The demand for financial wellness programs by 401k and 403b plan sponsor continues to grow evidenced by an HR professional attending a TPSU program at Queens University in Charlotte, NC. But the jury is still out on its effectiveness.
Using targeted messaging for different generations, the Charlotte based HR professional is excited about their financial fitness program trying to get employees to focus on the future concerned about many falling prey to pay-day loans. Just like physical fitness, financial fitness is a key component of stress reduction leading to higher worker productivity.
But when asked about its effectiveness, the HR professional noted that they are just at the beginning of the process and have not been able to measure success.
Employee education in 401k and 403b plans is largely ineffective – an academic study showed that overall financial literacy has a .1% impact on changing behavior. Yet many plans and providers keep doing it as a fiduciary hedge.
One of the issues with financial wellness is the same as with financial fitness – the people who need it don’t use it. They may think there is no hope to get more fit. The question is whether we are using the wrong methods and programs or whether people will ever engage in financial wellness programs.
- Accountability – Personal trainers helps us get to the gym and so can financial coaches.
- Specific Goals – Let people select their own goals.
- Confidence – Coaches can give us confidence to be successful
One of the biggest obstacles to improving results in 401k and 403b plans is getting senior management engaged which will not happen until they see how their company’s retirement plan affects the bottom line in the form of higher costs and lower productivity for older workers not able to retire or concerned about finances. If we are not able to show a return on investment in financial wellness soon, resources may be cut off before we find potentially viable solutions.
