Excerpt from USA Today Interview with Liz Davidson on Best Practices in Financial Wellness

March 17, 2016

Three-quarters of about 400 large companies surveyed by Aon Hewitt survey say they’re planning to focus more on financial wellness this year. And that means this sort of program could be coming to an employer near you.

But what are financial wellness programs? How do they work? And should you take advantage of such plans if offered one in your workplace? For the answers to those and other questions, we turned to Liz Davidson, the CEO and founder of Financial Finesse, an El Segundo, California, based provider of financial education programs. Below are her responses to our questions.

What is a financial wellness program?

I want to define financial wellness, since the term is commonly misused by financial services firms selling financial products or services, managing assets or even providing advice.

Financial wellness, from an employees’ perspective, is a state of financial well-being, where they have:

minimal financial stress
a strong financial foundation with little or no debt, an emergency savings fund and are living below their means
a plan they are following that puts them on track to meet future financial goals

From the standpoint of employers who are offering financial wellness programs as an additional employee benefit, the programs must meet the following criteria to qualify as a true financial wellness program:

Delivered by an unbiased financial education company that is focused on changing employees’ financial habits and behaviors and helping them make informed financial decisions and create strong financial plans. Pairing this with an advice component can make for a comprehensive program, but solely having financial representatives sell employees insurance, mutual funds, or manage their assets is not a financial wellness benefit.

Holistic and comprehensive, meaning that it covers all aspects of financial planning, from serious debt issues to advanced estate planning and wealth protection, so the program can help all employees in a workforce, not just those who fall into a certain demographic. Also, the program should integrate all employer benefits and providers so it is a seamless program from an employee perspective.

Personalized and employee focused so that the programs start with the employees’ financial issues and provide guidance around their specific needs, rather than attempting to simply educate them on financial terms or specific financial services. Personalized financial wellness programs are tremendously successful at driving behavioral change because they provide direct guidance tailored to the person’s individual needs, as opposed to a “one-size-fits-all approach.”

This may be the most important thing (after an unbiased financial education company): These programs must be a process, not an event. Employers would never expect employees to work out once or eat their vegetables for a week and immediately improve their health, which is the same thing with finances. Financial wellness programs, by nature, provide multiple channels and ongoing access to financial coaching, so that employees have the support and accountability they need to not only make one-time changes, but ultimately develop financial habits and behaviors that become part of their lifestyles.

What’s the purpose of such a program and what features would a good program have?

The purpose of a program is two-fold: From an employer perspective, a financial wellness program can provide lower employee turnover, lower healthcare costs as a result of less financial stress taking a toll on employees, and lower absenteeism to name a few. Read Actual Results from Company’s Financial Wellness Program to view a return on investment (ROI) study on stress and health care changes as a result of financial wellness programs. One thing that bears mentioning is that these programs significantly impact employees’ retirement preparedness, which is good for the employee and the employer. Employees who work past normal retirement age should do so because they want to, not because they have to.

From an employee perspective, it can lead to higher satisfaction and better knowledge of their employer benefits, less physical illness due to lower stress, higher productivity at work and, of course, financial security.

A good program would be established as a core employee benefit and is customized based on employee needs and learning styles, taught by experienced CERTIFIED FINANCIAL PLANNER™ professionals and maintain a completely unbiased approach. By assessing employees’ vulnerabilities, strengths and weaknesses through a financial wellness assessment, it provides an employer with the ability to customize the program topics based on employees’ needs through a learning style that resonates best for them (in a variety of different mediums such as online, one-on-one, workshops, webcasts and the like).

There is no one-size-fits-all approach to a wellness program, so tailoring the program to the employees ensures the highest utilization and participation rates, and a greater overall satisfaction with the benefit itself. Maintaining an unbiased approach to the education builds employee trust with the benefit, as he or she initially might be skeptical of “being sold” or concerned that the educator might have a hidden agenda. It ensures pure guidance over advice, while also empowering the employees to make the best educated decisions for themselves based on their unique situations.

Lastly, a good financial wellness program would be comprehensive, integrating all employer benefits and providers, so it’s a seamless and holistic program from an employee perspective.

What advice would you give to employees who are just now being introduced to a financial wellness program?

Become familiarized with the benefit and what it can offer you. Do the educators have their CFP® designation? Are they unbiased and are they there to truly educate vs. provide advice? Do they use it as an ongoing resource throughout your career to help you make financial decisions and maximize your benefits and investment decisions?

Employers that provide this program to their employees as a free benefit truly care about their workforce and their well-being. It can be a truly life-changing opportunity to take ownership of your financial situation, regardless of what life stage you are in.

Any other thoughts?

