Demographic analysis informs plan design

Financial wellness is a dynamic journey that is unique across employee demographics and the outcomes generated can be quite varied. Through research and plan analysis, we can gain valuable perspective on employees’ financial needs across all life stages, ethnicities, cultures, genders and ages. These insights can help inform effective plan design strategies and programs that address employees’ individual challenges and priorities and encourage positive actions to move them toward their goals and healthier financial lives.

Through a better understanding of the demographic differences in a workforce, we can help enhance employee engagement and help improve financial wellness for all.” —  Kai Walker, head of Inclusion Transformation, Retirement and Personal Wealth Solutions at Bank of America

In collaboration with our plan sponsor clients and other stakeholders and influencers, Kai Walker, head of Inclusion Transformation, Retirement and Personal Wealth Solutions at Bank of America, helps gather and analyze data on employee segments and shares those findings to help employers create programs that are more meaningful and valuable to their employees. “We’re seeing a growing interest among clients to evaluate the impact of plan design on behaviors across their participant demographic segments—including gender, ethnicity and generation—and the outcomes of those behaviors,” Kai says.

Digging deeper into the plan demographics can reveal opportunities to enhance financial wellness. “We believe that it’s critically important for companies to revisit and re-evaluate how their plans align with workplace trends and employee needs in order to better support employees’ overall financial wellness,” Kai says. “We can work with our clients to help conduct this plan analysis and develop strategies to help improve engagement and financial health.”

Example of recent plan analysis

We recently conducted an analysis of 401(k) plan and demographic data (where available) of 30,000 participants spanning different plans and industries. The participant sample included 56% male and 44% female employees, representing different ages, ethnicities, and salary and tenure levels.1

On average, the analysis revealed common themes across certain demographic segments:1

Average account balances by ethnicity
(Percentage represented in study)1

The graph shows average account balances by ethnicity (percentage represented in study): White $107,000 (84.4%), Asian $101,000 (1.7%), American Indian $64,000 (0.7%), Native Hawaiian $47,000 (0.3%), Hispanic/Latino $46,000 (4.3%), Black/African American $40,000 (7.5%), Two or more races $25,000 (1.1%).

401(k) contributions and assets

  • Black/African American and Hispanic/Latino populations have lower participation rates, deferral rates and retirement assets. These differences persist across salary ranges.
  • On average, women participate at a slightly higher percentage than men; however, they have lower average deferral rates and retirement assets.
  • Black/African Americans appear to be falling short of general retirement income goals.


  • Minority populations tend to take loans as a higher percentage of their overall account balance compared to their counterparts.
  • While Asian participants maintain the largest average account balances, they also have the highest outstanding loan balance as a percentage of overall account balance.

Plan design

The analysis also showed how plan design can influence participant behavior. For example, while automatic enrollment can help increase participation in the plan, plans with low default contribution rates and no automatic increase program could see participant inertia working against them and potentially inhibiting outcomes.

Key takeaways and actions to consider

  • Evolve plan design to help improve plan outcomes across all cohorts. For example, auto programs can be designed to include:
    • An initial default contribution rate that maximizes plan match and/or an automatic increase program to help get to match maximization.
    • An annual auto increase to help move participants toward their goals.
    • Custom strategies and match formulas to align with your company’s budget and goals.
  • Offer educational programs that consider gender, age, ethnicity and life stage to ensure messages are relevant and meaningful to employees.
  • Review the 2022 Workplace Benefits Report for additional insights on employee financial wellness across demographics.
  • Be sure to also check out this month’s article on the financial challenges and priorities of Gen Z and click through to the new Bank of America Better Money Habits® research report that explores how race, ethnicity and gender may influence financial motivations, behaviors and barriers among this diverse group of young adults.

1 Plan data as of 12/31/2021.

Case studies are intended to illustrate products and services available at Merrill. You should not consider these as an endorsement of Merrill as an investment adviser or as a testimonial about a client’s experiences with us as an investment adviser. Case studies do not necessarily represent the experiences of other clients, nor do they indicate future performance. Investment results may vary. The investment strategies discussed are not appropriate for every investor and should be considered given a person’s investment objectives, financial situation and particular needs.