Financial wellness programs are growing in popularity, but measuring their value and getting employees to participate remain major challenges. Prudential Financial Inc. survey of 777 employers in 2017 found 83% of employers offered some sort of financial wellness program, up from 20% in 2015.

Such programs run the gamut from help with student loan repayments to establishing an emergency fund and budgeting, all with the goal of reducing employees’ financial stress and bolstering workplace productivity.

The impact of employees’ financial stress on their productivity cannot be ignored, sources said. A 2017 survey of more than 1,500 employees found that 30% of employees said they are distracted by their finances at work.

In the same survey report, PricewaterhouseCoopers estimated that a company with 10,000 employees could lose $3.3 million a year from such distracted workers.

But while the number of workplace financial wellness initiatives is growing, measuring their value remains tough.

In a Bank of America Merrill Lynchsurvey of 667 401(k) plan sponsors, 70% of respondents that offered financial wellness programs in 2017 said they lacked formal measurements to assess their value. Determining the value is difficult, industry experts said, for a number of reasons. Those include the subjective nature of some data; the infancy of some financial wellness programs; the lack of a common formula to measure value; and the effect of outside factors, such as the economy and company health. The latter, in particular, can influence employee behaviors and skew results.

Lori Lucas, president and CEO of the Employee Benefit Research Institute, Washington, said EBRI officials have heard from plan executives that in order to get the money to implement financial wellness programs they need to demonstrate a return on investment to upper management. Among the results management is looking for: improved retirement readiness, lower turnover, higher employee satisfaction and greater workforce productivity.

ROI ‘hard to pin down’

“There are a lot of interrelated issues and interrelated influences on employee behavior,” which make something like the return on investment hard to pin down, said Shane Bartling, San Francisco-based senior director, retirement, at Willis Towers Watson PLC. It’s difficult to say that an effort that was undertaken in the financial wellness space is the sole reason employees are acting a certain way, he said.

While “there are too many influences to precisely pin down ROI in a hard and fast way,” some Willis Towers Watson clients have taken the step of estimating the ROI from broad-based wellness programs, considering, for instance, what financial stress could be costing their companies in terms of performance, Mr. Bartling said.

He declined to identify the clients.

A reduction in health costs and absenteeism are other results employers seek from financial wellness programs, Mr. Bartling said. While success in those areas can take time to materialize, there are a number of near-term measurements employers can take to understand if their financial wellness programs are on track to deliver value and be successful, sources said.

Mark Singer, Boston-based president and founder of Financial Literacy Toolbox, said the financial wellness company completed a five-week pilot program in October with 10 employers where it looked for changes in employees’ self-reported financial stress levels and retirement plan contributions.

Program participation levels, employee feedback, changes in health savings account contributions, loans and withdrawal levels from defined contribution plans are other near-term types of information employers should look to capture, Mr. Bartling said. “Those are ways to measure value on investment. It doesn’t directly speak to return on investment, but it definitely shows how the workforce is deriving value from that effort,” he said. “Seeing those sorts of both hard objective data points as well as subjective feedback can you give a good sense for (whether) this service is worth the investment and worth the time.”

Looking past aggregated metrics to see how different segments of the workforce are responding to financial wellness initiatives is critical, Mr. Bartling added.

“Statistics that measure usage, participation and behavior in the aggregate can easily miss the fact that usage by the most at risk, the ones that need the help the most or want the most help … may not be engaging in the solution,” he said.

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