Is 2017 the Year of Employee Financial Wellness Programs?

Helping workers manage their finances can reduce stress, raise productivity

Stephen Miller, CEBS By Stephen Miller, CEBS January 17, 2017
Is 2017 the Year of Employee Financial Wellness Programs?

Benefits specialists say that giving employees money management training and tools through a financial wellness program is a key workplace trend for 2017.

"A big opportunity is to take this year to push ahead on financial wellness," said Michael Archer, Philadelphia-based leader of the client solutions group for Willis Towers Watson's North American retirement practice. "The tools for employers to measure and improve financial wellness are more broadly available, and taking advantage of these programs can have big payoffs for employees and employers."

"This year, employers are likely to focus on the financial well-being of workers in a way that extends beyond retirement, such as help with managing student loan debt, day-to-day budgeting, and even physical and emotional well-being," said Rob Austin, director of retirement research at consultancy Aon Hewitt in Charlotte, N.C.

"We see 2017 being the year of financial wellness," said Carla Dearing, CEO of SUM180, an online financial wellness service in Louisville, Ky.

[SHRM members-only how-to guide: How to Design an Employee Benefits Program]

Meeting a Need

Financial wellness programs educate employees about overcoming personal finance challenges. Training topics could include debt reduction, asset management and saving for current and future needs—such as purchasing a home, financing their children's education or preparing for retirement.

The Society for Human Resource Management (SHRM) noted in its 2016 Employee Benefits survey report that 61 percent of HR professionals polled last year described their employees' financial health as no better than "fair," and 17 percent reported their employees were "not at all financially literate." Organizations with more hourly workers were less likely to rate their employees' financial health as "good" and less likely to rate their employees as "very financially literate."

SHRM also found that last year:

  • 24 percent of organizations offered employees online financial/investment advice.
  • 27 percent offered one-on-one advice.
  • 22 percent offered group or classroom financial advice.

Other research highlights why these benefits are needed. PricewaterhouseCooper's (PwC's) 2016 Employee Financial Wellness Survey, with responses from 1,600 full-time employees, showed that:

  • 52 percent of workers overall are stressed about their finances. And the younger the worker, the more likely he or she is to be worried: 64 percent of Millennials said they are stressed about their finances.

  • 46 percent of workers spend three or more hours during the workweek dealing with or thinking about financial issues.

  • 45 percent said their finance-related stress had increased over the last 12 months.

"The benefits to employers of addressing employee financial stress are significant," Dearing said. "Financial wellness programs drive engagement, productivity and success," and they "also engender increased loyalty and connection."

Although some employers debate whether they should get involved in their employees' finances, Dearing thinks that view is shortsighted. "Financial health is a major component of employee wellness," she noted. "If employers say they're concerned about their employees' wellness, they can't ignore their role in helping employees improve their financial health."

Integration with 401(k) Education

"Leading-edge employers will be marrying financial wellness education with employee 401(k) education in 2017," predicted Robert C. Lawton, founder and president of Milwaukee-based Lawton Retirement Plan Consultants. "Many employers are finding that employees who don't know how to create a budget can't begin to understand how to diversify their 401(k) plan accounts. Without basic financial knowledge, employees have a hard time understanding more-advanced concepts like risk and volatility."

Employers are "offering tools and modelers to help workers understand, realistically, how much they're likely to need in order to retire," Austin noted. "Some of these tools take it a step further and provide education on what specific actions workers can take to help close the savings gap and can help workers understand that even small changes, such as increasing 401(k) contributions by just 2 percentage points, can impact their long-term savings outlook."

Designing a Financial Wellness Plan

"Companies are starting to include money in the budget for financial counseling," said Andrew Brickman, Wayne, Pa.-based director of benefits administration at Corporate Synergies, a consultancy. He noted that PwC's survey, referenced above, found that 14 percent of employers had a budget for financial education and another 25 percent were looking to add budget dollars for these programs.

"But as with health and wellness programs, it can be daunting to encourage upper management to allocate dollars for financial education and support programs and then motivate employees to participate once executives give the nod," he said. "How well your plan is designed can impact employee participation."

Mark Lamoriello, president of Lamco Advisory Services in Orlando, Fla., recommended that employers consider these questions during the design phase of a financial wellness plan:

  • How will we measure the success of the program? "These programs will almost always compete with 401(k) and health benefits for resources, which will automatically put them at a disadvantage because the outcomes will be less apparent and not as easily quantified as health and retirement benefits," Lamoriello said.

  • How in-depth will the program be? Financial wellness programs can range from group educational sessions to individualized online programs to personalized coaching sessions with a financial professional, Lamoriello explained. "Obviously, the more individualized your program is, the more effective—and expensive—it will be."

  • Will your program be mandatory? If not, what incentives will be given for participation? "This speaks right to one of the major concerns about financial wellness programs: Will they be used?" Lamoriello said. "You can't force an employee to comply with a financial wellness program, so we see incentives used more frequently. Those incentives can range from small, one-time bonuses to subsidized sessions with a financial planner."

As with most benefits programs, "an effective financial wellness program won't be one-size-fits-all and will depend heavily on the resources made available to it," Brickman noted. 

Related SHRM Online Article:

Financial Wellness Success Requires Proactive HR, SHRM Online Benefits, September 2016

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

Financial Planning Tackles Gender Savings GapSHRM Online Benefits, March 2016

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