How do you know if financial wellness is paying off for you and your people?

More than retirement planning

No matter their age when they begin tackling these issues, employees striving for financial security need to start with a stable foundation. That foundation serves as a cornerstone to plan and adjust as employees move through career stages and life events. Employees benefit most from integrated plans that methodically address each phase. But companies are not financial wellness consultants.

In the absence of a comprehensive program, organizations often cobble together financial wellness programs by offering solutions for a specific personal financial wellness need, such as retirement, insurance or student loan debt. This siloed approach leaves gaps in the program that can limit the potential of a well-intentioned benefits suite.

Companies may consider their retirement plan administrator a financial wellness provider. But the administrator’s primary focus is on helping employees invest for the future within their retirement plan. Other benefit administrators may offer point solutions without holistically integrating information and bridging the benefits divide for the employee.

In 2021, 46% of employers offered financial wellness programs, up from 40% in 2020 (Bank of America Workplace Benefits Report). And, 80% of those employers agree that financial wellness improves employee productivity, engagement, satisfaction and loyalty.

In search of ROI and VOI

The benefits of financial wellness programs are well documented, but organizations want metrics and measurements to validate the expense. And, hard dollar ROI measurements are available and can be reasonably tied to financial wellness initiatives.

1. In the fight for talent, employee retention leads to direct cost savings, as it may cost 50%-60% of salary to replace a departed employee with someone new.
2. Financially well employees may lead to reduced costs for wage garnishments and administering 401(k) loan programs.
3. Increased education, awareness and use of tax-advantaged accounts such as health care flexible spending accounts (FSAs) and health savings accounts (HSAs) also bring direct savings to the employer and employee. Employee contributions are not subject to FICA payroll taxes, potentially saving both the employer and employee 7.65%. If employees save an additional $200-$400 annually to such accounts, the employer tax savings may be enough to fully fund a comprehensive financial wellness program. 

More recently, employers are turning their focus to value on investment (VOI) for financial wellness. Through employee surveys and other measures, VOI looks at employee morale, absenteeism rates, satisfaction with job and benefits, productivity targets, etc., as indicators of the value of benefit and wellness programs.

But ROI can be difficult to measure and may not be the most reliable benchmark. Sick days, productivity and other indicators fluctuate, and factors unrelated to financial stress could account for those changes. Additional data may be with third parties, making it expensive to obtain and time consuming to aggregate.

It’s time to change the ROI conversation. HR practitioners excel at knowing how employees utilize their benefits options, accepted methods of learning more about an organizational topic and what employees look for when they need help. This practical knowledge provides an opportunity for the benefits department to share strategic insights with the C-suite, helping executives reframe how they view the value of financial wellness programs.

A better measure of success

Most workforce populations cross several generations with varying perspectives on personal finance. They also consume information differently. To engage them, leading organizations craft a multidimensional program and formulate a targeted communications plan to foster awareness and push employees to action. With those core components in place, employee engagement can then be measured.

The process starts with knowing your employee base — age, career stage and income ranges. But fostering engagement depends on more than demographics. It requires a deeper understanding of workforce psychographics — how employees think and feel about money.

• What are their money habits?
• How satisfied are they with their current personal financial situation?
• Do financial concerns affect their family relationships?
• How much time do they spend worrying about their personal financial situation?

A financial wellness assessment can help uncover these more subjective beliefs and enable you to craft targeted communications to inspire action.

Personalized learning paths, access to trusted resources and targeted communications are the foundation of a comprehensive financial wellness program. But the selection criteria vary among those who already offer a program and those who don’t.

Selection criteria for non-adopters:

• Price
• Ease
• Breadth

Selection criteria for current providers:

• Breadth
• Employee communications
• Price

Those who have yet to offer a program focus on cost, which shows that justifying the price — the hallmark of ROI — remains a stumbling block for some. This despite the cost of providing direct access to financial planning professionals for employees being around 1% the cost of providing access to health care professionals. But looking to the market to see what other companies — especially competitors — are doing will yield insights on how to justify these programs. Once a program is in place, the focus shifts and becomes more about employee engagement across the breadth of the program

An integrated, multichannel program that is objective, easy to use, well publicized and personalized will best serve employees and help with engagement.

Each touch point of a comprehensive, integrated program should include handoffs from one action to the next to minimize interruption of the financial planning process. For instance, a group learning session should introduce a related learning tool, video or invitation to speak with a financial planner. This approach teases out a continuous learning experience, vs. the start and stop of siloed activities and yields stronger metrics of interaction.

Unlike the third-party data needed to calculate ROI, these metrics come directly from the wellness program making them accessible and more accurately correlated to program performance.

Participation = ROI

It’s understandable that organizations need to measure the impact of their investment in employee benefits. Creating a suite of benefits is futile if your workforce doesn’t use the resources to forge a path to financial wellness. But changing the conversation from metrics-driven assessment to measuring levels of healthy utilization will give leaders a new perspective on the value of their spend.

Financial wellness is a lifelong effort. The more guidance your employees receive, the more likely they are to learn and put financial constructs into action. Targeted education, access to personalized learning paths and support from trained financial professionals ultimately lead to employees who are engaged in their financial lives.

As employees become more active in financial planning, they build the confidence they need to continue their financial wellness journey. Alleviating financial stress clears the way for more productive workers and ultimately yields a higher return on investment.