What’s Financial Wellness Doing In The Workplace?

Tips for selecting the right financial education program

Are businesses responsible for the financial well-being of their employees? And if companies offer wellness programs as a benefit, what are the chances that education can make a difference in the lives the employees or even to the bottom line of the company?

 

These are some of the questions swirling around the state of financial wellness, a relatively new benefit that is gaining traction in both small and large companies and institutions throughout the US. In a general sense, companies have historically offered at least some type of financial information, if only by providing details about retirement, pensions, or other benefits available to employees.
 
Today there are many more sophisticated options available ranging from group seminars, individual appointments with advisors, or comprehensive programs dealing everything from paying off student loan debt to caring for aging parents. And if you are one of those responsible for selecting a financial education program that fits your company, there are some strategies that can make your decision a little easier.
 
First, it's important to know that financial wellness is a popular benefit today, with more than 80% of large employers and a significant number of small businesses currently reporting they are offering some type of financial wellness benefit at work. When you look at the complexity of the financial decisions people have to make today, it is hard to argue with the need we have and help most of us need in order to take a deeper dive into money issues. Most companies recognize the monumental changes in pension systems and retirement options from previous generations to this one.
 
Added to that is the increasing complexity of our financial systems and processes, from financing a college education to buying a house or figuring out how to plan for unexpected emergencies. And, what might be the most stressful reality of all is that 50 to 75 percent of all employees live paycheck to paycheck, regardless of income. Given this, how does a business decide what is the best financial education fit for its employees?
 
There are still those who believe it is not their responsibility to provide financial wellness as a benefit to their employees. Of course, workers can hire personal financial advisers or spend time investigating financial issues on their own. However, the chances are remote that those options work for the majority of people.
 
If your company decides to take on some of the responsibility of providing financial education, you want to make sure that you select the best fit for your employees. Short, informal surveys can be a good starting point to investigate the interests your employees have in gaining more expertise in handling their financial lives. Then, armed with that information, you can review programs available to see what might work best for you.
 
Thanks to increased public and private interest in preventing people from making some of the disastrous financial decisions of the past few years, there has been some useful research focused on what really works to improve adults’ financial knowledge and actions. A summary of this research shows that, as you might expect, a one-time seminar to cover financial topics has limited benefits, especially if it is concentrated on only one aspect of personal finance, such as retirement planning or selection of benefits.
 
No matter how important it is to provide information about benefits and plans, the causes of most people’s financial stress go far beyond opting in or out of a sponsored retirement program or setting up a savings plan for one aspect of their complicated lives. Yes, those seminars can be a positive step towards financial wellness, but by themselves, they do not begin to address some of the everyday worries people have about finding a way to reduce an avalanche of debt, pay for your family’s needs and wants, or even how to achieve the overwhelming desire for financial freedom to enjoy life.
 
Research tends to identify that financial wellness programs focused on long-term behaviors are more beneficial than those that do not in that these programs reduce financial stress and improves personal financial decision-making and action. It is one thing for employees to enjoy participating in an educational program and even to feel they are benefitting from learning whatever was presented.
 
Real behavior change is one of the most difficult outcomes to achieve in any educational program and requires a lot of detailed planning as well as a system for ongoing evaluation. While workplace programs are planned to be beneficial to employees, most of them have not been evaluated over a long enough period of time to determine whether they have really made a dent in changing spending or savings behavior.
 
It is important to note that the differences in financial programs and the audiences for financial programs make it difficult to compare outcomes. What appeals to and works for one set of employees may be hopelessly ineffective with another group.

That said, the National Endowment for Financial Education, a non-profit organization devoted to financial education research and programming, highlighted several key issues in its 2016 report, Perspectives on Evaluation in Financial Education: Landscape, Issues, and Studies. While the report discusses financial education programs from school age to retirement age, there are sections that deal specifically with young adults and working adults.
 
The report provides an overview of several ongoing programs for these categories of learners with details about what works and what the outcomes have been. Also contained in the report is a strong rationale for workplace financial education. The authors cite the complex world of retirement planning options and the flexibility of the job market that allows (or forces) workers to change jobs much more frequently than ever before as compelling reasons to have comprehensive financial education available through employment.
 
Reviewing several existing programs including one-time seminars, ongoing seminars, and online programs, the report argues that customizing programs to employees’ needs yield the best results in teaching basic financial concepts. Also, including tools and resources to extend employees’ abilities to practice and apply what they have learned to their own financial issues (such as debt payoff calculators or mortgage payment comparisons) greatly increases the likelihood that the education will result in positive behavior change. In many of the retirement planning trainings, participants showed increased participation in retirement plans and in savings amounts.
 
The report concludes that offering financial education that goes beyond retirement and includes information and tools to promote budgeting and emergency savings or assist with navigating the complex decisions regarding health insurance is beneficial in improving financial knowledge and reducing stress, both factors that contribute to worker productivity.
 
Whether your company is considering offering financial wellness as an employee benefit or enhancing programs you currently offer, the most important factor is to have a clear understanding of the type of program that can provide the most benefit to your particular group of workers. And it’s certainly okay to start with a small, targeted program as a first step into the financial education arena.
 
The bottom line is that evaluation data needs to be collected on all programs, ranging from simple attitude and satisfaction surveys at the conclusion of the training to long-term, more in-depth questionnaires about
the effects, if any, of financial decisions and behavior based on whatever training you provide.
 
Only then can you know with confidence that the financial education program in your workplace offers a benefit that is actually effective now and will continue to grow the financial information and skills your employees need and want.