When I talk to employers about financial wellness, heads nod in unison and there is agreement on the fundamental concepts. Employees with less financial stress are healthier, more productive, stay longer and cost the company less money. So where does the conversation break down between we all agree this is a great idea and getting a program launched? The lack of a working definition of workplace financial wellness doesn’t help and internal silos make it difficult to find a champion to lead the charge. Let’s explore these statements and then wrap up with three ideas that could help you get started sooner than later.
Financial Wellness Defined?
I’ll spare you the dictionary definition because I am not aware of one that fits financial wellness in the context of the workplace environment. Financial wellness has become the dreaded buzzword. Further confusing things is the fact that many firms have borrowed the phrase to describe their products and services. However, it doesn’t come in a box, and it is not an app, a website or a brochure. There is no proverbial financial wellness miracle pill you can buy for $19.99 plus shipping and handling to help your employees. So what is it then? Financial wellness is a process to engage employees and improve one or more aspects of their relationship with money. Important words being “process,” meaning not a product and that your approach should evolve over time. The other concept is “one or more,” don’t feel like your financial wellness strategy has to address all monetary concerns your employees could have. Finally, and this is the hardest, “engage.” Not easy, but important if you want to change your employees’ relationship with money.
Missing a Home
Financial wellness is a “tweener” topic. For example, human resources or benefits departments at midsize to large employers often have team members who focus on health benefits and others who focus on retirement or financial benefits. Financial wellness has one foot in health benefits and one foot in retirement. Most current workplace wellness programs are managed by the health side of the benefits team. For financial wellness to be cohesive for employees it should integrate with an existing wellness offering. Yet, those who handle the physical wellness strategy, don’t always have the comfort or resources to navigate the financial side of wellness. Also, there can be silos or lack of communication within internal departments or between your health and financial service partners. Here is my challenge, become a financial wellness champion. Whether you are an HR/benefits professional or a health/retirement service partner, bring the right people to the table, share ideas, build concensus and start your journey.
In a perfect world, when you launch a financial wellness program you will have some awareness of or will work to understand the financial challenges within your workforce. If you don’t have a good sense of those today, you could start your journey to financial wellness with a single step that applies to a large percentage of the population and refine from there. Remember, this is about starting a process to improve your employee’s relationship with money. Don’t let the goal of creating the perfect financial wellness strategy stand in the way of a good one you can start soon.
- Know Your Numbers – Most current wellness programs have a biometric screening, physical exam or similar component to them. Why not extend that concept to financial wellness? Most retirement plan recordkeepers have a robust financial calculator. Employees can invest a little bit of time to complete the process and the output will generate helpful information that might change their current financial habits. If you incentivize your employees to complete a biometric screening you can also award “points”, or make it a “step” in your wellness program to complete a financial calculator. Your retirement recordkeeper can track those who complete it and provide reporting to you at a predetermined frequency. This could be a low-cost and easy step to start with.
- Emergency Savings – According to a recent study, over half the country would struggle to cover a financial emergency of $500. We consistently see retirement plan loans taken or people going into credit card debt to cover a financial surprise. Neither are great options. In your retirement plan, you may add a traditional aftertax contribution that can serve as an emergency savings account. Not to be confused with Roth contributions, the traditional aftertax option allows employees the convenience of funding their emergency savings through payroll deduction. The money saved will be a part of their 401(k) or retirement account but treated differently. Want to kick it up a notch? You may provide a match on their emergency savings like you may already do on retirement savings. Could be an interesting combination if you are so inclined.
- Debt Management – With both consumer and student loan debt at all-time highs there is an argument that employers should steer into the challenge to help improve their employees’ financial lives. To start, some employers have begun offering student loan assistance programs to help employees understand and get control of their student loans. Others are going one step further and are making payments towards student loans for their employees as a new benefit. To the extent you want to tackle credit card or other unsecured debt your employees have, there are many paths you can explore as well. Be sure you understand the motivations of those offering to help.
Despite financial wellness now firmly in the buzzword category, it can still provide the framework for a thoughtful process to engage employees and improve one or more aspects of their relationship with money. All you need is a champion, awareness of the financial blind spots within your workforce and the willingness to steer into them. With a little coordination, some good communication and minimal cost, you can make a big impact on the financial futures of your employees.