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Some workplace financial wellness programs have deviated from their original goals and may not be as effective as hoped. Answering the author’s seven questions can help organizations determine whether their programs may need a reset.

The concept of financial wellness has been known to the employee benefits marketplace for well over a decade. Employers began implementing these programs in response to events that were occurring, including a shift away from defined benefit pensions, which, along with Social Security, was the historical safety net for many employees who otherwise failed to sufficiently save for retirement. Savings rates were dismal. Health costs were skyrocketing and student loans burgeoning.

Financial wellness programs were quickly adopted both in the United States and globally and were based largely on what was being done in the corporate health care marketplace around improving physical wellness utilizing behavior science. A whole new industry was created  with old and new products and services now being classified under the broad label of financial wellness.

Today there is some confusion in the marketplace around what constitutes a financial wellness program and what is and isn’t financial well-being. As a result, some programs have deviated from the intended goal and purpose and may not be as effective as hoped. Thus financial wellness programs at many organizations may need a reboot.

Revisiting Your Program’s Foundation

As with most structures, a financial wellness program is only as strong as its foundation and, if the foundation is weak, it will fail. Given that most current programs started out as financial and retirement education programs, it is important to understand that financial education is not the same as financial wellness and achieving financial literacy does not necessarily equate to achieving financial well-being.

It may be more helpful to view financial education as a component of a financial wellness program and that improving/achieving financial literacy ultimately “assists” in achieving financial well-being. A true financial wellness program goes far beyond just providing education. Achieving financial literacy is a lifelong endeavor and requires continual reinforcement and actual life experiences. And, if by chance you do achieve it, it is sometimes too late since you can’t go back and undo the actions and financial decisions you’ve already made.

While continuous education and school-based financial literacy programs that attempt to start the process earlier are important, it’s also crucial to get people to make the right choices and take the right actions at the appropriate time—even if they are not yet completely financially literate. Financial education as part of a broader financial wellness program becomes a means to explain why you are suggesting that an individual employee change a particular behavior now versus waiting until they are completely financially literate. The education is most effective if it is delivered when it is timely and relevant to the financial decisions they need to make.

To be effective, the financial education component should be part of a broader process that first assesses an individual’s current state of well-being and their financial knowledge, behaviors and attitudes toward money—which is often shaped by their personal and cultural experiences and outside influences.

It should then cater and customize the education to include the suggested actions the individual should take. Thus, the financial education component of a financial wellness program likely needs to be reverse engineered, starting with the desired end result (i.e., the desired behavioral change) and then the development of the education component to facilitate taking the desired action. For example, in addition to just teaching employees on why it is beneficial to save in their 401(k) plan, the program should address the financial challenges and other obstacles that may be preventing someone from contributing and teach them how to overcome those challenges and obstacles so they can find the means to contribute to the 401(k) plan. The education can then support the facilitation of those actions through coaching, socialization, digital tools and other means of support, including assistance with implementation.

Unfortunately, a number of financial wellness programs are still just traditional financial and retirement education programs repackaged under a different name.

Evaluating Your Program Positioning

Another reason that some financial wellness programs are not successful is related to how an employer positions the program. Many organizations fail to properly communicate their financial wellness programs, which leads to low participation.  It may be the reason that one PwC study showed that only 32% of employees stated that their company has a program to assist them with their personal finances while recent surveys of plan sponsors report that anywhere from 45% to 80% of employers offer a financial wellness program. Such a disparity can be interpreted to mean that employees are either unaware of the programs being offered by their employers or employees and employers have a different interpretation of what constitutes a true financial wellness program.

For a financial wellness program to be successful, it should sit atop of the employer’s various benefit solutions, highlighting those solutions in the context of each employee’s particular needs. For example, should the employee indicate they do not have a will, the program should not only educate the employee on why it is important to have a will, but also highlight the low-cost legal plan offered through the company benefit plans (assuming one is offered). Ideally it should also be integrated with a company’s broader employee health and wellness strategy. This doesn’t mean just putting it under the same umbrella and having consistent branding. It means truly integrating financial wellness within an overall employee wellness strategy. This is particularly important because studies have consistently reported financial stress as the number one cause of overall stress which in turn takes its toll on personal relationships and ultimately impact both physical and emotional well-being. A recent survey from the International Foundation of Employee Benefit Plans showed that worker stress was the top personal factor impacted by worker financial challenges.

To ensure its viability and effectiveness, financial wellness programs should also be tied to the key business objectives of the organization. The more aligned the program is with leadership’s objectives the more strategic it becomes and the more it will be supported and funded. For example, in certain industries, tenured employees may be hesitant to retire, leaving leadership with a bottleneck that may not only impacts labor costs, health care expenses and productivity but may also limit opportunities for the younger workforce—resulting in higher turnover. Recognizing this is an issue of concern for leadership, the financial wellness program should look for ways to assist more-tenured employees with becoming more comfortable with their ability to retire and helping those not on track to get on track—creating a road map for success and better aligning the employee career path and time line with organizational objectives. Aside from a company’s social responsibility for improving overall financial well-being, numerous studies have evidenced a real rate of return on investing in financial wellness programs with benefits being derived from greater employee engagement and satisfaction, improved productivity, reduced absenteeism, better presenteeism, improved retention and a reduction in health care costs.

