Financial Finesse held on Thursday a webcast for its clients on best practices for improving employees’ financial wellness.
Liz Davidson, founder and CEO of Financial Finesse, drew a line between financial wellness and financial education, calling wellness a “state of being,” while “education is a process, not an event.” Wellness, she said, is a “mastery of financial issues, with little or no financial stress.”
While wellness and education are distinct, they work together. “We’re coalescing as an industry, but we’re not there yet,” Davidson said.
Financial Finesse presented findings on how financial wellness is linked with physical wellness. Referring to an Associated Press-AOL poll, the company said employees who reported feeling low levels of financial stress were less likely to report suffering common health concerns like migraines, anxiety and depression. Nearly half of people who reported a high level of financial stress said they suffered migraines, compared with just 15% of respondents with low levels of stress. Anxiety and depression were reported by 29% and 23% of highly stressed people respectively, compared with just 4% of people with little stress.
Linda Robertson, a senior financial planner at Financial Finesse and one of the presenters on the webcast, said higher levels of stress were a result of cortisol being released in the brain, adding that overall wellness “goes deeper than physical wellness.”
Financial Finesse identified several benefits to employers who help their employees achieve financial wellness, including lower health care costs, increased productivity and performance, and greater employer satisfaction with their benefits. For employees, financial wellness also leads to a lower risk of delaying retirement.
“You cannot have ROI [on wellness programs] if employees don’t change their behavior,” Davidson noted. She suggested measuring employees’ progress periodically after education events. For example, Davidson referred to a Fortune 500 client of the firm that surveyed its employees 30 days after an educational seminar. Ninety percent of participants had taken at least one step to improve their financial situation and 78% had taken two or more steps. Furthermore, Financial Finesse saw an increase in deferral rates among employees who had more financial education.
“The biggest barrier [to retirement] is saving enough in the first place,” she said. How investors allocate their investments is important, but they must have assets to allocate first.
The important thing is to make saving and investing easy. Davidson said the goal of financial education and wellness programs should be to help employees develop “ongoing financial behavior [they] can use day in and day out to improve their finances.” To do that, employers need to follow a two-step process: get employees to commit to change and make them active participants. The more developed their financial routine is, the more likely they are to stick to it, she said.
Financial Finesse also offered suggestions for how to fund a wellness program. First, employers need to agree on which metrics will demonstrate the program’s long-term success. Employers can also inquire whether they can use ERISA funds to support the program. Davidson said that when funds are used to support retirement success, such as in financial education that focuses on retirement, it’s an appropriate use of ERISA funds. More general financial education that covers topics like debt management or buying a house, however, would be prohibited.
Before starting a financial wellness program employers need to evaluate the culture, work environment and demographics of their company. With that information the can determine the best way to deliver financial education to their employees. For example, online assessments and tools are best for the initial introduction to the program. On-site workshops work best with baby boomers while webcasts are better for Gen X and millennial workers.
In marketing their education and wellness program, employers should highlight it as a company benefit and position it along with their physical wellness program. Employers also need to keep it relatable to their company’s employees.
Financial Finesse asked five questions to help employers adminisiter their wellness program.
- How will employees sign up to the program?
- What are all the pieces of the program? Will employers coordinate with multiple vendors?
- Which incentives and marketing materials are employees responding to?
- How will employers track which components are being utilized and whether employees are returning for multiple services?
- How is the program improving employees’ financial wellness?