The US economy is healthy and growing, but many American households remain stymied by debt, unable or unwilling to save, and emotionally strained over personal finances. The aggregate household debt to income ratio has risen steadily from 0.6 in the 1980s to 1.0 today.1 Consumer debt in America now tops $13 trillion, exceeding the massive debt adults in the United States had prior to the 2008 financial crisis. The added debt burden has negatively affected both mental and physical health.2
And while many American households have racked up debt, they have not built sufficient savings. According to the latest data from the US Bureau of Economic Analysis, the personal savings rate in the United States is 5.7%. This means that out of every $100 in after-tax income Americans bring in, approximately $5.70 is being saved for things such as retirement, emergency expenses, and rainy-day savings. One in 3 Americans has $0 in retirement savings. Overall, about 50% of Americans are not saving adequately for retirement.3With these statistics, it’s not surprising that more than 60% of Americans report that money is their leading cause of stress.4
People’s financial stress is not confined to home: It inevitably spills into others areas of their lives. Personal financial stress manifests itself in many ways at work. Absenteeism, turnover, presenteeism, wage garnishments, employee theft, and 401(k) loans are just a few impacts connected to personal financial stress. Consequently, financial stress has direct negative effects on costs and profitability.5 To battle financial stress, an increasing number of companies are offering financial wellness as an employee benefit. Financial wellness programs can lower costs, reflect the employer’s genuine concern for the welfare of their employees, and are responsive to employee’s expectations for assistance from their employer.6
One such organization is Meredith Corporation, a media and marketing company in Des Moines, Iowa. Known best to consumers through such magazines as Better Homes & Gardens, PEOPLE, Parents, and SHAPE, Meredith Corporation has over 7000 employees across 25 locations. In 2006, then Chairman and CEO Steve Lacy established Meredith Wellness “to help our employees enjoy a long and healthy life, right now and during retirement.”7 From 2006 through 2009, Meredith focused on health and wellness (physical and emotional well-being), offering health screenings, fitness classes, and team challenges, among other activities. In 2010, Meredith worked with Iota, a financial wellness and employee benefits education provider, to design and implement a comprehensive financial wellness program.
A critical success factor in Meredith’s health and wellness program through 2010 was good data, which it obtained by having employees complete a Health Risk Assessment (HRA) and biometric screening. The HRA and biometric data allowed Meredith to identify specific behavioral interventions and track program outcomes at an aggregate level. Leveraging this experience, Meredith set the following 3 goals for its financial wellness program:
- Determine how employees were feeling about and performing with their money.
- Offer programming that would increase employee financial well-being.
- Measure behavioral gains (or losses) over time at the participant and aggregate levels.
The program components Meredith implemented to accomplish these goals included an assessment, risk stratification, onsite financial workshops, and financial coaching.
To determine how employees were feeling about and performing with their money, Meredith deployed a financial wellness assessment (FWA) in April 2010. As with its HRA, Meredith’s FWA was a self-reported instrument administered online to employees via Meredith’s wellness platform. Meredith’s original FWA measured 4 attributes: financial well-being, cash flow stress, savings rate, and employee benefits understanding. In its present configuration, Meredith’s FWA also provides measures in such areas as investing, retirement readiness, college planning, and general well-being.
To measure financial well-being, Meredith and Iota worked with Virginia Tech professor and Personal Finance Employee Education Fund founder Dr. E. Thomas Garman. Garman and his colleagues had developed the Personal Financial Wellness Scale (PFW).8 Derived from dozens of questions asked in many research studies conducted over almost 20 years, the PFW scale is an 8-item measure of the key outcomes of a single factor—financial distress/financial well-being. The PFW scale provides an accurate and reliable measure of the financial wellness with a Cronbach α reliability coefficient of 0.956.9Table 1 provides the framework for interpreting scores on the PFW. The average PFW score in the United States in 2013 was 5.2.10 According to John Hoffmire, the current average score in the United States is 5.82.
To measure the remaining 3 attributes of cash flow stress, savings rate, and employee benefits understanding, Meredith’s FWA contained additional subjective and objective questions. For instance, employees were asked how much they saved each month. Meredith’s FWA also captured data beyond that required to measure the 4 attributes. For example, the FWA captured participants’ readiness for financial behavior change, drawing directly on the Transtheortical Model of Behavioral Change developed by Dr. James Prochaska and his colleagues.11 In total, Meredith’s original FWA had 28 items and took about 20 minutes to complete.
The FWA was foundational in achieving Meredith’s second objective for its financial wellness program: to offer programming that would improve employee financial well-being. In 2010, Meredith offered 4 onsite financial workshops covering such topics as budgeting, 401(k), and basic retirement planning. Today Meredith offers over 40 workshops, all of which can be delivered live at a worksite, live online via webinar, and through video streaming at no cost to employees and their spouses or partners. To facilitate these workshops, Meredith contracts with financial wellness professionals who are dedicated to education and coaching rather than the sale of financial products. The unbiased nature of Meredith’s financial program removes potential conflicts of interest, builds trust, and promotes participation. One other aspect of Meredith’s program that promotes participation is personalized learning. Meredith uses algorithms in the FWA to stratify a participant’s financial risk. Additional algorithms in Meredith’s wellness platform then pair each participant’s financial risks with suggested educational content.
