Life in the Middle: The Ins and Outs of Plan Design for Middle Managers

This is the second in a series of three articles about the benefits of designing your workplace financial wellness, retirement solutions and equity compensation based on where employees are in their respective lives. This piece focuses on how to customize plans for the middle manager segment and their unique financial needs.

Taking care of employees feels especially important right now—not just because it’s one of the best ways to retain top talent, but also because employees at all levels are experiencing significant financial stress. Quite simply: you need them, and they need you.

But how will you address their varied financial concerns? How will you help problem-solve when their financial challenges vary?

Blanket approaches to financial wellness, retirement solutions and equity compensation plans miss the opportunity to customize the types of services you offer and personalize how you talk to your employees. “There are so many ways in which we have gained comfort in focusing on the whole (individual) in the workplace now,” points out Laura Assomull, Head of Financial Wellness Business Development, Morgan Stanley at Work. In fact, we have come to expect it. “Companies that work to meet the unique financial needs of employees, based on what they most need at that stage of their careers, will be the companies that are best able to drive talent recruitment and retention.”

Using a more targeted benefits strategy doesn’t just show that you’re listening to what your employees need; it can also increase their engagement. “Oftentimes, a company has a variety of financial benefits, but no one really knows about them or how they may benefit them,” Assomull says. Targeting your messages to specific groups helps you to focus on what is more actionable for that group. Segmenting also allows you to collect engagement data to discern where the gaps are. For example, if one group of employees isn’t engaging enough with saving for retirement, it might mean they need more education about it, perhaps an on-site seminar, to better understand how it relates to their overall financial wellness.

Designing benefits plans that target various segments of employees is also smart business. “Employers invest a lot of time, energy and money into benefits, only to see them underutilized. Segmenting your approach can help your employees make the most of your benefits spend,” says Tom Conlon, Head of Retirement Sales, Morgan Stanley at Work.

Organizations often talk a lot about setting employees up for success early on, such as explaining the company’s 401(k) program and encouraging participation. Companies are also very tuned into the unique needs of the C-suite, regarding complex issues like equity compensation and deferred compensation. But too often the vast majority in the middle—the middle manager segment—lack any kind of personalized guidance from their company. And the fact is, they might need it the most.

The Challenges Middle Managers Often Face

Though their demographics may vary, employees working in middle management tend to have some things in common. They make more money than junior-level employees, but they are more likely to feel the financial crunch of raising children, making a mortgage payment, funding quality of life activities such as family vacations, and trying to max out their 401(k) contributions. They are also more likely to live paycheck-to-paycheck, and are more susceptible to job loss, since middle managers are often the first to go when there are layoffs—or what one Forbes columnist called the “juniorization” happening in some companies.1

Conlon points out that this group includes employees who are moving into a higher tax bracket—six figures and beyond. This means they may need to think seriously about tax planning for the first time. They’re also trying to save for retirement, which feels much closer than it did a few years ago.

In light of the financial pressures associated with COVID-19, some of these employees may have cashed out their emergency savings, and may be trying to build their savings back up. More than any other workplace segment, middle managers face stress from all sides—they make enough money for taxes to be a concern, but not enough to be able to constantly stop worrying about money. They’re saving for retirement and college, as well as caring for aging parents and young adults, and often look to employers for help.

How a Plan Design Can Help Your Midlevel, Midlife, Mid-Career Employees

Plan sponsors can help middle managers work through these financial challenges by tailoring benefits plans to the needs of middle managers.