A financial wellness program should also be flexible enough to adapt to organizational and social change. Nothing could be more evident than the heightened need for these services in a post-COVID world with a high-inflation economy on the verge of recession where studies show many are already living paycheck to paycheck and are saddled with debt. Couple that with building tensions surrounding the growing disparities around wealth and income and increased awareness of inequities in underserved communities. As a result, some of the more forward-thinking and socially responsible companies are already acting by incorporating financial wellness into their diversity, equity and inclusion (DEI) initiatives and social outreach programs.

What Is Financial Well-Being?

The Consumer Financial Protection Bureau (CFPB) defines financial well-being as “a condition wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow them to enjoy life.” More specifically, an individual’s financial well-being corresponds to the extent to which they (1) have control over day-to-day and month-to-month finances, (2) have the capacity to absorb a financial shock (3) are on track to meet their financial goals and (4) have the financial freedom to make the choices that allow them to enjoy life. Although specific goals and vision of the good life vary from person to person, these four elements reflect two common and consistent themes: security and freedom of choice, in the present and for the future.

Does Your Financial Wellness Program Need a Reboot?

With that goal in mind, how you answer the following questions will determine whether your financial wellness program needs a reboot.

<1>Is your program a financial education program or a financial wellness program, i.e., is it designed to educate employees and improve financial literacy or is it based on a methodology “specifically” designed to change financial attitudes and behaviors?

Tip: Make sure every element of your financial wellness program is designed to facilitate a course of action, e.g., increase 401(k) contributions, decrease 401(k) loans, reduce employee debt, provide adequate protection, etc.

<2>Does your program have a means to measure behavior change and the program’s effectiveness, e.g., a qualitative and quantitative assessment of employee financial behaviors and attitudes and the impact of the program on changing those behaviors and attitudes?

Tip: Work with your provider to define specific program objectives with strategic outcomes that can be measured over time. Meet at least annually with your provider to review results and modify the program and objectives as needed.

<3>Is your financial wellness program tied to the strategic business objectives of the organization with leadership’s support and are the results consistently measured against those corporate objectives and reported back to leadership?

Tip: Get leadership’s support at the outset of the program. Do not try to “sell” the merits of program after it is in place. Make sure the objectives of the program are aligned with key business objectives for the organization and you have a way to measure and report the results to leadership on an ongoing basis, seeking the continuous input and support along the way.

<4>Is your program part of your overall wellness initiatives and integrated with other aspects of your wellness programs, e.g., physical, mental, career, social, etc.?

Tip: If possible, organize all wellness initiatives under one umbrella, with an overall wellness leader who can orchestrate the individual goals and objectives of each aspect of well-being, while looking for ways to leverage and integrate where possible, with a focus on achieving specific strategic corporate objectives via improving overall employee well-being.

<5>Is your financial wellness program an integral part of your diversity, equity and inclusion strategy and initiatives?

Tip: Most organizations recognize the importance of diversity, equity, and inclusion (DEI) have a desire to ensure that every employee in the workforce is treated fairly and feels welcome. However, many programs fail to recognize the importance of financial equity and inclusion within their initiatives. Significant wealth gaps exist among different races, genders and abilities which, if ignored, can undermine the overall mission of DEI programs. Ensuring that all employees have equal access to resources that will allow them to improve their overall financial well-being and can help them generate greater wealth, increased professional opportunities and reduce financial inequity.

<6>Does your financial wellness program “truly” integrate with your benefits programs, i.e., is it a standalone benefit or does your financial wellness provider work closely with your other benefit plan providers – actively coordinating and promoting those benefits within the context of each individual employee’s needs?

Tip: Have an annual meeting with where your financial wellness provider is in the same room as your benefit providers. Review overall objectives of the financial wellness program and ensure that all understand the role of the broader role financial wellness provider. Also ensure that the financial wellness provider understands all the capabilities and solutions offered by the benefit providers. It will be important that all work together to ensure the employee has a seamless experience moving from the guidance provided by the financial wellness provider to taking action through the services and solutions offered through the benefit providers.

<7> Do those who are responsible for the design, delivery and oversight of your financial wellness program have any previous background, experience and/or certifications in wellness and behavioral science, in addition to personal finance?

Tip: The financial wellness industry is a relatively new industry that requires a unique set of skills that isn’t necessarily fulfilled currently by an existing certification or designation. Depending on your role, it requires specialized training in a blend of skills that combines elements of behavioral science, personal finance, education, coaching, counseling, program design, project management, data analysis, systems integration, etc. In addition to pursuing additional training to hone skills in the management and oversight of a financial wellness initiative, program champions should also ensure that those who are delivering the services have the requisite training and skill set required to design and deliver an effective financial wellness program.

If you answered “no” or “I don’t know” to even one of these questions, then it likely is time to reevaluate your financial wellness program. If you answer “no” to three or more, then it is very likely you need to reboot your financial wellness program and/or consider changing providers.

Kent E. Allison is an advocate of employee financial well-being and has spent his entire career focused on helping others improve their financial lives. He has served as a consultant to Fortune 500 companies and financial institutions helping them develop their financial wellness strategies and digital solutions; has worked with various government entities focused on improving national financial literacy and wellness; consulted with the U.S. Military to address the financial needs of its personnel; and is involved with various initiatives in the nonprofit and charitable arena.

Guest Contributor

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