Financial Wellness Programs Failing on Education
Financial wellness programs fail to show broad-based success in education alone.
A new Cerulli report on financial wellness programs corroborates what many have been questioning. Without tangible metrics and accountability, are financial wellness programs effective? When it comes to financial wellness programs, the question remains – is education moving the needle on employee behaviors?
According to the Cerulli report, cited in Pensions & Investments, hallmarks of a quality financial wellness program include one where success can be measured easily and that reflects the unique demographics of each workplace. Specifically, Cerulli’s research highlights that financial wellness programs should focus on actionable goals for participants that can be measured within a “realistic” timeframe. This enables employers to hold workers accountable for making progress on their goals. The measurement function will also become a good indicator for determining if both the company and the employee are getting a return on their investment in the financial wellness program.
Research analyst Daniel Cook, from Cerulli Associates’ retirement practice, states that question in another way, asking “How do you address the challenge to prove that financial wellness is more than a marketing ploy?”
In its report, Cerulli offered examples of education-oriented vs. action-oriented financial wellness programs. The former would feature “a library of online articles covering various topics such as budgeting, investing basics, and retirement income planning,” according to the report. The latter would include administering a survey on a participant website that asked questions related to their finances, such as “What are your financial goals? What types of debt do you have?” the report said. Sponsors could use the survey results to identify areas of improvement for financial wellness program participants, then subsequently serve up targeted content on the participant website, to help participants to accomplish specific goals.
One example of a targeted financial wellness topic is student loans. Informational articles alone, for example, are inadequate because financial wellness program participants are unlikely to act just on something they’ve read. However, “gamifying” it and prompting them to set goals they can track may help to motivate them resulting in positive changes in behavior, the Cerulli report said.
Another Cerulli survey of 401k plan participants found that sizable numbers of younger employees said they would be more motivated to increase their retirement plan contributions if their employers made matching contributions to help them pay off student loan debt. This is where knowing workplace demographics can make an impact. Sponsors with younger workers could then develop benefits that address these needs, for example, and offer them in tandem with financial wellness programs to help participants reach their goals.
Financial wellness programs are established by well-intentioned work-teams and professionals. However, in the absence of a valid accountability component and a way to measure progress, education alone consistently fails to deliver to a goal. Plan sponsors should review existing financial wellness programs to ensure their plan participants have specific goals for their unique workforce demographics and that the program’s success can be measured via tracking tangible results.
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