Employees want to improve their financial literacy and reduce the stress that they experience due to personal financial issues. Employers know that they have the ability to offer financial wellness programs and that these programs will provide multiple benefits to workers and the corporation alike. Agreeing on these facts could lead to the conclusion that we are well on our way to success.
Unfortunately, it’s not that simple. Moving from the desire to provide financial wellness to the actual execution of a strong program presents many hurdles for the plan sponsor. One of the biggest challenges is creating a clear, agreed-upon definition of what financial wellness really is. Plan sponsors looking for a place to start can view it from the employee’s perspective. PricewaterhouseCoopers’ 2017 Employee Wellness Survey found that all generations of employees see financial wellness as “freedom from financial stress and debt, enjoying life, and being prepared for emergencies.”
Very few employees, no matter their age, define financial wellness in terms of retirement, although saving for retirement has historically been the specific focus for most employers’ financial education programs. This was an “aha” moment: Although we are all using the broad term “financial wellness,” we don’t mean the same things when we talk about it.
Financial wellness is often defined by the seat of the person answering the question. In the search for a proper financial wellness solution, there are many voices in the room — the plan consultant, the HR/benefits professional, the CEO, the board of directors, and most importantly, the employee. Each comes with a different agenda, and the true answer to the question, “What is financial wellness?” lies in the combination and collaboration of all of the voices in the room.
Another huge hurdle facing effective implementation of financial wellness is defining the plan sponsors’ objective for providing it. When you ask a plan sponsor why they’re interested in providing a financial wellness program, some may say employees expect this as part of their benefits package, and some may say that someone else told them to do so. The objective should be clear. Employees need help with the day-to-day financial stressors. Once this is addressed, they become less stressed, more productive and more open to contributing to their retirement plans.
Diagnosing the challenge
Further complicating the progress is the fact that even if the employer can define a baseline for financial wellness, and confirm why it’s being offered, the plan sponsor is still faced with many challenges, such as:
HR/benefits personnel struggle with “bandwidth” issues. There may not be enough resources, time, or money to offer an extensive new financial wellness programs.
Gaining support, commitment from senior management. Without direction from the top, it may be difficult to find the champions necessary to get proper traction within the organization.
The need to benchmark. Corporations are used to measuring the success of “health” wellness programs. It’s easy to understand if one walked 10,000 steps or lowered their weight or cholesterol number. With financial wellness, measuring a successful outcome is more complex.
Engaging employees. Industry experts gauge that even when programs are in place, only 7% to 15% of all employees actually engage with the tools offered.
Despite these challenges, all is not lost. The No. 1 reason employers offer these programs is because it is “the right thing to do,” according to Aon Hewitt research.
Still, we are left with some important questions: Is financial wellness just too big? Is it worth plan sponsors’ time and effort? Does it make sense to pursue this, or is it going to distract from the overall mission of the organization? There are so many questions that could truly define success or failure for many companies, as we look at the changing landscape of addressing employee financial wellness.