Developing a Financial Wellness Program

Moderating a panel at the 2016 Plan Sponsor Council of America (PSCA) annual conference in Nashville, Tennessee, Kenje Mallot, financial solutions product manager in the Retirement Strategy & Solutions unit at Aon Hewitt, pointed out that employers are increasingly offering help to workers with financial wellness.

According to Aon Hewitt’s “Hot Topics in Retirement and Financial Well-Being” survey report, a majority of large employers (55%) now offer help to workers in a least one category of financial wellness, such as budgeting, debt management or the financial aspects of health care. Mallot told attendees that 85% of employers said they offer financial wellness help because it is the right thing to do.

Steve Smalley, managing director of client experience at Schwab Retirement Plan Services, noted that a spectrum of organizations have emerged to help employers provide financial wellness tools and programs to employees. They use a convergence of technology, data analytics and behavior finance.

For example, Yodlee is a firm focused on account aggregation for employees. It helps employees see their financial situation in a single view to let them know where they are and whether they are moving in the right direction long-term. GuideSpark focuses on providing information, using brief presentations to explain complex financial issues. In addition, HelloWallet merges data analytics and technology to frame employees’ savings and spending habits and compare them to their peers. It also provides scores to help employees see if they are improving on their savings scores, or debt scores, for example.

“No one sees retirement savings in a vacuum,” Smalley said. “They look at savings in comparison with their total financial picture.”

According to Smalley, a good financial wellness program includes:

• Assessment tools;
• Financial literacy and wellness content addressing behavioral finance;
• The ability to plan, from budgeting, to emergency savings to longer-term savings; and
• The ability to execute the plan.

He added that employers should find out the unique needs of employees—what they are most stressed about financially.

Liz Davidson, founder and CEO of Financial Finesse, a financial wellness program provider, said it is not an employer’s responsibility to help with financial wellness, but it is in an employer’s best interest. “You can’t give employees financial security with rich pensions and retiree health benefits, but you can enable it with tools and programs,” she told conference attendees.

Employers may use a tools-based approach. Maybe employers have a limited budget for financial wellness, Davidson noted, or they have one specific population to target. They can provide tools to help employees with finances, for example, student loan re-financing for Millennials or debt consolidation for Generation X employees. Davidson noted that the one tool she’s seen move the needle the most in getting employees to address their finances better is a retirement readiness estimator.

Whatever tools employers use, they must market the tools and incentivize employees to use them. When vetting which tools to use, Davidson advocates using conservative tools to best prepare employees, and when vetting providers of tools, make sure they are diligent about data security.

Employers may also use a program-based method of offering financial wellness help. Davidson explained that this method targets segments of employees that need more than just a tool. Employers target specific needs of employees with a goal to change behavior and develop better financial habits. They use unbiased, ongoing education and coaching through a set structure or series.

Finally, there is the benefits approach to providing financial wellness help. Davidson explained this is a holistic program provided to all employees and fully integrated with other benefits to help employees make the most out of their pay and benefits based on their personal situations. Employees are provided with unbiased personal coaching, online or in-person, and other education resources are also provided, either online or in meetings.

At Robert W. Baird & Co., a wealth management, capital markets, asset management and private equity firm, all the tools and resources provided to clients are provided to employees, Lisa Mrozinski told conference attendees. The company has 70% engagement from employees in these tools and resources.

She said there can be a stigma about using financial wellness help from employers. Especially in a company like Baird, employees don’t want the employer to know what they don’t know—“they feel they should know this stuff already,” Mrozinski said.

But, Baird was noticing issues with its Millennial employees and its pre-retirees. It offers financial planning resources for Millennials, as well as automatic enrollment into the retirement plan at 6% of pay. It also offers a know-your-score tool.

For Baby Boomers, Baird started a “retirement experience” event, not only so pre-retirees could know whether they are financially prepared, but whether they are emotionally prepared as well.

Baird looked at all demographics in its employee population to determine the issues and what programs and tools it could put into place.

Mrozinski said one thing that was important and increased engagement from employees was to engage managers to be advocates for the financial wellness offering.