Employers often include this as a free benefit to employees, so employees should take advantage of it as much as possible provided the program meets the criteria of being a true financial wellness program designed to help them develop the financial habits and behaviors they need to become financially secure.

Five Common Mistakes Employees Make in Benefits Planning

March 17, 2016

I’m sure you’ve heard the phrase “start off on the right foot.” It’s a guideline that can be applied to everything in life, from starting a new career to getting married. But a lot of times, we make initial mistakes that lead to others – we’re not only on the wrong foot; we’re wearing the wrong shoes.

You probably see this with employees in their benefits plans: They are using their benefits wrong from the get go. Instead of helping them reach financial milestones, like retirement or to pay for costly health care expenses, benefits end up costing employees more or become lost opportunities.

As workplace financial educators, we often see the mistakes employees make with their benefits after it’s too late. Mistakes are common because employees are either unaware of or misunderstand their benefits. Here are the five most common mistakes we see.

Going for the lowest premiums. Many employees think low-premium health care plans are best because they see an immediate savings. But, in reality, these plans can end up costing employees more later on if they have a major health issue and out-of-pocket expenses cost more.

Setting it and forgetting it. Auto-enrollment and auto-escalation in company-sponsored retirement plans are valuable features to both the company and their employees, but they often give employees the idea that everything in their plan is on autopilot; they forget to manage their own increases and other options.

Using target date funds with other investment options. Employees often misinterpret their allocation because they use target date funds as one investment option in their portfolio. But target date funds should be used alone or not at all. In this recent video, Target Date Fund Tips on Forbes.com, our planner Erik Carter shares tips on how to use them properly.

Buying and selling at wrong times. Employees who are actively managing their investments are often trying to time the market but end up losing value because they are buying at high points, rather than low ones. As much as we would like to “buy low,” active trading is a common mistake that often leaves employees short of retirement goals.

Unaware of the benefits they have. Probably one of the most detrimental mistakes employees make about their benefits is not knowing what they have. Many companies now have preventative health and financial wellness programs that offer incentives, such as tuition reimbursement and life insurance, which is often less expensive and easier to qualify for through an employer than individually.

Benefits, in the scheme of everyday life, can help employees not only meet milestones and pay expenses but also build wealth. If you’ve seen mistakes that cost employees, share them with us. As plan providers, you can educate them on common mistakes, so they can maximize their benefits. If you would like a worksheet you can share with your clients and their employees, e-mail us at [email protected].

“Bright Spots” in Benefits Communication and Education

March 17, 2016

We’ve all heard that we learn more from our failures than our successes.

But is that really true? Recent research demonstrates the opposite to be true—that there is actually a tremendous amount we can learn from our success. And, further, that leveraging our successes can create major, systemic change and transform cultures within organizations, often in relatively short amounts of time. In their best-selling book, Switch, Chip and Dan Health call these successes “bright spots” and draw upon large scale research studies to show the impact of studying and replicating success.

We’ve seen the same thing from a benefits communication and education perspective: Most employers have experienced major successes in their benefits communication. Maybe not consistently, but if they go back over the last few years they can identify campaigns that really engaged employees, significantly increased participation in benefit programs, and really helped employees better manage their benefits. In some cases, the campaigns may have been so successful they took on a life of their own—becoming viral and even institutionalizing themselves into a culture as an annual event or contest.

When we work with employers, we recommend they examine their best campaigns and initiatives—starting with benefits communication and planning but expanding into overall HR initiatives to determine what the successful programs have in common. In every case where our clients have gone through this exercise, they’ve been able to identify common themes. In some environments, a sense of community is extremely important. Therefore, creating a forum where employees actively participate in the dialogue and interact with each other is vitally important. For others, it’s about target marketing—getting the right groups the right information in the right way at the right time so the communication has a highly personal feel. In other cases, it’s about repetition and making it part of day to day communications and ultimately the culture of an employer group—or even making it part of employee identity. Of course there are always those environments that are all about fun—where employees work incredibly hard and can become burned out and immune to communications because they simply don’t have the energy or enthusiasm to look at one more thing. In these environments, it’s about creating special occasions and events that are fun and allow employees to get their minds completely off work and focused for a moment on themselves and what they need to do to maximize the benefits they have in order to achieve their most important life goals.

At the end of the day, every company is different, but you can almost always find a pattern in your success, and then use these patterns as your roadmap in developing new campaigns that will resonate with your employees. Over time, you’ll end up developing a brand and culture associated with your benefits communications that differentiates your company as an employer of choice and creates a more cohesive (and ideally a more fun) working environment.

Does Financial Wellness At Work Really Work?