  • Design a flexible and responsive wellness program: Because middle managers are struggling with work-life balance, they are often reactive in their financial decisions. Financial wellness coaching that meets them where they are can help. For example, a manager who lives by their meeting calendar may respond better to scheduled blocks of one-on-one coaching, whereas someone who likes self-guided learning may prefer to listen to podcasts while working out or commuting. Financial wellness programs can offer a variety of channels, and focus specifically on the topics of concern to middle managers.
  • Encourage Roth contributions: “As middle managers edge into higher tax brackets, you can consider offering personalized guidance to help them optimize for taxes. Utilizing features like Roth becomes incredibly important,” Conlon says. An employee whose plan integrates with a Roth 401(k) can put up to $19,500 into it per year. Guiding middle managers toward a Roth makes sense for several reasons. They are starting to earn more, so have a greater ability to save. They are also more likely to keep earning more, especially if they are on track to become an executive. From a holistic tax planning strategy, it’s more economical to pay the taxes on the saved money now, before they have reached the highest tax bracket.
  • Review emergency savings and other savings plans: According to Bankrate’s August 2020 survey, 35 percent2 of Americans report they have less emergency savings now than before the pandemic (just 13 percent say they have more savings now). Money earmarked for a child’s college education or other big life expenditures may have been spent to cover emergency expenses, which leaves employees vulnerable to tapping into their 401(k). This is why it’s key to educate employees about any emergency savings components your retirement plan offers. For example, consider offering an automated emergency savings fund that monitors a person’s spending patterns and automatically increases savings contributions when there is more in their checking account.3
  • Offer guidance around equity compensation: “In the last decade or so, we’ve seen a resurgence in companies offering more equity to employees at all levels. It’s a great recruitment tool,” says Dee Crosby, VP of Shareworks by Morgan Stanley. Employee stock purchase plans (ESPP) that serve middle managers need a high-priority education component and one-on-one financial advising around how to optimize the benefits. These employees need to understand the tax implications of selling stock. Plan sponsors should also make sure they are clear in communicating what happens to equity awards if an employee is laid off—and employees should make sure they understand and are asking all the right questions before a termination, versus after, Crosby says. It’s one more reason why financial wellness coaching goes hand-in-hand with equity compensation—because employees always have far more questions than answers.

Working with a financial advisor and benefits provider who can offer uniquely segmented approaches across retirement solutions, financial wellness, and equity compensation plans can mean happier, more productive middle managers. It also creates a robust, flexible benefits program that can help both your organization and your employees thrive.

Morgan Stanley at Work meets companies and individuals wherever they are on their journey of wealth creation. With an end-to-end approach to workplace financial solutions, we provide a unique combination of thoughtful education, insightful advice and leading technology.

Empower Your Workforce

We’d love to talk. Fill out the form and a team member will reach out shortly.

1 Jack Kelley, Why Many Professionals In Their Late 30s, 40s And 50s Are Not Benefiting From The Tight Job Market, Forbes, February 13, 2020,
2 August 20, 2020. Bankrate survey:
3Lee Barney, Automating Emergency Savings for Retirement Plan Participants, Plan Sponsor, November 5, 2019,

This material may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the material refers to website material of Morgan Stanley Wealth Management, the firm has not reviewed the linked site. Equally, except to the extent to which the material refers to website material of Morgan Stanley Wealth Management, the firm takes no responsibility for, and makes no representations or warranties whatsoever as to, the data and information contained therein. Such address or hyperlink (including addresses or hyperlinks to website material of Morgan Stanley Wealth Management) is provided solely for your convenience and information and the content of the linked site does not in any way form part of this document. Accessing such website or following such link through the material or the website of the firm shall be at your own risk and we shall have no liability arising out of, or in connection with, any such referenced website.

Morgan Stanley Wealth Management is a business of Morgan Stanley Smith Barney LLC.

Tax laws are complex and subject to change. Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors do not provide tax or legal advice and are not “fiduciaries” (under the Investment Advisers Act of 1940, ERISA, the Internal Revenue Code or otherwise) with respect to the services or activities described herein except as otherwise provided in writing by Morgan Stanley and/or as described at Individuals are encouraged to consult their tax and legal advisors (a) before establishing a retirement plan or account, and (b) regarding any potential tax, ERISA and related consequences of any investments made under such plan or account.

© 2020 Morgan Stanley Smith Barney LLC. Member SIPC.

CRC#3350012 (12/2020)