Building an Effective Financial Wellness Program

March 13, 2014 ( – There are many elements that make up an effective financial wellness program for a company, according speakers during a recent webinar.

One element is to understand the psychology behind such a program, says presenter Linda Robertson, a certified financial planner with Financial Finesse in El Segundo, California. “In order to help instill positive financial habits, employers need to understand some of how behavioral finance works. Something like a rewards systems, where participants enjoy the competition and the thrill of the hunt,” she says. Robertson points to examples of this dynamic in the retail world, such as frequent flyer programs and coupons.

Understanding your audience through demographic data and targeted communications can also help foster success with a financial wellness program, says presenter Liz Davidson, CEO of Financial Finesse. She compares it to how some retailers are successfully using algorithms to predict future purchases based on their customers’ past purchases and the life events they are going through.

The real goal, says Davidson, is not so much predicting what a person will do as directing them to form specific and positive financial habits. “In surveying 25,000 employees, Financial Finesse finds that 86% of them report feeling stress when it comes to finances, with 23% saying such stress is either high or overwhelming,” she says.

This research also shows that only 20% of respondents feel they are prepared for retirement and only 50% have a fund for financial emergencies, says Robertson. This lack of preparedness can lead to retirement plans experiencing more loans or hardship withdrawals by their participants, she says.

Davidson says another effective strategy for building a financial wellness program is by starting with a broad audience and then getting more specific. “Employers can start out with a general online center to see who’s interested in the program, then progress to workshops and webinars tailored to employees’ needs based on assessments. From there, you can continue on to one-on-one meetings about financial planning.”

She also advises using multiple channels or delivery methods to convey information about the financial wellness programs, pointing out that the more employees are exposed to such materials, the greater the chance the information will sink in, be remembered and be used.

Davidson acknowledges that some employees may be hesitant to discuss financial planning in general or to sit down with a financial adviser. “But if you have an employee go through a process like this, the more focused and confident they will become,” she says.

Another building block to a successful financial wellness program, says Davidson, is to not overwhelm employees with too much information, adding, “None of us have as much time or willpower as we would like.” She says employers should work with employees to set goals that are achievable, as well as get them to understand that the process of financial planning and wellness takes time. “Build on the small wins,” she says.

She also recommends employers guide employees away from emotional reactions to negative financial situations by educating them and offering rational next steps, as well as scheduled tasks. For example, she says, couples can set aside time every week to discuss finances or evaluate what savings goals they have achieved.

Davidson adds that a system that documents milestones reached and progress made is also effective. “Full financial wellness can take a lifetime to achieve, so regularly do an assessment to note milestones and see what next steps need to be done.”

Robertson says incentives can be helpful in motivating employees to participate in financial wellness and to achieve financial planning goals. Such incentives can include free one-on-one financial coaching, having the financial wellness program added to the company’s menu of benefits, or even a tangible raffle prize that employees can compete to win.

For those employers with smaller budgets, gift cards or extra time off can be used as incentives, says Davidson. “Regardless of what incentives are used, the key is for employers to show their commitment to helping their employees achieve financial wellness.”

Davidson concludes, “Remind employees that this is a process, not an event. Employees should focus on immediate changes and develop good, ongoing financial habits.”