Financial Wellness

What Ails Financial Wellness Plans

Divergent employer opinions combine with low user numbers to show flagging plan vitals.

By Patty Kujawa

F

inancial wellness programs are not well today.

Despite the vast number of new providers and products in the market, employers are still scratching their heads in determining the worth of financial wellness, and even fewer employees are using what is available at work.

Only about half of employers today are offering financial wellness programs, and for those who do, only about a third of employees are taking advantage of what is available, a recent study from Bank of America Merrill Lynch reported.

The study surveyed 657 employees participating in company 401(k) plans and 667 employers that offer 401(k) and financial wellness programs. It found a sharp disconnect between what employees want and what employers are offering. Employees want to work on end goals like reaching financial freedom and want to focus on one thing at a time. Employers are going big, emphasizing controlling overall finances and want employees to think about how employer benefits can impact personal money issues.

“These employers think they understand [workers’] needs and yet they don’t,” said Gao-Wen Shao, director of retirement and personal wealth solutions for BofA Merrill Lynch. “It points to a gap in understanding.”

Terminology can be confusing, too. In general, financial wellness is a plan tailored to a person’s monetary needs today and tomorrow and can include things like budgeting, 401(k) education and debt repayment. Another term commonly used is financial well-being, which tends to suggest a more holistic approach that addresses ways to support physical, financial, social and emotional needs simultaneously.

The difference in definition points to the myriad interpretations financial wellness has to individual organizations, said Peter DeBellis, vice president total rewards research leader at Bersin, Deloitte Consulting.

But despite the lack of understanding or which term to use, financial wellness tools are the top items growing in demand, according to Shortlister’s “Well-Being Industry Prospectus.” In addition, Shortlister’s data show that financial wellness tools are ranked fourth in point solutions expected to get the most traction this year.

Yet there is much discontent. Some 43 percent of industry experts see value in financial wellness tools but think providers and programs need to improve.

Joe Miller, the author of the prospectus, said users are struggling to find the right solution at a reasonable price. Currently 12 percent of respondents found little value in financial wellness products and 7 percent aren’t sure of its benefits. A little more than a third said financial wellness tools are important and will continue to grow in popularity.

Lots of employers are looking at financial wellness, but few are actually installing products, Miller said. In the past 20 months, Shortlister has tracked 72 financial wellness searches (of which 50 have been in the last year). Many, Miller said are still in pre-proposal stage.

“The forward progress has not been where it needs to be,” Miller said. “While we’ve seen the volume of interest increasing, the number of successful transactions has been very low compared to other areas.”

Getting to Know You

Success comes when employers take the time to get to know the employees, experts agree. DeBellis said that companies that treat employees like customers and hype niche solutions tailored to their workforce will be the ones winning the war on talent.

“The results of employers willing to step out to get to know employees better and are unapologetically different will be more successful,” DeBellis said, predicting that some employers will outright say things like “if you like pet insurance, come check us out.”

There are a lot of workers who don’t want the typical 401(k) education, but are still stressed about finances, said Pamela Chan, project director, human insights for the nonprofit financial advocacy group Prosperity Now. Learning how to build credit, paying down student loans and personalizing financial learning are top items employees want from their employer, she said.

Solutions can often be hard to find, especially for small employers. Prosperity Now created a database of financial wellness providers as well as a primer about the strategy.

“Employers need to look at the needs of their employee groups and think beyond retirement,” Chan said, adding that several non-profit organizations like Working Credit NFP have entered the space to offer low-cost solutions for employers with tight budgets.

The Merrill Lynch report showed that 91 percent of employees who use workplace financial tools say the help has helped them. Meanwhile, employers who offer them said the tools have helped the organizations reach certain goals, including employee satisfaction, low turnover, productivity and lower health care costs.

Iron Mountain employees participate in focus groups and give other personal feedback to help management create an effective lineup of benefits products. Currently, the company offers 33 well-being programs and intends to add more, said Scott Kirschner, director of benefits strategy for the Boston-based information systems company.

“As part of our business case, we needed to find out what employees were saying,” Kirschner said. “We needed to address what is going on in their lives and how that might impact work.”

The company creates voluntary challenges, which help employees engage with the programs offered. About a third of eligible employees completed a range of challenges, including one called Budgeting for Life and a second called Making a Date (with a significant other).

“We have been very open to evaluating solutions,” Kirschner said. “My challenge is to not roll out every new cool thing I see. I have to think about how it fits and whether it is different from everything else we already offer.”


Patty Kujawa is a writer in the Milwaukee area. To comment, email editors@workforce.com.