Practice Management

Data is King

By Jon Shuman

In baseball, fans know “the shift” is increasingly being deployed by teams to improve their defense and take away hits from opposing teams.

The shift relies on data to locate defensive players to areas of the field where a specific batter is most likely to hit the ball. The strategy has become so effective that the leaders of Major League Baseball are actually considering proposals to limit or even eliminate teams’ ability to shift as a way to boost offense.

Data is also used to inform batters about what type of pitches are most likely be thrown by individual pitchers in a given situation. Pitchers rely on similar data about what types of pitches hitters prefer and where in the strike zone they are most likely and least likely to hit a ball.

In today’s baseball, it appears that data is king. Data is also driving more decisions about many other aspects of daily living, including how we shop, what types of media we consume, and how we use voluntary benefits at the workplace. Taking a page from baseball managers, corporate leaders are relying on data to help determine the effectiveness of retirement plans, uncover financial issues that are affecting employees, measure benefits usage and ascertain what benefits might help employees attain greater financial wellness.

Whether you are an insurance agent or benefits broker, employer or plan sponsor, or a worker or retirement plan participant, data may be helpful to improve your batting average for recommending or selecting benefits.

That’s why retirement plan and benefits providers are ramping up their ability to not only manage data but to harness its ability to distill terabytes of information into digestible, usable and actionable insights.

Data may provide brokers with key insights to share with employers to help design better, more effective benefits platforms. For instance, the right information may help brokers and employers determine the relative effectiveness of benefit utilization, including a retirement plan or other voluntary benefits such as life or disability insurance, critical illness or accident coverage, or other needs.

The right data may help brokers and employers evaluate the potential costs and liabilities associated with the under-utilization of retirement savings plans, specifically if employees lack sufficient savings to replace a sufficient percentage of their pre-retirement income at age 65. With sufficient facts in hand, it may then be ascertained what an employer’s long-term costs for salaries, healthcare and other benefits might be if employees can’t afford to retire when they first qualify for full Social Security benefits.

Similarly, if employee productivity is suffering because workers are distracted by financial issues, data may help pinpoint some of the reasons. An analysis may help brokers determine the right steps to recommend, whether it’s making available budgeting tools, offering debt management consultation, or including critical illness or accident coverage on an employer’s voluntary benefits platform.

Adding or subtracting the right voluntary benefits may be like incorporating baseball’s shift into an employer’s benefits strategy. Voluntary benefits may be used to plug holes in employees’ overall financial wellness, enabling each person to develop his or her own personal wellness strategy.

Employees would welcome the help. Nearly six in 10 middle-income Americans say they feel more financially secure as a result of financial and insurance benefits they receive through their employer, according to the 2018 MassMutual Workplace Benefits Study1. However, not all workers agree, especially those with lower-incomes, which may indicate a need for more financial education through the workplace.

Although only one in four employees is offered financial education at work, MassMutual’s study finds, as many as half would welcome additional help or guidance on personal finances from their employer. Moreover, 51 percent expressed a desire for their employer to provide more education about saving for retirement.

Millennials, according to the study, are dramatically more open and interested in receiving help at the workplace. Seven in 10 millennials would welcome financial planning services and six in 10 would be interested in budgeting assistance at work, according to the study.

When polled, many workers express interest in specific employee benefits. For example, 78 percent of survey respondents said they were “very interested” or “somewhat interested” in disability insurance, MassMutual’s study found, with interest high across all income levels.

While workplace benefits can help employees feel more financially secure, each employee’s personal financial situation is unique. Employers and brokers may help through education and making a wide range of benefits available on a voluntary or employee-paid basis to meet as many individual financial needs as possible.

What benefits should be incorporated into an overall financial wellness strategy? The answer starts with the data.

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1MassMutual Workplace Benefits Study, http://massmutual.com/-/media/files/MM%202018%20Benefits%20Study_Final.pdf

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