Leveraging Direct To Consumer Innovations To Help Improve Worker Financial Health

Financial coaching in times of crisis

COVID-19 has demonstrated that employee financial health is more relevant now than ever. Recent surveys have shown that more than half of employees cite financial health as their biggest concern amidst this pandemic. Employees are also now more inclined to believe that their employers have a responsibility to help address their overall well-being, including providing financial health benefits. And this is especially true for more financially vulnerable Americans, who believe they are likely to bear the brunt of the continuing fallout from this pandemic. 
 

Prior to COVID-19, workplace financial health programs were on the rise and were expected to nearly double over the next several years. Retirement, online financial education and planning tools, protection benefits like life, disability, and medical insurance and access to an advisor for financial planning were the most popular elements of pre-COVID workplace financial health programs.  
 
This crisis has shown that employee financial health extends far beyond the traditional elements of workplace programs. COVID-19 highlighted and exacerbated many financial health challenges that workers were already facing prior to the pandemic, and it underscored significant gaps that existed in many workplace programs. Following the outbreak, some employers (primarily large organizations) scaled up their workplace financial health programs to address these gaps including adding options such as financial coaching, credit and debt counseling, broad-scale advice and planning, and more streamlined savings solutions.
 
However, it is reasonable to assume that many employers may not be in a fiscal position to add or expand new workplace benefits programs in the near term. While some existing workplace programs will help address the above challenges, HR leaders may need to look beyond the four walls of their existing programs. 
 
For example, understanding the landscape of direct-to-consumer fintech apps and other solutions may help spur workplaces to address the financial health challenges of their workforce, without necessarily adding additional cost to their benefit programs.  The following offers HR leaders to think more creatively about how to support their employees using direct-to-consumer fintech apps and other solutions. 

Non-profit direct to consumer financial coaching services can, among other things, help individuals who are facing significant financial challenges or hardship. For example, the National Foundation for Credit Counseling and its member agencies have counselors available by phone to assist with those experiencing job loss, temporary loss of income, or financial hardship. Money Management International also offers a wide range of counseling services to address some of the most common and troubling issues individuals face, including credit counseling, debt management plans, and post-disaster financial recovery.  

The debt was a challenge for many Americans even before this crisis, and this challenge is likely to grow as people increase their credit card balances or defer mortgage payments to cope with emergency expenses. However, some direct to consumer solutions can help individuals manage outstanding payments and/or refinance their debt. For instance, Lendstreet provides debt consolidation for individuals with unmanageable debt, allowing them to avoid bankruptcy, reduce debt over time, and rebuild individual credit. Likewise, fintech’s Resolve and Scratch provide individuals with access to debt experts and relief plans, as well as educational content, and EarnUp helps individuals establish a budget and automate payments toward outstanding debt.  

Beyond just the normal financial advice solutions (which are fairly common in existing workplace programs) there are other fintech solutions that can help individuals manage their financial lives, including helping those who are the most vulnerable navigate public benefits.  As an example, fintech Fresh EBT by Propel links to an individual's EBT account to show them their food stamps and benefits balance, as well as the location of food stamp offices, stores accepting food stamps, and food pantries.  

Before this crisis, 47% of people did not have enough savings to cover three months of living expenses. To address this, some direct-to-consumer solutions leverage human-centered design and behavioral science principles to make it easier to set aside extra savings, even in difficult economic times. These solutions help households plan and budget for upcoming expenses and allow for easy transfers and withdrawals. For example, Digit analyzes individual spending and automatically saves an optimal amount each day to help meet individual financial goals. Esusu is a digital, rotational savings club that helps build both savings and credit, and Qapital helps users build savings, make investments, and manage spending. Finally, SaverLife (formerly EARN) is a nonprofit online savings platform that enables anyone, anywhere to build an emergency savings fund and develop the skills to manage their financial futures.
 
Direct-to-consumer innovations that support coaching, debt management, planning and savings may give HR leaders additional options or help them think creatively about supporting workers to improve workplace financial health. When employers think creatively and provide novel and meaningful solutions, they engender loyalty and demonstrate their commitment to building a great workplace. 

Matt Bahl is Vice President and Head of Workplace at Financial Health Network. In this role, he leads market development and workplace strategy efforts across the organization. Matt is deeply committed to the goal of helping improve financial health for all and believes work and the workplace play a key role in making that goal a reality. With over 15 years of financial services, consulting, legal, and Human Resources experience, Bahl understands the impact that work and the workplace can have on improving worker financial health. Visit https://finhealthnetwork.org/ Connect Matt Bahl  Follow @mattbahl