Tuesday, August 21, 2018

Financial Wellness: One Size Doesn’t Fit All

Financial wellness programs may not be the right fit for some organizations. There may be a moral imperative that drives commitment for some, while others require a business imperative to justify the investment. Regardless of the rationale, a logical starting point would be for an organization to survey its employees and assess the need.

As employers learn more about financial wellness, some will deem these programs a good fit for their organizations, while others will not see the need to establish one or consider it a top priority. For those who see value in financial wellness programs, some may be drawn to them as a moral imperative, while others believe they’re a worthy business investment.

Employers cite a variety of employee priorities when considering whether to start a financial wellness program. Some financial wellness programs may provide education on student loan debt management or help with budgeting that may appeal more to millennials, while programs that focus on college savings options or retirement planning may appeal to older employees. Survey respondents listed these and other program elements.

Interestingly, those with a program cited priorities that were similar to the expectations of those without one. For example, retirement planning topped the list and was followed by debt management and budgeting. However, those without a financial wellness program considered budgeting and savings more of a priority than those that had adopted a program.

These priorities may be subject to change considering different age groups of employees or other demographic factors. Also, it’s worth noting that while an overwhelming majority of respondents list managing monthly expenses as their employees’ top concern (over having enough money for retirement). These findings are somewhat intuitive. Since retirement planning is the most prevalent financial assistance benefit already being delivered by employers, their concern could be turning to a
need not being addressed, such as managing monthly expenses.

How financial wellness information is communicated is critical to program success, though once again, there’s no one clear path to accomplishment. The most popular program format is online resources (69.6%), group financial education or literacy meetings (65.2%), one-on-one financial education or literacy meetings (52.2%), in-person resources (43.5%), and custom training tailored toward different employee needs or stages (30.4%). Other formats include one-on-one counseling or coaching (26.1%) and group counseling or coaching (13.0%).

An overwhelming number of those that offer such a program said it is coordinated by the HR department (69.6%), while a retirement plan recordkeeper and independent financial wellness vendor were cited by an equal number of respondents (13% apiece). In addition, 17.4% listed the “other” category to describe who runs their program. In most cases, the employer picks up the tab for a financial wellness program (40.9%), which might be expected, while 31.8% said “other” and 22.7% haven’t yet made that determination.

Regardless of who’s in charge, employers all share the same objective in terms of designing the most effective program possible. It starts with proper assessment and evaluation of financial wellness. Once these determinations have been made, then the employer can develop a customized program to meet the organization’s needs and personalize it for employees. Establishing a financial wellness programs is more than picking seminars. There are multiple factors that need to be fully considered along the road to program success.

To learn more, read our first blog post, Understanding Financial Wellness Programs, and download the full report: Assessing the Merits and Challenges of Financial Wellness. To begin talking to a retirement plan advisor, please get in touch by email or by calling (855) 882-9177.