Financial literacy among employees is "an age-old issue. It's nothing new," says Kevin Close, vice president, global compensation, benefits & HRIS, with EMC, an information technology company with about 50,000 employees worldwide. "We've always struggled with helping employees optimize the value they receive from participating in employer-based programs."
So when EMC looked at revamping its financial wellness program, it did so with the benefit of being able to apply some of the lessons it had learned from driving consumerism in its health care plans. "We saw the impact it had to our business, as well as to the increase in the perceived value of benefits to our employees," says Close. "It was really about taking the lessons we learned from driving consumerism in health care and bringing them over to the financial side."
EMC started with an analysis of the competitiveness of all of its financial programs, including compensation, retirement and stock-based programs. One area where there was a perceived lack of value among employees was with EMC's 401(k) plan.
While the company matches up to $3,000 per year for each participant in the 401(k), there "was a perception among our employees that EMC was not competitive with regards to that one benefit," recalls Close.
The company looked at whether it could afford to raise the match and quickly realized it could not. With about 20,000 U.S. employees, raising the match by even $1,000 per employee would conceivably cost the organization $20 million a year - a steep number for almost any company.
"We figured we should start with the access and the education first, because we were just not in the financial position where we really could be increasing the overall benefit cost we were providing to employees," says Close.
In August 2008 - when all hell broke loose in the financial markets - EMC launched a brand-new website called WealthLink. The site provides one access point for employees on all of EMC's financial programs. "In the past, you'd have to go to one place to see your cash compensation, another place to see your 401(k) balance, another place to see your equity, and another place to see your insurance coverage and things like that," says Close. "We tried to consolidate all that information into one environment for the individual." The company also created a total rewards statement.
Careful balance
In addition to employee-specific numbers, WealthLink offers relevant financial content produced by its partner organizations, as well as financial modeling tools. "In that same environment, the individual can see what programs they participate in, what the value of the program is to them and then have access to more information," says Close.
Within the first month, about 15% of employees signed up to access WealthLink. "We could not have picked a better time to launch," says Close. "A lot of individuals were very focused on what was happening in the markets at that time [August 2008]. They were certainly more attuned to their investments. We also had an equal number of employees who wanted to stick their heads in the sand and wait until all the bad news blew over."
Today, about 60% of EMC employees in the U.S. are WealthLink users. "There's a careful balance we're trying to achieve with our financial wellness programs versus our health programs," says Close. "With health, I think there's more influence in getting them [employees] to disclose information so we can have more targeted programs that they can participate in. If I'm at risk for diabetes, we have third-party vendors who can contact that person directly for outreach coaching. The health care is a much more engaging model than what we have in the financial wellness, which is more of a passive education and access-to-information approach, rather than influence. I believe we met our objectives to provide that type of environment for employees."
And while EMC may have taken a more passive approach to financial wellness, the program has seen active results. From August 2008, when the site was launched, to September 2009, 7% of employees who did not engage in the WealthLink environment decreased their participation in the 401(k) plan. Those who were active WealthLink users did not reduce their 401(k) participation at all.
"We thought there was a strong correlation in commitment to continuing to save for retirement, even in tumultuous financial times," says Close. "And although account balances were going down, we thought down markets were also a good time to be buying. So those individuals who were not engaging were more apt to reduce their contributions to the 401(k)."
Moreover, the company found that 38% of employees who were enrolled in health savings accounts were active users of WealthLink. And with regards to EMC's employee stock purchase program - an after-tax contributory program that offers employees a 15% discount on the purchase of company stock - 5% of employees who were WealthLink users reduced their overall contribution to the stock program, compared to 20% of employees who were not WealthLink users.
Even though there was a lot of market volatility in 2008 and 2009, "we believe people who better understood the programs made better commitments to a longer-term strategy," says Close.
As the population continues to age, and the dependency ratio of people working compared to people not working increases, employers find themselves shifting more and more decision-making to employees, according to Michael Malouf, senior vice president, global strategies and sales, with MetLife.
On a broader scale, "you see this shift occurring between what's happening with governments and the strain they have to fund for the aging population," he says. "What that is, in effect, doing is placing more onus on employers to retain their employees and keep them productive, and on employees to drive a lot of the decision making on financial education and wellness."
Close admits that, right now, WealthLink is U.S.-centric. With employees in more than 60 countries, "it's very difficult to provide the same level of information in each of those 60 countries and do it on a cost-effective basis. We've got 20,000-plus employees here in the U.S., so it makes it much easier to justify the investment we're making."
EMC is continuing to expand the coverage to employees worldwide, but "it's difficult and it can be expensive."
Another challenge the company faces is portability. Currently, WealthLink is proprietary, meaning employees can't access the site once they leave the company. They can still access the data from the various providers, just not all in one spot.
"Portability is one of the strongest things that came out of the shift in health care to a more consumeristic model," says Close, noting that EMC first adopted personal health records for employees in 2004.
The company long emphasized that the personal health record would be portable so that if an individual left the company, it didn't mean all of their health records were captive to EMC. The company's third-party vendor, WebMD, continues to provide the individual free access to their health information, even when the person is no longer employed by EMC.
"It's not owned by EMC. It's owned by the individual," says Close. "It was one of our guiding principles with WealthLink, but it's one we really struggled to achieve. We're not quite there yet."
