Financial wellness programs lack follow-up services
Not all financial wellness programs are created equal, and that’s why Financial Finesse would like to see best practices brought into the mix when companies are looking to offer a financial well-being benefit to their employees.
As financial wellness programs continue to gain in popularity among companies looking for additional ways to help their employees get ahead, Liz Davidson, founder and CEO of workplace financial education provider Financial Finesse, believes that many vendors are simply jumping in to offer different educational workshops or seminars without any follow-up or direction on what the next steps should be.
“To have the kind of national impact that we believe is necessary to reverse the trajectory of downward mobility and create future generations of financially healthy people who are able to weather any economic or political challenges, we must better define and protect financial wellness so other organizations can follow suit,” Davidson says.
To address this matter, Davidson released a frequently asked questions guide about the differences between financial wellness and financial security and what makes a good financial wellness program.
Davidson believes that financial wellness providers must act in the best interest of employees by following an established set of standards. If not, “we run the risk of this movement becoming a euphemism for financial services companies, payday lenders, high-interest rate purchasing programs, and others who want to rebrand themselves to gain back trust they have lost,” she says.
Many companies stayed away from financial wellness initiatives in the past because of the expense, but as numerous financial wellness efforts are underway currently, Davidson says some initiatives are not as good as others.
“This is a fascinating time. A lot is going on where employers are increasingly saying they need to do something but are also increasingly worried about how to do it right,” Davidson says.
The right wellness fit
The FAQ guide attempts to simplify how companies decide what type of program they want to offer to employees, Davidson says. The one thing she encourages employers to do is to find an unbiased financial wellness program.
“There is a true difference between sales and education and wellness. You can’t call something an employee benefit if it is designed around using employees as a sales channel. That is not a benefit to employees,” she says. She adds that it also “needs to be a level benefit, available to all walks of life. Those that need it the most are not the executives.”
While Financial Finesse’s programs focus on the largest corporations in the U.S., Davidson says that there is the same need for these types of programs at the small- to medium-size company level.
Any financial wellness program must personalize its programming to every employee and it must be ongoing, she advises. In the past, financial education was event-driven. Companies would have a seminar on budgeting or investment but would never follow up with anyone to find out if they were on track or making worthwhile changes to their financial planning.
Financial wellness is a behavioral issue more than anything, Davidson says. It is hard to change behavior for the better with a one-time financial education session.
Financial wellness needs to be a “true benefit” like healthcare or saving for retirement where the company gets the word out and gets people to use the benefit on an ongoing basis.
The first question to ask is: what is the difference between financial wellness, financial education, financial advice and financial security?
“They haven’t been defined in a good way, which is causing a lot of market confusion,” she says.
“Financial wellness is an ongoing process that combines financial education with personalized financial coaching to provide employees with the guidance and accountability they need to develop strong financial habits and behaviors to make informed financial decisions,” according to a Financial Finesse report. “Financial wellness focuses on helping individuals resolve financial problems and ultimately get to a place where they have significant assets to invest, while financial advice focuses on helping individuals who have significant investible assets to manage those assets wisely.”
Meanwhile, it’s clear there’s a need for financial wellness programs. Financial Finesse’s own financial wellness assessment last year showed a large chunk of employees experiencing financial stress. It found that 81% of those who took the financial wellness survey experienced “some” level of financial stress, with 21% indicating “high” or “overwhelming” stress. Fifty percent said they did not have an emergency fund; 43% were not comfortable with their debt and 27% did not have a handle on their cash flow.