Financial Wellness Programs Get Boost with Education
Financial wellness programs are continuing to look for ways to reflect their value-add. Then, the plan sponsor needs to understand the value of the value-add by assembling an appropriate mix of Health wellness, emotional wellness and financial education. As follow-up to a story previously appearing on 401kTV, we have updated some of information on the topic of Financial Wellness. Many employers are laser-focused on offering more competitive employee benefits — in particular, enhanced health and financial wellness programs. The article in BenefitsPro reminds employers not to forget financial wellness programs as they consider expanding their employee benefits offerings for 2020. According to Brian Hamilton, who authored the article for BenefitsPro, financial wellness programs are poised to make the make the greatest impact on employees’ overall health and wellness. Mr. Hamilton is vice president of SmartDollar, a financial wellness program oriented-benefit offered by Ramsey Solutions.
Why is a financial wellness program so important? Simply this: employees are concerned about money, they need help, and they’re looking to their employers to offer financial wellness programs to help them better manage their finances. Indeed, a SmartDollar study found that 83% of employees across the country have a desire to improve their money management skills. According to Mr. Hamilton, the need for financial wellness is critical, especially considering that 40% of Americans can’t cover a $400 emergency expense without selling something or borrowing money, according to a study from the Federal Reserve. And nearly 80% live paycheck to paycheck, regardless of their earnings bracket, as reported in the CareerBuilder survey.
Mr. Hamilton opined, “It’s time to call it like it is: Financial wellness is no longer optional. Your employees are looking to you for help. And it’s up to you to give them what they need to take control of their money once and for all.” Indeed, employers have an opportunity to make a significant impact when it comes to improving employees’ financial wellness, reducing stress, and boosting productivity — all of which has a positive impact on the bottom line.
According to Mr. Hamilton (and as 401kTV has noted before here and here), financial wellness programs are so much more than mere education. Financial wellness programs that emphasize financial literacy only, without fostering behavior change, generally fall short. “A successful financial wellness benefit will show your employees how to change their behavior, not just throw instructions at them without any tools,” Mr. Hamilton explained.
What are the “false” financial wellness programs to watch out for? Those that offer easy access to paycheck advances, student loan refinancing and payday loans, which only serve to perpetuate employees’ money concerns, and, have the potential to leave an employee in even worse shape. An effective financial wellness program should help employees achieve long-term change when it comes to their spending and saving behaviors.
As pointed out by 401k Specialist, “over the past two years, financial well-being has received more attention than in prior years; 35% of companies have increased spending in this area.” What’s more, getting your financial wellness program’s benefit-offering right is important because employees don’t leave their money issues at home; they bring them to work. They are stressed and distracted, which costs employers money — potentially as much as $500 billion collectively in lost productivity costs on an annual basis, according to a study from Salary Finance. Employers who help employees achieve success via financial wellness programs, reap the benefits of less stress, a more productive employee-base and reduced absenteeism in the workplace. Employees who stick around are more likely to participate in other benefits, such as their workplace 401(k) plan, Mr. Hamilton noted.
An effective financial wellness program should give employees the tools they need to change their financial behaviors not only today, but for their lifetime. While the return on investment for financial wellness programs is typically hard to measure, Mr. Hamilton aptly observed that behavior change has an impact on employees’ lives that goes way beyond the bottom line.