Another critical design element in Meredith’s financial wellness program has been integration. From its inception, financial wellness has been wholly integrated into Meredith’s health and wellness program. For instance, participants engage in both domains of wellness through a single platform, meredithwellness.com. User barriers are further minimized by either embedding financial wellness program elements into the platform or by using APIs for seamless transitions to external financial applications. On the promotional front, Meredith offers incentives to complete activities in both health and financial wellness. For example, participants may earn $10 in Well-Bucks, Meredith’s popular wellness reimbursement program, by completing the FWA or by attending a financial workshop. Meredith also awards participants points for completing both health and financial wellness activities. Employees who earn a minimum number of points are rewarded with a substantial reduction in their health insurance premium.
To deepen integration even further, Meredith includes employee benefits education as an integral component of financial wellness programming. Whenever possible, a financial workshop will include benefit examples. For instance, a workshop on life insurance would include a discussion of Meredith’s group life and supplemental life benefits. Furthermore, during open enrollment, Meredith offers workshops that guide employees through each open enrollment benefit. Finally, Meredith offers an online portal containing over 100 animated videos on Meredith’s entire suite of benefits. By including employee benefits education in its financial wellness program, Meredith has significantly increased benefits understanding and use while simultaneously enhancing program relevance to employees.
To achieve its third program goal, the measurement of behavior change over time, Meredith offers the FWA to employees and spouses each year. Using 2010 assessment results as a baseline, Meredith provides each participant with a confidential annual scorecard. At the program level, administrators can search and retrieve both archived aggregate data and real-time aggregate scores via Meredith’s wellness platform. The following data illustrate Meredith’s aggregate results.7
- Aggregate PFW score increased from 6.0 in 2010 to 7.3 in 2018.7
- High financial distress reduced from 22% in 2010 to 6% today.
- High cash flow stress reduced from 41% in 2010 to 15% today.
- 401(k) participation increased from 85% in 2010 to 94% in 2011.
- High-deductible health plan enrollment increased from 8% in 2014 to 51% in 2016.
- Family relationships reported as “excellent” improved from 18% in 2013 to 47% in 2015.
For a more detailed analysis of Meredith’s financial wellness results, see Prawitz and Cohart.10 Additionally, Meredith generates equally strong results in health wellness, which has garnered national recognition. For example, Meredith was a Wellness Council of America’s Platinum Well Workplace Award winner in 2011 and is a Healthiest 100 workplace award winner in 2018.
Given the level of financial stress among Americans and the negative impacts that stress has on businesses, employers can do well for both their workforce and themselves by replicating Meredith’s financial wellness program. Offering an assessment, unbiased education, and analytics for both participants and program managers are key first steps in building a solid program. Other key design elements include integrating financial wellness into the overall wellness programming and technology, incorporating employee benefits into core financial wellness activities, and providing adequate incentives to promote engagement. Blending these attributes with an ongoing commitment of company leaders will position companies to mirror Meredith’s success.
|1.||Ahn, M, Batty, M, Meisenzahl, R. Household debt-to-income ratios in the enhanced financial accounts. Board of governors of the Federal Reserve System Website. 2018. https://www.federalreserve.gov/econres/notes/feds-notes/household-debt-to-income-ratios-in-the-enhanced-financial-accounts-20180109.htm. Accessed September 16, 2018. |
|2.||Sweet, E, Nandi, A, Adam, E, McDade, T. The high price of debt: household financial debt and its impact on mental and physical health. Soc Sci Med. 2013;91:94–100. |
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|5.||Garman, E, Leech, I, Grable, J. The negative impact of employee poor personal financial behaviors on employers. JFCP. 1996;7(1):157–168. |
|6.||Met Life’s 16th Annual U.S . Employee Benefits Trends Study. MetLife Website. 2018. https://benefittrends.metlife.com/us-perspectives/ebts2018/. Accessed September 13, 2018. |
|7.||Meredith Corporation . Internal documents. Accessed September 23, 2018. |
|8.||Prawitz, A, Garman, E, Sorhaindo, B, O’Neill, B, Kim, J, Drentea, P. InCharge Financial Distress/Financial Well-Being Scale: development, administration, and score interpretation. Financial Planning Counsel. 2006;17(1):34–50. |
|9.||Garman, E, Sorhaindo, B. Development of and norms for the InCharge Financial Distress/Financial Well-Being Scale: a summary. Consumer Interest Annual. 2005;51:1–6. |
|10.||Prawitz, A, Cohart, J. Workplace financial education facilitates improvement in personal financial behaviors. JFCP. 2014;25(1):5–26. |
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