“When I first started [in this business], there was a model of financial education in which financial planners were focused on capturing assets and the investing strategies for those assets, so the business was focused on those with higher incomes and assets to invest,” noted Linda Robertson, certified financial planner with Financial Finesse, during a webcast hosted by the firm. “Most employees were financially stressed and so they were not targeted for financial planning. They had no help with basic financial and savings habits.”
Robertson pointed out that now regulators and plan sponsors want employees to have unbiased help from people or companies with no sales focus and no hidden agendas. In addition, there is a bigger focus on financial wellness—looking at the basics of budgeting and saving—which encompasses all employee benefits and focuses on positive savings habits to help employees reach all their financial goals.
Liz Davidson, founder and CEO of Financial Finesse, added that employees need different financial lessons (and different benefits and insurance products) at different points in their lives. “We should get employees to a point where they have investable assets, then we can help them decide how to invest,” she said.
According to Robertson, financial wellness is becoming a new employee benefit. She cited an Aon Hewitt study that found 76% of employers indicated they plan to implement financial wellness programs or extend existing programs to more employees. Robertson also said more employer inquiries to Financial Finesse are about total financial wellness programs, rather than just retirement education.
According to Davidson, financial wellness programs are increasingly marketed as an additional employee benefit. Information about the programs are included in all benefits communications—on company Intranet sites and benefits handbooks. “Employers want employees to see it as an important overall component of pay, the culture of the company, and the employer’s concern for them,” she said. The approach to financial wellness and benefits is more personalized now; communications speak to employees about their own financial goals instead of a general “here are all employee benefits and the considerations for choosing them.”
Employers are also highlighting how the financial wellness help is unbiased and how it will benefit employees. As a result, according to Davidson, there is a personal connection employees make with employers, and almost 100% appreciation by employees of this benefit.
Financial wellness programs continue to evolve. According to Robertson, in 2011, 54% of Financial Finesse clients used personalized financial coaching, while 46% used group sessions in their financial wellness programs. Last year 71% used personalized coaching and 29% used group sessions. “Technology has helped with this,” she noted.
Financial Finesse offers clients an online financial wellness center for employees. Robertson pointed out employees can use it on their own time. They select priorities for the self-assessment, and the program tells them key vulnerabilities. For example, someone may have serious debt or not have an emergency fund; the program would tell that person actionable next steps to improve their situation, such as to contact creditors to request lower interest rates or how to find room in their budget to set a small amount aside monthly for savings. Thanks to technology, employers can use online tools for their wellness programs, and use web chats and electronic communications to reach employees more easily and at times more convenient for employees, Robertson said.
Financial Finesse can customize its platform for employers, Robertson noted. For example, it can include a link to an employer’s retirement plan website when suggesting an employee start saving, or it could link to other employee benefits. Davidson added that it can list the contact information for employers’ employee assistance programs (EAPs), if credit counseling is recommended.
Davidson said employees get so much information—from employers, banks or credit unions, the Internet—that it is important to make it personalized. “Pull together all benefits and resources to create something relevant and cohesive for employees.”
The Financial Finesse financial wellness platform also aggregates employee assessment data, which can help employers design financial wellness programs, according to Robertson. The tool compiles data about different employee demographics and suggests initiatives based on the most–identified financial issues for employee groups. For example, for employees ages 30 to 44, the main financial focus may be money management or cash flow. The platform may suggest a financial basics workshop or workshop about handling debt for this group. For employees ages 55 and older, the main financial focus may be retirement, so the platform would suggest retirement readiness education.
Davidson gave an example of a time the platform revealed a problem with an employer’s retirement plan benefit. The client’s employees were highly paid, but showed concern about saving for retirement and asset allocation. Financial Finesse discovered the employer had a generous retirement plan, but it was too complicated in design, so the firm helped the employer rethink its plan design.
Robertson said financial wellness programs can help employees maximize the value of their benefits, increases their awareness of their benefits, and in turn, their appreciation of benefits. A key component of a financial wellness program is making sure employees are not selecting benefits in a disjointed way, but are instead selecting them based on overall financial wellness goals. Life-event considerations should be incorporated into the program, added Davidson. For example, if an employee is expecting a child, she can turn to the financial wellness program for a to-do list. It would include adding the baby to health care coverage and increasing health care or day care flexible spending account (FSA) savings, as well as non-benefit related items, such as reevaluating her budget or drawing up a will.
"A financial wellness program starts with employees’ needs and folds in benefits and other resources to help them meet those needs,” Davidson said. “Financial wellness is a process, not an event, that employees can use at various points in their lives or careers.”