Financial Wellness Gone Wrong
According to Forbes, a financial wellness program is the new “must-have” employee benefit. And it’s not hard to argue it’s a must-have for plan sponsors too. After all, financial stress can hinder productivity and dampen employee morale, while financial wellness can help workers gain control of their financial lives and retire on time, saving companies money. However, this is one area where less is definitely not more — and rubber stamp solutions can cause problems all their own. Here are four examples of financial wellness gone wrong.
1. One-size-fits-all approaches. Imagine going to a doctor who prescribed every patient the same medicine regardless of their symptoms or diagnosis. Cookie-cutter financial wellness programs make about as much sense. What’s worse, unlike employees with no program at all, participants of poorly designed and implemented programs could end up overestimating their preparedness when important areas of financial wellness are neglected. Workers’ financial needs and concerns can vary depending on many factors including age, gender, risk tolerance, life stage, educational level and socioeconomic status. So, a sound financial wellness program must address these individual differences.
2. Online-only (non)solutions. Programs without in-person advisory support can leave some employees behind. Digital resources are necessary — though not sufficient enough — for a robust financial wellness offering. Without the option of face-to-face interaction, those not inclined or well-equipped to take advantage of online resources can be underserved. You want flexible options for both individual and group in-person interactions to enable more in-depth discussion of questions and concerns. Some employees need one-on-one assistance, and increasingly more are expressing the desire to avoid tackling retirement planning decisions alone.
3. Limited scope and focus. It can be easy for 401(k) service providers to emphasize programming around retirement plan contributions at the expense of a more integrative financial wellness approach, yet they’d do so at the peril of participants and sponsors alike. For example, when workers can’t get a handle on debt it can be difficult for them to contribute enough to their 401(k) to retire on time. Additionally, if they haven’t been educated about the necessity of an emergency fund, it’s more likely they’ll dip into their retirement plan in the event of a crisis. The impact of delayed retirement on workforce costs are well-documented, and SHRM reports workers under high stress are more likely to take sick days and miss work. Financial wellness programming which fails to cover all the bases — from budgeting to credit and debt, to investing and long-term care planning — can leave participants and organizations vulnerable.
4. Insufficient performance metrics. If you don’t gauge progress, how can you (or your participants) tell if you’re making any? Financial Wellness assessment tools provide a global financial wellness score as well as metrics across a wide spectrum of individual financial priorities. Repeat measures assess ongoing progress while offering participants specific and actionable advice to address their identified needs. Similarly, sponsors need their own metrics to evaluate progress.
KerberRose Retirement Plan Services has integrative and customized end-to-end financial wellness solutions which provide benchmarks for progress and actionable advice across a variety of platforms which are highly individualized to participants’ needs. Sponsors simply can’t afford to get financial wellness wrong. KerberRose is the win-win solution you want — and your employees need.
Sources
https://peterlazaroff.com/what-makes-a-bad-financial-wellness-offering/
https://www.prudential.com/corporate-insights/employers-should-care-cost-delayed-retirements