How To Design a Highly Effective Workplace Financial Wellness Program

October 19, 2016

What’s the best way to design a workplace financial wellness program? At their core, effective programs meet the strategic needs of your business. Key areas that drive the creation of workplace financial wellness programs are:

• Attracting and retaining talented employees;
• Employee financial stress, which costs your organization in areas like higher health care costs, absenteeism and workers’ compensation;
• Benefits changes, such as a new high deductible health care plan or changes in an employer-sponsored pension;
• Merger or acquisition;
• Initiative to build a stronger company culture, increasing productivity and engagement; and
• Rising costs of delayed retirements.

According to a Consumer Financial Protection Bureau report, “a financially capable workforce is more satisfied, more engaged, and more productive for their employers.” That’s why 93 percent of companies surveyed in a 2015 Aon Hewitt report are likely to create or broaden their efforts on financial wellness.

 Determine the Right Approach for Your Workforce

Workplace financial wellness offerings can range from highly effective, comprehensive solutions fully integrated with company benefits to online-only tools or programs that address specific employee populations. There are three broad approaches:

Benefits-Based Approach A workplace financial wellness benefit can be the one benefit that pulls all the other benefits together, increasing employee understanding, use and appreciation of their value. In particular, when your strategic goals are to engage employees, reduce financial stress, encourage benefits appreciation and realize measurable cost savings by reducing financial stress or benefits appreciation, the best solution is making financial wellness an ongoing employee benefit available to all employees. The foundation of a benefits-based approach to financial wellness is ongoing guidance and coaching that promotes behavior change.  Depending on workforce needs, this includes some combination of workshops, webcasts, one to one coaching (telephone, in-person, or both) and online learning.

The benefits-based approach embeds financial wellness into your company culture and establishes your company as a partner in employees’ financial security. This is a powerful contribution to your recruiting brand. Over time,  research shows a benefits-based approach can provide significant ROI for a large company.

Program-Based Approach   The program-based approach can be a good fit for companies who may not have a strategic need for workplace financial wellness as a benefit offered to all employees, but have a need for support for specific employee populations. Typical employee populations to address with a targeted financial wellness program include pre-retirees, employees offered early retirement, recent college graduates and employees who have requested a retirement plan loan or received a wage garnishment. Companies may also choose to target executives by offering them an unbiased review of their financial plan by an experienced financial planner.

Tool-Based Approach Financial wellness websites and apps are generally used as tools in a more comprehensive program. There are some circumstances where a tool-based approach on its own may be a fit: when you are looking for a lower cost solution to check the box, when you have a very specific issue you want to address— such as helping parents navigate the college planning process, refinancing student loans for employees, offering employees in plan advice to help them better manage their 401(k) investments, or decision making tools that help them select the right health care plan during open enrollment.  The right tools can make an impact here, provided you are working with a best in class provider and your population truly needs the service.  However, they don’t generally make an enduring impact on overall employee financial wellness, retirement preparedness, or even benefits satisfaction.  To do that, a holistic approach is needed. This is why employers are increasingly folding these tools into fully integrated financial wellness programs that utilize a “concierge” service approach where employees are directed to the right tools and benefits based on their needs, while working with a counselor that can help them continually improve their finances over time.

Understand What Your Employees Really Need

Everything starts with data. Once you have decided on whether to implement a benefits-based, program-based or tool-based program based on your strategic needs, you still need to validate the needs of the employees you are trying to reach with the program. There’s nothing worse than spending a large amount of time and money to launch a new program, only to discover that you could have spent half that amount and gotten much more appreciation and utilization from employees who actually needed a completely different service.

For example, you may think student loan debt is a major issue looking at your population— but what if the bigger issue is not knowing how to effectively budget to pay off the debts?  You can help provide loan consolidation support for employees in this scenario but the effect will be marginal, as their foundational habits around how they manage their money won’t change.  Similarly, in plan advice can be great— but it’s more expensive than target date funds and if employees who rely on their retirement plan as their sole investment vehicle choose in-plan advice thinking it will provide them with a bullet proof investment strategy when a cheaper target date fund would serve essentially the same purpose, you may have actually exposed yourself to legal liability down the road when they realize the extra fees were not justified for their situation.

Why A Workforce Financial Wellness Assessment™ is a “Must Have” Before Making Any Decisions on What To Offer Employees

The only way to truly understand what employees need, whether you are looking to add tools, programs, or a holistic benefit is to better understand their finances, in a confidential, non-invasive way. The best way to do this is to provide them with access to an online financial wellness assessment which they can use to get a snapshot of their personal financial wellness and key next steps to take to improve their finances, including a Financial Wellness Score™ they can use as a gauge to track their progress.  Employees take five minutes, answer non-invasive questions about their financial habits, behaviors, and decisions they’ve made — without any account information collected — and you get an aggregated Workforce Financial Wellness Assessment™ detailing the following:

• Overall financial wellness broken down by age, income, gender, location, and job classification.

• Most pressing needs for each group— from money management to investing, saving for college, protecting their income and assets, retirement planning, etc.

• Specific areas within each of these categories that are the most concerning so you can pinpoint which services are best for which population. For example, if 93 percent of those 45-54 are managing their money well and have their debt under control and investing sufficiently for retirement, but most have children and no life insurance and poor college planning strategies, those are the areas to focus on.  Conversely, if employees just starting out aren’t even aware of how basic benefits work, but actually have the free cash flow to be able to invest more money into benefits that are important to their future— there may be a need for financial mentorship programs that help them adjust to “real life” and fully maximize benefits they may not even be aware they have available.