Financial Wellness Success Requires Proactive HR

Workers’ needs vary by generation, education and other factors

By Mark Feffer Sep 8, 2016
Reuse Permissions

As the workforce becomes younger and its financial needs are changing, more organizations are taking a broader approach to helping employees face money issues that range from crushing student debt to saving for a house or assisting aging parents.

According to consultancy PricewaterhouseCoopers’ 2016 Employee Financial Wellness Survey:

  • 45 percent of employees identify financial matters as the most stressful issue they face.
  • 40 percent have difficulty meeting their household expenses each month.
  • 24 percent have withdrawn money from their retirement plans to pay for unrelated expenses.

Meanwhile, the firm's Millennials and Financial Literacy study reports that over the last five years 42 percent of Generation Y workers have used services like payday loans, pawnshops or tax-refund advances to make ends meet.

The anxiety workers feel won't surprise HR. According to a 2010 study by the Federal Reserve, every year financial stress costs businesses $5,000 in lost productivity per employee.

To relieve at least some of the tension, many employers are implementing programs centered on "financial wellness," an approach that encourages workers to make better choices in both their general financial planning and specific financial decisions.

Action over Education

"In the past, companies may have overemphasized [financial] education," said Betsy Dill, Los Angeles-based senior partner and U.S. financial wellness leader at the consulting firm Mercer. "But that may not be moving the needle in terms of people taking action."

Instead, Dill said, employees need help making the right decision without sitting through "hundreds of hours of education." A simple example is defaulting employees into the company's 401(k) program. However, many financial-wellness professionals say that truly effective solutions need to be a lot more involved than that.

For example, Kent Allison, a partner and national leader of PricewaterhouseCoopers's personal financial education and wellness practice in Florham Park, N.J., noted that education should be delivered in the context of employees' needs at that moment. "Teach them about the impact of loans from their 401(k) when they're about to take one," he said. "Educate them at the right time and at the inflection point, at the moment when they have to make a choice."

A key to doing this right is understanding that people at different stages of life have different priorities. Jeff Tulloch, vice president of MetLife's PlanSmart financial education program in Danbury, Conn., put it another way: "Money's very personal and everyone has different needs."

Engage at All Levels

This transformation from financial education to financial wellness requires the active involvement of HR in order to succeed. "You have to be persistent and make it a priority," said Sean Furlong, the director of finance at the Gilman School in Baltimore. "We're very active with our vendors. We meet on a regular basis to discuss plans, what we are doing, how our population is doing financially and are they participating."

But the real key is for the employer to visibly participate in making financial wellness a priority, and not simply rely on its providers. Not only does this demonstrate that the company is taking its workers' financial issues seriously, but it makes the effort more effective by helping vendors reach the right people with the right solutions.

"HR needs to work with financial wellness companies to reach the people who need help the most," said Sarah Newcomb, a behavioral economist at Morningstar and HelloWallet in Washington, D.C. "HR can identify the people most at risk and hold sessions that show them how the program works and how it will make their lives easier." Basically, Newcomb said, "HR needs to engage more."

Linda Robertson, director of planner operations for the financial wellness services provider Financial Finesse in El Segundo, Calif., agreed. "If the organization wants to move the needle, it needs to come from within," she said. HR—as well as the CEO, division heads and other leaders—have to say, "This is important."

Successful financial wellness programs have ongoing communications campaigns behind them, Robertson added—campaigns that are embedded in HR's own messaging. Otherwise, employees may look on vendor-produced materials as "just marketing."

Make It Personal

HR also should look at personal financial issues from the employees' point of view, said Allison. And, here again, one size doesn't fit all. Workers' need don't vary only by generation, he noted, but by region, educational level and other factors.

While most large employers pride themselves on the variety of benefits they offer, they can overwhelm employees if they don't package their offerings properly, Dill observed. For instance, employers may not understand how voluntary benefits such as supplemental life insurance might work with retirement savings to provide for beneficiaries under a worst-case scenario, or how health savings accounts can help with high deductibles in consumer-directed health plans.

"Employers need to look at how they integrate these solutions into a more employee-first experience," Dill said.

Finally, Allison noted the importance of asking yourself whether employees are really using your organization's financial wellness programs, and which ones are having the most impact. "Making sure benefits are actually working is one area where HR can improve," he said. "It needs to be more proactive. This is a hot topic because it's actionable and measurable."

A Spectrum of Financial Confidence and Wellness Needs

Meghan Murphy, director of thought leadership at financial services firm Fidelity, shared findings drawn from over 250,000 individuals who, since its launch in June, provided data through the firm’s online Money Checkup tool into their financial wellbeing, including how they feel about their finances, how they’re saving, where they’re spending—and where they’re seeking the help:

  • People admit they are not financially well, but are seeking guidance on very specific topics. Overall, most people (88 percent) are not confident about their financial future, over half do not have healthy saving and spending habits or behaviors, and only about one-third (38 percent) have more than three months of an emergency fund. The top three topics that they are interested in: health savings accounts (HSAs), simple rules for saving, and spending and saving for an emergency fund.

  • Unconfident Millennials (ages 18-35). Most of these individuals (89 percent) don’t feel confident or are wary of their current financial picture. Despite having the longest time horizon, more than one-quarter (28 percent) don’t invest in the markets.

  • Single moms in need of most help. Most (97 percent) do not feel confident about their financial situation. Over half (60 percent) have little or no emergency savings and 67 percent have credit card debt. About one-quarter (27 percent) spend more than they earn, while only half (49 percent) break even each month.

  • Vacation dreamers. Across the board, about half (47 percent) of people are saving for vacation, which ranks as the most popular goal despite having unhealthy saving/spending habits or adequate emergency savings. However, for younger people (ages 18-35) it falls to #2 behind saving for a home.

  • Financially sound. The people who report feeling financially well say that it’s because they’re in control of their debt (76 percent). Also, those who "confidently" manage their own investments also are three times more confident in their financial wellness than those who do not (30 percent vs. 9 percent).

“Employers should consider personalized financial wellness programs that target those who are at most risk of being financially distressed, directing people to the guidance that will help them the most,” Murphy advised.

Mark Feffer is a freelance writer based in Pennsylvania.

Related SHRM Articles:

Reach Out to Workers Living Paycheck-to-Paycheck, SHRM Online Benefits, September 2016

Financial Planning Tackles Gender Savings Gap, SHRM Online Benefits, March 2016

Boosting Younger Workers' Financial Fitness, SHRM Online Benefits, June 2015

Reuse Permissions


The application deadline is November 11

Apply Today

Job Finder

Find an HR Job Near You


Find the Right Vendor for Your HR Needs

SHRM’s HR Vendor Directory contains over 3,200 companies

Search & Connect