Editorial Policy

Financial wellness takes root at more workplaces

Susan Johnston Taylor

April 15, 2016

Budgeting, avoiding debt and buying a home — more workplaces are expanding retirement benefits by offering financial wellness programs that cover far more ground than how to make the most of your 401(k).

A 2016 report from benefits firm Aon Hewitt found that more than half of the 250 employers surveyed said they offer to help employees in at least one category of financial well-being — debt management, budgeting, simple investing, financial planning, health care education, savings prioritization and assistance with saving for buying a home or paying for college. By the end of 2016, more than three-quarters of employers said they will have expanded their programs to include one of these financial well-being categories.

Why the change? Research shows that employers who’ve adopted these expanded programs have a workforce that is more productive, says Janneke Ratcliffe, assistant director of financial education for the Consumer Financial Protection Bureau. Financial stress often takes a toll on an employee’s health, leading to more missed workdays and higher levels of turnover, she says.

“By leveraging key moments in an employee’s life — such as starting a job, the birth of child, or buying a home — to deliver important skills training, employers can help employees improve their financial futures.”
— Janneke Ratcliffe,
Consumer Financial
Protection Bureau

Another reason for the shift to financial wellness? “Employers are looking to differentiate themselves,” says Rob Austin, director of retirement research at Aon Hewitt. As the economy recovers and businesses expand their strategy beyond simply staying afloat, employers offer financial wellness programs for several reasons, including boosting employee engagement and attracting new talent.

Often when an employee has a financial hardship, that worker will turn to the employer for help, perhaps asking for a paycheck advance, a loan or a raise. For human resources professionals, especially those at smaller companies, helping employees put out financial fires can add stress to their plate, says Steve Wilbourne, an investment adviser and CEO/founder of financial wellness platform Questis.

Sometimes small companies may not even have an HR person, he says. “When they get asked those personal finance questions, they don’t want to give a wrong answer,” he adds. “They don’t have the training and experience to be giving financial advice.”

Kathy King, HR manager at Environmental Express, a manufacturing company in Charleston, South Carolina, knew her company needed a financial wellness program when one employee called saying he wasn’t sure how he would get to work because his car had been repossessed. That employee had a deep knowledge of a particular machine, so King wondered, “If he’s not here, who’s going to run that machine?”

He wasn’t the only employee who lacked financial skills. “Many employees at the company said they felt like ‘My money comes in, and it goes out,’” King says. “We needed to change how we look at money.”

That was about two years ago, and King brought on Questis to help employees get a handle on their personal finances. Questis now has a financial wellness program Environmental Express workers can access online, in person or by phone.

The employee whose car was repossessed also had a large tax bill, and Questis helped him negotiate a payment plan with the IRS and work on out a budget.

“It’s changed the way people were feeling about the relationship with their finances,” King says. “They feel empowered and that they could make some significant changes in their lives.”

Money is often a taboo subject in the workplace, but now employees at Environmental Express even compare notes on how to save money, such as bringing a lunch.

Financial wellness programs can take different forms depending on the employer and the needs of the workforce.

“Many employees at the company said they felt like ‘My money comes in, and it goes out.’ We needed to change how we look at money.”
— Kathy King, HR manager, Environmental Express

The CFPB’s 2014 Financial Wellness at Work report outlines promising practices and demonstrates steps that employers can take to increase their workers’ engagement in their own financial lives. “By leveraging key moments in an employee’s life — such as starting a job, the birth of child, or buying a home — to deliver important skills training, employers can help employees improve their financial futures,” Ratcliffe says.

In addition to Questis, other financial wellness programs offered through employers include HelloWallet and SmartDollar. Other programs such as GuideSpark include financial wellness as a component of a larger employee engagement effort.

Some financial wellness programs, such as Zebit’s, feature online resources so employees can learn about financial literacy. Zebitline also offers interest-free financing to eligible employees.

Zebit also has a budgeting app “that lets you put in your annual income, ZIP code, household composition, and it builds a budget for you based on what’s typical for your area,” says Zebit CEO Michael Thiemann. “You can customize it and build your savings plan.”

Zebit is free for the employer and employee, but not all financial wellness programs are.

Before opting in to any employer-offered program, make sure you understand who’s footing the bill.

“If the employer is picking up the tab for this, that’s one thing,” Austin says. “Other companies will use group purchasing to get the cost down. Some apps can cost $100 a year per employee, and you could see an employer picking up all that cost or half or less. It depends on what tools and services the employer is offering.”

If you, the employee, are footing the bill, it may still be a worthwhile investment in your financial education, but make sure you understand what you’re paying for and use those tools to your full advantage, experts say.

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