Prove the Package | Lord Abbett
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Practice Management

Benefits spend is greater than the sum of its parts. But is that obvious to clients? Or is everyone down in the weeds looking at separate channels of health and wellness or retirement?

Read time: 7 minutes

Employers want to attract and retain the best employees and achieve maximum productivity from those employees on the job. Benefits are key — and a huge investment of funds, time, attention, and staff.  While specific program elements can show results here and there, the impact of the combined benefits program often isn’t readily apparent.

“In terms of salaries and benefits, employers allocate over 80% of their overall expense budget to employees,” says Brett Shofner, Co-Founder of Hero7, a workplace benefits advisory firm. “That makes your employees your greatest asset. The question is: Do you have enough visibility into this huge capital spend?”

THE NUMBER CRUNCH

Source: The Next Gen Workplace, 2016, Kay Sargent, Senior Principal - Director of Workplace, HOK

Source: US Bureau of Labor

Is it time to think differently about the true Return on Investment on benefits?

How can plan sponsors achieve that visibility? How can they be confident that their overall benefits package is creating the impact they want? At Lord Abbett, we are recommending that you “prove the package” by measuring the ROI on the employer's entire benefit stack. Essentially, looking at benefits as a single program versus a series of disparate items.

No wellness silos. No retirement segments. Benefits are viewed as a single program where elements are connected and measured in totality to show their combined impact.
 

When you deal in silos you miss things that would otherwise be more apparent in a consolidated framework. The holistic view is one of big picture thinking combined with detailed and cohesive execution. Think about it: The holistic view is simple to grasp and easy to talk about. Simpler conversations can deepen plan sponsor understanding.

Why this matters right now

Industry changes towards simplicity and consolidation are already in motion. Plan sponsors are telling us they don’t want shiny new products.  They want to keep things simple.

At Lord Abbett, we believe that successful corporate services consulting isn’t simply a matter of saying “we can also offer you x, y, and z services.” Your value proposition needs to reveal a larger scope and offer clients proof of what they gain. Remember, over 80% of their spend is on salaries and benefits. And benefits represent about 30% of what it takes to keep a single worker on board.

Big firms are on to this trend, competing against one another and weeding out the smaller players.

Advisors: You need to step up and be the voice of this change or you’ll be trailing, not leading.

How do plan sponsors get that holistic view?  By working with a single benefits advisory firm to provide strategic analysis, cohesion and consistency.

Holistic advisory makes more sense to clients. The trend is toward one advisory firm consulting on the entire suite of the benefits package. Wealth management is a good example of the transition from a transactional to holistic approach, while diversifying revenue and strengthening relationships.

Taking steps to “prove the package” can bring clarity

Todd Harlow, Co-Founder of Hero7, describes it this way: “Essentially, the ROI of an employer’s total benefits program is the measure of connectivity created between employee and employer. It reflects what employers want –to recruit and retain key talent and maximize their productivity– while showing that they have matched their offering to the needs of their employees.”

How do plan sponsors get there?  “It starts with a comprehensive benefits gap analysis,” says Brett Shofner. “Here is what you are offering. And here is what your top five competitors are doing in your geographical footprint.  How does it line up?  What are the implications?  And we go from there,” he says.

The analysis can be revealing. “It’s about finding clarity in your approach and creating greater  connectivity,” Todd Harlow says. “By proving the package, employers can see the impact of their program in its entirety.”

He adds: “If you had a siloed approach before to your benefits strategy that your employees didn’t feel connected to, now when we look at the whole picture, we can elevate the discussion to some simple yet profound solutions.”

When you invest in your employees, they’re more invested in you.

Organizations also need to “prove the package” to employees. Employees can’t appreciate what their employers do for them if they don’t understand the package of compensation and benefits. You don’t value something if you don’t know what you have.

And that makes communication to employees key.  What are employees asking for?  What don’t they understand or appreciate?

While the need for financial wellness programs is well established, according to Bank of America’s 2020 Workplace Benefits Report, employees themselves are pushing for support across wellness topics and beyond finances (i.e. health care, student debt, legal services, basic financial skills).  35% of employees feel there is a lot more employers can do to support their overall well-being. And 57% of employees feel their well-being has a great impact on their productivity.

Learn more

We believe that viewing benefits and benefits spend as a single program with a measurable impact can help show plan sponsors a clear return on their investment.  To learn more how to obtain this more holistic review and analysis of a benefits program and strategy, talk to your local Lord Abbett Regional Director.

Forecasts and projections are based on current market conditions and are subject to change without notice. Projections should not be considered a guarantee.

This article may contain assumptions that are “forward-looking statements,” which are based on certain assumptions of future events. Actual events are difficult to predict and may differ from those assumed. There can be no assurance that forward-looking statements will materialize or that actual returns or results will not be materially different from those described here.

The opinions in the preceding commentary are as of the date of publication and are subject to change. Additionally, the opinions may not represent the opinions of the firm as a whole. The document is not intended for use as forecast, research or investment advice concerning any particular investment or the markets in general, and it is not intended to be legal advice or tax advice. This document is prepared based on information Lord Abbett deems reliable; however, Lord Abbett does not warrant the accuracy and completeness of the information.

The information provided herein is not directed at any investor or category of investors and is provided solely as general information about our products and services and to otherwise provide general investment education. No information contained herein should be regarded as a suggestion to engage in or refrain from any investment-related course of action as Lord, Abbett & Co LLC (and its affiliates, “Lord Abbett”) is not undertaking to provide impartial investment advice, act as an impartial adviser, or give advice in a fiduciary capacity with respect to the materials presented herein. If you are an individual retirement investor, contact your financial advisor or other non-Lord Abbett fiduciary about whether any given investment idea, strategy, product, or service described herein may be appropriate for your circumstances.

PRACTICE MANAGEMENT PDF

 

    Prove the Package

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