Half of all Americans, regardless of income level, cannot cover a $400 emergency without taking a loan or selling something while most cannot pass a simple financial literacy quiz. Which is why so many employers that also sponsor a retirement plan are incorporating financial wellness programs. But do these programs work and how do we measure them effectively?
According to a survey conducted by SHRM companies are starting to question whether these wellness programs actually pay off and are worth the time and money spent.
Wellness programs, originally designed to promote healthier practices and reduce healthcare costs, seem to be declining with just 37% of companies offering health coaches, for example, compared with half last year. While it’s difficult to measure the return on investment, Rand estimates that companies lose $.50 on every dollar spent on wellness programs.
On the other hand, Aon Hewitt is reporting that 56% of companies are either creating or expanding their financial wellness program up 10% from 2015.
The elements of a successful financial wellness program outlined in a BNA article include:
- Constant nudging throughout the year
- Incentive based
- Personalized v. one size fits all
- Simple plans created by employees with periodic check-ups
Barbara Delaney, founder and principal at Stone Street Equity, engages participants starting with an online assessment survey to learn what’s bothering them using a raffle of a month’s free rent to get them to respond. They found that participants wanted to know more about the process of applying for and successfully getting student loans. As a result, Stone Street created workshops on the subject which 400 people attended.
The key to Stone Street’s success is twofold. They do not just focus on the 401k plan and the principles of investing – they teach financial literacy helping people to manage their finances and their budgets. Secondly, they custom their workshops based on the needs of the employees based on the online assessment which also allows Stone Street and the committee to know how effective the financial wellness programs have been.
Ultimately financial wellness programs should be judged on whether they move the needle on helping more people to retire successfully – it’s good for them and the company. But for many companies, financial wellness at work feels like the “right thing to do” which may have to suffice as long as there is active engagement which can be measured now.
