program can help your employees better plan for the short-term, so they eventually get to a place where they can focus on the long-term as well.

Provide more holistic guidance

A retirement plan supports your workforce in a very specific area in their financial lives. But this alone isn’t enough to help your employees achieve financial wellness, which, as research shows us, 95% of employers feel responsible for. A financial wellness program addresses this need by providing employees with more holistic support. For example, with Origin’s platform, employees get access to our network of CFP® professionals, who are bound by the fiduciary standard—which means they have to work in the clients’ best interest—and trained to look at an individual’s entire financial situation.

“At Origin, we look at all areas of a person’s financial life. We are looking beyond their 401(k) or benefits package to provide financial guidance that addresses not only where they are currently at but where they want to be. In addition to this holistic view, our planners are experienced, and they leverage that experience to work with members in a number of key areas to make sure the person is in a better position from working with our team.”

—David Blaylock, CFP®, Head of Financial Planning and Advice

Increases utilization

Believe it or not, a financial wellness program can even help your employees increase their utilization of other financial benefits. How? For instance, a CFP® professional can help an employee identify the right healthcare plan, maximize their 401(k)s, or choose the right life insurance plan for their situation. By helping your workforce understand what’s being offered to them, a financial wellness program can increase the chances that your employees will use more of the benefits you offer. While offering a 401(k) retirement plan is a fantastic start when it comes to supporting the financial needs of your employees, it’s not enough to help them achieve financial wellbeing. Consider introducing a holistic financial wellness program to help fill in the remaining gaps and complement your existing offerings.

If you’re curious to learn more about Origin’s financial wellness platform, request a demo.