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

By

Lynn Pettus

EY Americas Employee Financial Services Leader

Tax partner for Ernst & Young LLP in Charlotte, NC. Passionate about empowering women at the workplace and actively supporting women’s initiatives. Avid runner, completing numerous marathons.

6 minute read 10 May 2018
Related topics Tax

Understanding the ROI of employee financial wellness.

Want to help your employees build and maintain their financial health through organizational and life changes? Financial wellness education and counseling programs help your benefits suite perform as designed and better serve your employees, regardless of company size. Plus, adding financial wellness services can help your company manage fiduciary risk and deliver positive ROI on your benefit programs.

The benefits of adding financial wellness to your lineup

Research has shown that financial stress can be detrimental to productivity and business overall.

83% of HR professionals say financial stress in employees negatively impacted work performance. – The Society for Human Resource Management

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.

Some organizations don’t offer elements of financial wellness at all. Among the 200 HR professionals we polled, 14% said they do not have a program, and half of that group have never considered it.

Our survey showed that those who offer financial wellness plans saw a direct correlation to employee well-being, retention and productivity.

In fact, most respondents considered those the main benefits of a financial wellness program, while those without a program had a more limited vision of the potential benefits.

In search of ROI

The benefits of financial wellness programs are well documented, but organizations want metrics and measurements to validate the expense. Among our survey respondents, of those who do not have a program, only 16% felt they could justify adding a financial wellness program without knowing the anticipated ROI. Among those who already offer some type of benefit, 34% felt they could offer the benefit without knowing the ROI.

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.

Increasing ROI 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.

The reality is that financial wellness programs can be “proved in” with fairly conservative assumptions. The Consumer Financial Protection Bureau says employers typically see a return of $3 for every $1 spent on financial wellness programs. Yet a more effective way to prove the program’s value is by measuring employee engagement.

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 our survey revealed the selection criteria varies 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. 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, versus 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.

Summary

Financial wellness education and counseling programs help your benefits suite perform as designed and better serve your employees. Plus, adding financial wellness services can help your company manage fiduciary risk and deliver positive ROI on your benefit programs.

About this article

By

Lynn Pettus

EY Americas Employee Financial Services Leader

Tax partner for Ernst & Young LLP in Charlotte, NC. Passionate about empowering women at the workplace and actively supporting women’s initiatives. Avid runner, completing numerous marathons.

Related topics Tax