January 28, 2016

What exactly is an unbiased workplace financial wellness program? Companies interested in providing one need to understand the essential components of this new workplace benefit. Behavioral finance expert Dr. Scott Spann explains how using the right success metrics, services, and customization can result in both financially healthier employees and an increase to the companies’ bottom line.

The Unlikely Place Where Women Are Finding Relief from Financial Stress

January 21, 2016

Can you guess which employees are the most financially stressed? Research shows that 55% of lower to middle income mothers have “high” or “overwhelming” levels of financial stress. Thankfully, many of them are turning to their workplace financial wellness programs to help reduce their level of financial stress. Learn more about how these valuable initiatives are helping female employees thrive.

Encouraging Behavior Change

December 22, 2015

What’s the key to success for a financial wellness program? Behavior change. Many behavior change tactics used for physical wellness can also be implemented to increase a person’s financial health. Liz Davidson shares some strategies to increase employee engagement and truly create long-lasting financial behavior change.

Ending Open Enrollment Insanity

November 09, 2015

How many bad decisions do employees make during limited decision periods? Is there a way to make this crazy period easier for both the workforce and the benefits team? Can “benefits planning” make life easier for everyone all year long?

6 Steps Employers Can Take To Improve Their Employees’ Retirement Preparedness

October 25, 2015

Can employers help solve Americas’ retirement crisis? Most workers need guidance on how to retire with enough money to have a comfortable lifestyle. What are the key issues employers can address to boost employee savings? In this article, financial planner Michael Smith outlines six achievable steps employers can take to improve their workforces’ retirement preparedness level.

Is there a Retirement Crisis Brewing in the Workforce Today?

October 14, 2015

Are most workers prepared for retirement? Unfortunately, over 60% of employees have never put the effort into running a retirement projection, and 81% have made a self-assessment that they are not prepared for retirement, based on our 2015 research report on the State of U.S. Employee Retirement Preparedness. This is not only a bad situation for the employees. There is a cost to employers when pre-retirees come to work only because they can’t afford not to. There are different types of employees struggling with retirement issues – the unknowns, the under prepared and the under confident.

Why an Article About Millennial Finances Made Me Mad

October 02, 2015

Should young people not worry about saving money, and focus on enjoying life and having experiences? A popular article advocating this approach prompted Liz Davidson to disagree. She explains why Millennials are making financial progress, and offers strategies to foster millennial employee engagement, such as leveraging technology, building communities, and approaching financial wellness in a holistic way.

Why the Retirement Savings Gender Gap Isn’t Just a Feminist Rant

September 23, 2015

The majority of Americans are not saving enough and women – because they live longer and therefore have higher healthcare expenses – have further to go to get on track. How can employers help women employees close the gender gap in financial wellness? How can employers bridge the divide and motivate working women to save more?

Financial Wellness – The New Employee Benefit That’s Changing Lives #MyIndustry

March 23, 2015

Financial wellness programs have the power to revolutionize how millions of Americans manage their finances. What is financial wellness? How does it work? Financial Finesse CEO Liz Davidson explains the emerging financial wellness industry, and how these programs are helping companies save millions in healthcare costs while reducing financial stress and anxiety for employees.

Can You Change Your Workforce Culture to Increase Their Financial Wellness?

November 20, 2012

No matter how much financial education you provide to your workforce, ultimately it is up to your employees themselves to alter their financial bad habits and focus on improving their financial well-being. It all starts with creating a culture of accountability, according to best-selling author Roger Connors. I was fortunate to pick up a free copy of his book Change the Culture, Change the Game a few months ago at the SHRM Annual Expo in Atlanta. Although some of you might disagree, one of the things I like most about attending these conferences is the ability to visit all the vendors’ booths, find out what’s new in the benefits arena, and best of all, collect the freebies and giveaways. At one of the booths, Roger Connors was autographing his latest book, where he outlines a breakthrough strategy for energizing your workforce and creating accountability for results. Continue reading “Can You Change Your Workforce Culture to Increase Their Financial Wellness?”

What It Takes to Have a Winning Benefits Communications Plan for Your Employees

October 25, 2011

Congratulations to the most recent PSCA Signature Award Winners for 2011! The Profit Sharing/401(k) Council of America (PSCA) announced the winners of their Signature Awards at a special presentation at its 64th Annual National Conference at The Mirage in Las Vegas last month, to honor excellence in plan communication and education. This year, the Signature Award judges recognized 48 winners in 18 categories, based on how companies design, manage, and provide defined contribution communication and investment education to plan participants. Signature Award judges carefully review how effective the campaign was at achieving its goals and I’m proud to say that 3 employers that I have worked closely with over the past few years, were recognized as 2011 Signature Award Winners. Continue reading “What It Takes to Have a Winning Benefits Communications Plan for Your Employees”