Measuring the Impact of Financial Wellness Programs

When an employee is stressed about their financial situation, perhaps wondering if they will be able to pay their monthly rent or escape the cycle of credit card debt, their performance at work will likely suffer.

As an attempt to relieve some of this stress and improve productivity, employers often provide financial wellness programs. These are benefits that can help set a company apart from its competitors, as well as retain more workers. But how can plan sponsors measure the effectiveness of the programs? Are they worth the money?

While financial wellness consultants have developed a myriad of techniques to determine the effectiveness and value of certain financial wellness programs, other financial experts and researchers say it is often ambiguous whether these programs actually influence people’s behavior and improving their financial confidence.

The Challenges of Measurement

Anqi Chen, a senior research economist at Boston College’s Center for Retirement Research, argues that financial wellness benefits including student loan matching, emergency savings accounts and auto-enrollment into a 401(k) are beneficial because they directly improve people’s financial situation by providing company matching funds.

“If the employer is matching every dollar payment to a student loan, that is money that is being provided to the employee,” Chen says.

Under the SECURE 2.0 Act of 2022, employers will be able to provide retirement plan contributions that match a participant’s student debt payment. The goal of this provision is to provide employees a way to pay off their student debt while still saving for retirement, as opposed to being forced to choose one or the other.

Chen says a potential criticism to this benefit is that the worker could have used that matching contribution as additional wage.

A recent survey conducted by Aon found that employees were most commonly stressed about their day-to-day finances and the threat of inflation, rather than their long-term retirement savings.

While increasing wages may seem like a favorable benefit to employees, Jay Schmitt—a principal in Strategic Benefits Advisors—says this may not achieve the same results that a financial wellness program would.

“If you just increase [employees’] salaries so [they] can pay off student loans or pay for medical insurance, what are the chances that the money is going to the right place, without good financial acumen or a plan or budget?” Schmitt asks.

But at the same time, Schmitt says it is difficult to put a direct return on investment on financial wellness programs.

Utilization is often used to measure the success of a program—whether it’s measuring a health savings account participation rate or how many people attended a seminar on budgeting. But Schmitt says this method does not necessarily prove that a particular program has directly made people feel less stressed about their money.

“Companies will say, ‘We put in this program, and look at our retention,’” Schmitt says. “Well, is that because of that program specifically?”

Even though a new financial wellness program may correlate with an increase in retention, Schmitt says there could be several other factors that have contributed to the rising retention rate. For example, inflation or the rise in interest rates could be factors that are motivating people to remain at their current jobs.

Unlike programs that put money directly into workers’ retirement accounts, Chen says the impact of wellness education programs tend to be more ambiguous.

“If you give [participants] a seminar about how to save, that doesn’t necessarily mean that they will save and accumulate more assets or financial security,” Chen says.

With programs that provide a company match, Chen says employers can more easily measure if people are saving more, have less debt or have an emergency fund they can tap into.

How To Gauge Success

Ilyce Glink, the CEO and founder of financial wellness platform Best Money Moves LLC, explains several ways her educational platform measures the success of its various programs.

Best Money Moves provides companies with money coaches who are trained and accredited by the National Foundation for Consumer Credit, as well as financial literacy content and videos, live webinars every month, financial training courses and more.

In order to filter relevant content to employees, Best Money Moves collects demographic information, which includes information such as income level and ZIP code, then asks the person to rank 15 categories of financial stress on a scale from one to 10. The platform calls this feature a “Stressometer.”

The platform’s algorithm is then able to provide relevant and appropriate content, tools and solutions to the user. Glink says Best Money Moves can then measure its impact on a user’s financial wellness by comparing their answers before and after they use the provided content or money counseling.

“For our employers, we measure usage [of the content] and we show them what stresses are most prevalent for their organization,” Glink says. “We also show [employers] what content people are accessing over time.”

Glink adds that Best Money Moves works with companies to identify what financial wellness programs match the company’s priorities and what changes they are looking to see in their workforce.

Best Money Moves also works with Equifax, which uses The Work Number—a centralized commercial database of income and employment information from millions of people across the country. The Work Number analyzes a company’s data and generates a report that also factors in outgoing signs of stress based on employees’ credit histories.

“We combine the personal, ‘How I feel about my money’ information with [Equifax’s] empirical data on credit history,” Glink explains. “I think that this kind of comprehensive look really helps employers address what’s most important to them and their employees.”

Another benefits platform, LearnLux, offers employers a “holistic program” that aims to reduce financial stress, increase productivity, reduce employee turnover and encourage greater use of pretax products, on-time retirement and health-care savings.

LearnLux CEO and Co-Founder Rebecca Liebman said the platform equips participants of all incomes and asset levels with a financial plan to guide them through decision points like budgeting, paying down debt, electing benefits, understanding equity compensation, starting a family and buying a home.

“The most popular parts of the program are the interactive digital tools, jargon-free lessons, and calls with globally certified financial experts,” Liebman said in an emailed statement. “The result is that LearnLux participants feel great about their money, allowing their work and wellbeing to thrive.”

Liebman said LearnLux sees its users, on a daily basis, have continued success understanding their company’s 401(k) and employee stock purchase plan, while feeling more confident in navigating economic volatility.

The Future of Financial Wellness

New data released by MetLife in March revealed that employees’ satisfaction with their benefits fell to 61% in 2023 from 64% in 2022—its lowest point in the last decade.

These benefits not only include health insurance, paid leave and retirement plans, but financial wellness and stress management programs as well.

Negative feelings about company benefits could be caused by a number of factors, according to the Society for Human Resource Management, including inflation pressure, fear of a recession and continued COVID-19 pandemic concerns. MetLife also found that stress and burnout are both significantly higher than before the start of the pandemic.

Transamerica’s Prescience 2026 report predicted that financial well-being benefits, such as mortgage or rent assistance, credit improvement and student loan repayment programs, will be offered by more than 50% of employers by the year 2026. It also predicted that more than 40% will offer some sort of emergency savings fund mechanism.

“Although not all employers are in the financial condition to offer these benefits, we surmise that these benefits will set apart employers with the most successful record of attracting talent, while other employers unable to offer these benefits will struggle to maintain workforce and business performance,” the report states.

As employees’ overall financial wellness has been on the decline, MetLife recommends that plan sponsors offer access to applications like Upwise and Savi that help people determine the student loan forgiveness programs for which they may be eligible and calculate how much they can save.

MetLife found that employee interest in financial wellness tools and resources has increased dramatically, as the proportion of workers who view these resources as a “must have” increased to 45% in 2023, up from 18% in 2019.

Catherine Collinson, the CEO and president of the nonprofit Transamerica Institute, says SECURE 2.0 has helped raise awareness about the importance of student loan and emergency savings benefits.

“Employers are very well-positioned to help support the overall financial wellness of their employees,” Collinson says. “The extent to which an employer adopts one approach or another is really going to be up to the plan sponsor. A seed has been planted for the important role that they play and how they can make a difference.”