When a baby is born, it’s completely dependent on its parents and community of support, not just for its initial survival but to provide the right care and guidance during the formative years of its life to help it develop into a successful, functioning adult.
The same is true of your employee financial wellness program.
Financial wellness is still in its infancy, according the Employee Benefits Research Institute, which released its first report on the subject in November and recently conducted a webinar to delve further into the results.
Most of the companies that responded to EBRI’s survey don’t have a defined concept of financial wellness and are only experimenting with pilot programs (38 percent) or one-time wellness nativities (34 percent). “This is a pattern we’ll see throughout,” EBRI’s Lori Lucas told listeners. “Things are in pretty early stages for financial wellness. There’s not a lot of sophisticated wellness evaluation going on.”
So, what steps can HR professionals and plan advisors take to nurture their financial wellness program and raise it right?
Define the goals–and the term
The definition of financial wellness itself is yet to be truly cemented, and EBRI’s survey explored various concepts and opinions held by employers. The definition that resonated most closely with employers was that of the Bureau of Consumer Financial Protection: “Financial well-being is a state of being wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future.”
Still, that doesn’t provide much guidance to go on when designing a plan. Another approach is to ask what the employer wants to achieve with its program. Most companies identified improving worker satisfaction and reducing worker stress as the ultimate goals of a financial wellness program, but that can vary by industry. “For education, it’s reducing employee financial stress,” Lucas said. “For financial industry, it’s improved employee retention.”
Also important to any program is to identify what employees actually need help with. Student debt and debt management are hot topics. But are they right for your workers?
Joining the webinar was Casey Young, Senior Manager global retirement programs at Hilton, discussing the hospitality giant’s own successes and experiences implementing a financial wellness program after wrapping up a four-month pilot program. The team’s extensive research and data gathering led them to design a pilot program segmented into more-targeted (and more relevant) initiatives.
For instance, one campaign targeted employees 50 years old and above, offering them guidance on retirement and transitioning into retirement. Other communications related to student loans and refinancing, and building up savings, and were aimed at demographics who would find them of greater relevance.
Benchmark, benchmark, benchmark
The key to tracking the progress and success of financial wellness, both within a company and as a concept in itself, will be data. And, no, we don’t mean standardized testing.
First is establishing a starting reference point in regard to existing employee financial wellness. According to EBRI, employers are turning to existing data (63 percent) and employee surveys (48 percent) as they contemplate a financial wellness program.
“Any plan sponsor has access to a lot of data,” noted said Jeff Tulloch, vice president for PlanSmart at MetLife. Data can come from resources such as 401(k) contributions, loans, wage garnishment, claims data, turnover data, absenteeism, employee engagement. “Then on an ongoing basis, you can use that as a benchmark and see where there are improvements.”
Such an approach was integral to the development and success of Hilton’s pilot project. “Given the ROI is difficult to project, we outlined the research at a high level and then benchmarked what other companies were doing in our field and what vendors were offering,” Young said. “It’s helpful to speak with other companies and see what they faced.”
On the broader scale, its financial well-being survey is just the first step in establishing a foundation of data. “We do a lot of work when it comes to measuring things when it comes to 401 k plans,” Lucas said. “We’re building a database of financial wellness initiatives, as well.
Find the right tools
One problem is the number of vendors and solutions available in the space. How is an employer to go about deciding which are right for them? “One way to think about it is through various ‘buckets’ that different financial wellness providers may fall into,” said Jeff. “One would be around retirement providers. A second around benefit and insurance carriers. A third: fintech; a fourth: single-product providers.
“As you look across this landscape, maybe a logical starting point is understanding why a particular vendor is interested in the financial wellness space. What is their specific business model? Looking at it through that lens can help align what you’re trying to accomplish with what they’re trying to accomplish.”
That’s what Hilton did in designing its program, Young said, listing off the various questions they posed to potential vendors: “Can they handle the volume of a large business such as ours? How long had they been in business? What are their other large clients, and what do those clients say about them? And how do they make their money?”
Also of concern was how well employees’ data and privacy would be protected, whether the company’s values and culture aligned with Hilton’s, and what kind of communication tools were available for employees.
Appoint a champion
The two biggest challenges to any financial wellness program will likely be getting buy-in from the C-Suite, and buy-in from employees themselves. “There needs to be a real, inherent belief within the organization and leadership that this is the right thing to do,” Tulloch said. “If that’s there, you’re able to get all of this great support. There’s magic in making that happen.”
Thankfully, for Hilton, that seed was already planted before Young’s team began their work. “Financial stress is recognized as a top concern in employee well-being,” he said. “Our senior management was already aware of this trend and wanted us to investigate … We utilized our team member value proposition; benchmarked what others were doing, talked to people who had success and then tried to meet our employees where they were. We convinced senior management to let us do a pilot of our program. Based on success and feedback, they allowed us to proceed with rolling out the program.”
It’s up to HR to put the wheels in motion. According to EBRI’s survey, 80 percent respondents HR professionals as the leaders for initiating financial wellness programs, and 39 percent of firms rely on HR communications to drive employee engagement in programs.
At the end of the day, they key to a successful financial wellness program is whether it drives employees to truly change their behavior. “Action is what we are looking for,” Tulloch said. “Action is what we need employees to do in order to change their situation.”
Tulloch went on to outline three keys to driving action: education, access and motivation. “Employees seem to be thirsting for education,” Tulloch said. “We’ve moved from this direct-benefits world to this direct-contribution world and people realize, ‘I’m responsible for my financial well-being.’ … That education shouldn’t be just one and done. It really needs to be iterative. Whether that’s week after week or month after month, that iteration helps you build off the education and engage folks more completely.”
While access including things like digital and personal touchpoints employees have to take advantage of resources, it also included timing. “When am I informing people about the different tools relative to the timing of the year? Open enrollment, tax season, bonus time, et cetera,” he said.
Motivation may be the hardest one to achieve, but it can be done. “An approach that we took was that we began working to make our communications shorter, simpler, easier to read,” Young said. “And not just telling them about an offering but drive them to an action step at the end.”
Ultimately, Tulloch says it’s up to the HR team to build a culture around financial wellness–removing the stigma related to talking about finances in the workplace while encouraging people to take advantage of the tools and resources available and have trust in the employer.