According to a new MetLife industry profile, many financial services employees fare little or no better than their peers in other industries when it comes to retirement planning.
More than half (54 percent) of financial services employees surveyed say they are behind schedule in meeting their retirement financial goals, which is higher than the overall average (47 percent). Only about one-third (30%) of financial industry employees say they are on track with their retirement savings goals.
Despite receiving higher-than-average pay, employees in the financial services industry (finance, insurance, and real estate) have comparable levels of basic financial protection coverage (life and disability) as workers in other industries.
“These findings highlight a tremendous opportunity for employers,” said Randy Stram, vice president of MetLife Institutional Business. “Human capital is arguably the greatest asset of financial services employers, and retention, therefore, is a high priority. Employee retention and benefit satisfaction are linked. Employers must understand and appreciate what their employees receive in order to realize the full retention value inherent in providing a comprehensive set of benefits.”
“Financial services industry employees’ familiarity with financial products and services does not necessarily equate to an understanding of workplace benefits and personal financial needs,” Stram said. “Employers have the ability to create more potential retention power by bridging employees’ knowledge gap around their benefits.”
According to MetLife research:
• Only about half of those polled in the financial services industry are confident in their ability to distinguish between worker’s compensation and disability income insurance.
• One-fourth admits to knowing little or nothing about long-term disability insurance and term life insurance, two common workplace benefits.
• Sixty-one percent of those polled are unfamiliar with variable universal life insurance, nearly half (48%) are unfamiliar with long-term care insurance, and 29 percent are unfamiliar with accidental death and dismemberment policies.
Many lower-income or entry-level workers in this sector still lack critical components of a strong safety net. According to MetLife research, more than 40% of employees in the financial services industry earning less than $50,000 per year do not have disability insurance, and 34% do not have term life insurance. Furthermore, 10% of these employees are unsure whether they have disability insurance, and 17% are unsure whether they have term life insurance.
Highly compensated employees, on the other hand, should consider additional financial protection for themselves, their families, and their accumulated assets. If individuals do not have a strong personal financial safety net, an unexpected critical illness or need for long-term care services can devastate years of savings – and anticipated retirement plans.
According to MetLife research, more than 35% of financial services employees earning more than $100,000 have not considered annuities to provide income in retirement; 45% have not evaluated the costs of long-term care for elderly parents or spouses; and nearly half (45%) have not discussed how they will afford medical care in retirement with a financial professional.
“For financial services employers, employee retention is the top benefits objective,” Stram said. “Offering a benefits program that can be customized to meet the needs of a diverse workforce delivers greater value to employees and their families and helps employers optimize the success of meeting business objectives.”