Has financial wellness reached its moment?
Following more than a year of lockdowns and financial uncertainty, employees may be more receptive to participating in financial wellness programs than they have been in the past.
In a Lincoln Financial Group survey with responses from 437 full-time employed adults, 79 percent said COVID-19 had changed the way they think about planning for their financial future, and 90 percent indicated that they would like to take action to improve their finances during the next three months. Nearly two-thirds said it's important for employers to offer financial wellness programs.
Employees seem ready, and employers can make the most of the moment to help employees better manage their financial lives.
The state of Nebraska developed a series of six financial wellness webinars for all state and local public employees and made them available in April, just when many people were taking stock of their lives and finances as the pandemic began to recede and vaccination rates were increasing. Interest and participation in the financial wellness series shattered expectations.
Jennifer Davidson, assistant professor of economics at the University of Nebraska-Lincoln and president of the Nebraska Council on Economic Education developed the series. She was hoping 500 people would participate in the program—and offered financial incentives for the first 200 enrollees, plus a lottery with five additional cash prizes if more than 200 people enrolled.
To Davidson's surprise, more than 2,000 people signed up and an average of 1,000 participated in each of the first three webinars.
"We focused on providing foundational tools and covering the most important topics," Davidson said. "There is a lack of financial literacy across all age levels, so this should be a lifelong pursuit that people can use to improve, as they move through different life stages."
The six webinars—which will be available midsummer for anyone to use regardless of where they live or work—cover:
- Budgeting and debt reduction.
- Investing and retirement planning.
- Identity theft and fraud awareness.
- Planning for children and college.
- Estate planning.
Find the Right Angle
"Sometimes, the most effective solutions are the most basic," said Susan Shoemaker, a retirement advisor working in the Southfield, Mich., office of investment advisory firm Captrust. "While it takes time, encouraging a participant to save enough to cover at least three months' expenses is the most practical approach to heading off an emergency."
Employers can use the financial realities of the pandemic to get employees' attention, noted Nancy DeRusso, managing director and head of financial wellness with Goldman Sachs Ayco Personal Financial Management in New York City. Economic stimulus efforts, for example, can be a good hook on which to hang financial wellness communications.
In addition to direct stimulus payments to qualifying individuals, the American Rescue Plan Act provides a child tax credit of up to $3,600 for children under age 6 and up to $3,000 for children ages 6 to 17.
Financial wellness programs can help employees save or invest those funds, DeRusso said. "With strong communication, employers can leverage this information to get people interested in financial wellness" as they consider how best to use that money, she pointed out.
Financial wellness programs also can help employees decide whether to use those funds to set up an emergency savings account, pay down debt, save for retirement or address some other pressing financial issue.
[Related SHRM article: What's Happened to Retirement Expectations During the Pandemic?]
Offer Inclusive Outreach
The 2021 TIAA Institute-GFLEC Personal Finance Index report, released April 5, underscores financial hardships brought by the COVID-19 pandemic, especially among minorities who have been disproportionately affected. The survey, completed in January by more than 3,000 U.S. adults, found that 32 percent of Black and Hispanic Americans find it difficult to make ends meet in a typical month, compared to 18 percent of white Americans.
"Our data shows a direct link between financial literacy and financial well-being and demonstrates how knowledge can better equip Americans to face adverse economic conditions," said Annamaria Lusardi, professor of economics and accountancy at The George Washington University School of Business and founder of the school's Global Financial Literacy Excellence Center (GFLEC).
"Just as we need to address institutional barriers, we must also break down barriers to financial well-being as part of the path to economic recovery following the pandemic, and that includes greater access to financial literacy," she advised.
DeRusso encouraged employers to develop financial education programs designed to meet the needs of specific demographic segments, including women; LGBTQ, racial and ethnic minority employees; and those at specific income levels or living in certain geographic locations, to help make financial wellness more relevant to employees' lives.
"Financial wellness is connected to everything else in life," DeRusso said. "It's about becoming more secure."
Targeted communications and advice "can focus on the challenges and experiences these individuals are going through," DeRusso added. "Financial wellness is not just about access to education," she noted. "Employers have to make sure that [their programs] offer personalized education."
Peer evangelism can also bring employees into the financial wellness program. "Recruit on-the-ground or virtual financial wellness program champions who can help inspire fellow employees to participate," suggested Sharon Scanlon, senior vice president of customer experience and producer solutions at Lincoln Financial Group in North Reading, Mass. "Employees who are mission-driven and motivated and who have a passion for the program's goals can engage their colleagues and help increase participation with the program."
Financial wellness resonates particularly well with employees during times of change or transition, Scanlon said. As many employees prepare to return to the worksite on a full-time basis or with a hybrid onsite/home arrangement, emphasize financial wellness programs and resources.
She said employees may be more receptive to getting their financial houses in order as they get ready to face the new normal and all the uncertainty that this represents.
Joanne Sammer is a New Jersey-based business and financial writer.