Take Steps to Measure—and Enhance—Financial Wellness Success
Employers can add value to financial wellbeing initiatives in the workplace by tracking metrics like employee morale and financial stress, as well as measures like employee retention and absenteeism, personal financial advisors recommend.
“2021 will be a particularly crucial year as the financial wellbeing offerings are mature and many companies are excited to see how that works [these programs are] to support both workers and the company while making the most of limited resources, “said Jacqueline Barrett, executive director of SoFi at Work, which provides financial wellness services in the workplace.
“A well-structured financial wellness program will provide training, tools and resources to address the root causes of financial stress in the workforce,” concluded the Retirement Advisor Council, an organization of retirement plan advisors, investment managers and defined contribution plan providers from January. Employee financial stress can worsen absenteeism and decrease productivity, while at the same time putting a strain on employee health, which can drive insurance costs up, the council reported.
Financial wellness basics
Financial wellness programs typically aim to improve employees’ “financial literacy” by addressing challenges such as creating and maintaining a household budget and taking steps to reduce long-term debt. Other common topics are savings on milestones like buying a home or financing a college education.
The programs use a range of methods including webinars, online articles, interactive tutorials, and face-to-face (pre and post-pandemic) or virtual lunch-and-learning sessions.
“In most cases, throughout their financial journey, employees will be asked to provide feedback as they interact with tools and content to learn, attend training, and meet with certified financial planners,” said Barrett.
“To help employees become committed to their own financial wellbeing, many employers incorporate elements of financial literacy into their payroll programs,” said Dom Morea, senior vice president and head of prepaid at Fiserv, a financial services technology company. “This can be a simple finance tip of the day or an interactive component that stimulates the employee to act. This can be an easy way to help employees invest, build savings, and reduce financial stress.”
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In order to assess the success of a financial wellness program, key figures should be established that are tailored to the program objectives, recommends the Pension Advisory Council. Performance against these metrics should be measured regularly.
Employee surveys and internal information gathered prior to the launch of a program can provide a basis for measuring improvements in employee financial wellbeing, according to the council’s report. In addition, basic employee engagement metrics can help employers determine which program features are most commonly used by various employee demographics.
According to Barrett, “qualitative” metrics useful in assessing an employee’s perspective on the usefulness of a program can be gathered through text responses to survey questions, anecdotal employee feedback through focus groups, and exit interviews. “Quantitative” or number-based metrics include program participation, retention (or turnover), and contributions to retirement plans, automated savings programs, and health savings accounts.
“Different employees need different things at different points in their lives, and even seemingly homogeneous populations, when analyzed, need different types and levels of support,” she said.
Commitment is the key
“Employee engagement is not just part of the success of the Financial Wellbeing Program; it is at the heart of it,” said Barrett. Interactive technologies such as online dashboards that allow employees to track progress toward their goals can help “bring employee input into the design process” for future financial wellness offerings, “using data from measurement tools to inform future rollouts “.
As well as monitoring their financial wellness programs, employers should be able to increase participation by “getting the offer out to people instead of letting them know it’s there,” said Mark Ratay, senior vice president and corporate of Retirement Advisor Council Pension Director at investment services firm Morgan Stanley. Another tip: have business leaders support the program to increase engagement.
Financial advisors said an average of 19 percent of their clients with financial wellness programs use a rewards or points program to encourage participant engagement, the council reported.
Many in ‘survival mode’ for 2021
Separate research shows why it is so important to ensure the success of financial wellness programs. According to 3,011 U.S. adults surveyed in October, more than two-thirds experienced financial setbacks in 2020, often from job loss or household income due to the COVID-19 pandemic, and nearly a third admitted to being in a worse financial situation are in the situation compared to the previous year.
The results come from Fidelity Investments’ 2021 Financial Solutions Study. In the face of financial setbacks in 2020, the most common solutions have been to cut spending, take emergency savings, or take on debt with credit cards or personal loans.
Looking ahead, nearly 4 in 10 (38 percent) of respondents said they will be in ‘survival mode’ in 2021, which means they will focus on everyday life to get themselves and their families through the next year .
Retain financial decisions
Key to meeting financial resolutions is setting clear and specific financial goals – like budgeting for expenses and establishing or replenishing a “rainy day” fund for unforeseen expenses – and, Fidelity says, seeing progress toward those goals.
“The financial impact of the pandemic has shown the importance of having an emergency fund in place to help employees top up their retirement plans not to cover financial emergencies,” said Jeanne Thompson, senior vice president of workplace counseling at Fidelity.
“Last year, the COVID-19 pandemic taught many people to be prepared for the unexpected what … their emergency and retirement plans could deplete,” said Rob Grubka, president of Voya Financial’s employee benefits division.
Andrew Frend, Senior Vice President of Product and Strategy, Employee Benefits at Voya, added, “As COVID-19 highlights the need for greater financial security, the challenge for employers in the future is to combine health and financial benefits, while their employees continue to have increasing needs for budgeting, planning and advisory resources. “
Employers can help by working with their service providers to deliver robust educational programs, year-round communication campaigns, and digital tools that help their employees understand and get the most from their performance in the workplace.
Related SHRM items:
Employers Feel More Responsible for the Financial Wellbeing of Their Employees, SHRM Online, October 2020
Emergency Savings Accounts Funded by Payroll Deductions Boost Financial Wellbeing, SHRM Online, September 2020
How Income Advances Loans Help Financially Stressed Employees, SHRM Online, Feb 2020
Helping Employees Save For The Unexpected Pays Off, SHRM Online, August 2019
6 Ways To Measure The Success Of Financial Wellness Efforts, SHRM Online, January 2019