How Advisors Can Help With Financial Wellness Programs
Financial wellness programs have become the feel-good, must-have benefit in the workplace and advisors are working closely with employers to implement the best programs possible for good reason: a well-designed plan can help address the real issues of financial stress faced by today’s workforce.
Advisors and employers are tapping into companies such as FinFit, which offers financial wellness programs that use training and educational resources to improve participants’ financial health.
More than 80,000 employers have incorporated the FinFit platform into their benefit offerings says the company’s president, David Kilby. He notes that this ‘plug & play’ option is appealing to advisors and employers who don’t want the hassle of setting up a program from scratch.
Kilby has also written a book, The New Productivity Engine - The compelling impact of Financial Wellness in the workplace, that explores the real issue of financial stress in the workplace.
Specifically, Kilby points to “presenteeism” (physically at work but less productive due to a variety of issues, including financial stress), which can cost a company more than absenteeism.
A 2017 PricewaterhouseCoopers study found 30 percent of respondents said personal financial issues have been a distraction at work with 50 percent of them spending three hours or more at work each week thinking about or dealing with the issues.
Additionally, 31 percent of the “financial stressed” respondents acknowledge that productivity at work has been impacted by financial worries. Pricewaterhouse Coopers used the data to estimate the productivity cost impact of those distractions at $3.3M per year for an employer with 10,000 workers.
Research such as this is why Kilby believes that it’s important that financial wellness goes beyond education -- and that it’s most successful when coupled with motivation.
“Our platforms encourage motivation,” he says, adding that FinFit is able to target those who most need the financial support.
He says FinFit took a page from the health and wellness movement that tended to help those who were already healthy and not those who were in the most need of physical fitness.
“Our financial wellness assessment process is designed to pat those on the back who are already doing a good job managing their finances. But our target population are those who aren’t doing as good of a job and are in most need of the services our platforms offer.”
Though all indicators point to the promise of financial wellness’ impact on employee productivity, it’s not a slam dunk just yet.
“As a topic, financial wellness is still very hot,” says Mark Singer, CFP, founder and president of Financial Literacy Toolbox, “but we are having great difficulty in moving the needle forward in terms of execution and delivery of a program.”
According to Singer, a lack of a common objective might be the biggest obstacle. He recalls a recent talk where he asked a room of advisors what their objectives were in delivering a financial wellness program -- and received a wide range of answers.
“There was no consensus. It was clear as mud,” he laughs. Responses ranged from monetary (uncover new assets) to holistic (improve participants’ quality of life) to relationship building (better connection opportunities with the plan sponsor).
Singer notes that this example may be the key to how advisors should approach financial wellness: there is not one right answer and that advisors should survey their top plan sponsors and ask them what aspects of financial wellness will bring the most value to their companies.
He also cites an Aon report that found that 84 percent of employers surveyed answered “it’s the right thing to do” when asked why they wanted to offer a financial wellness program.
Altruistic reasons have a softer benchmark, concedes Singer, but advisors must still conduct ongoing assessments that track measurable changes, which in turn can be translated into all-important ROI.
“Financial wellness must be more than education. It must be action and results oriented.”
Another emerging trend is automatic features, which have seen success on the enrollment side. The premise for incorporating automation into financial wellness is to use it to deduct a set amount from each paycheck for a specific purpose, such as an emergency fund.
This tactic could address a serious pain point for workers who are struggling to make ends meet. A 2016 Bankrate survey found that only 37 percent of Americans had enough savings to pay for a $500 or $1,000 emergency, which clearly contributed to added financial stress for employees.
Kilby is a fan of this approach and sees systematic deductions as a better option than “one-offs.”
“More processes are moving that way,” he notes. Once you “set it and forget it,” employees get accustomed to the new take-home amount and Kilby says “it just goes on and on.”
However, Singer says that while auto features for financial wellness are a good idea at the 30,000 foot-level, advisors need to be prepared to follow-up and provide additional guidance to plan participants.
The experts agree that employee financial stress will never go away completely but advisors can help mitigate the issue.
Says Singer, “we need to change the conversation and start with people who want our help. Have them raise their hands and we’ll deliver the best possible options, and then leverage these successes.”