What Does Financial Wellness Mean to You?

Employers are building into retirement plans and beyond benefits to help workers gain greater financial security, financial freedom and overall financial wellness.

Research shows that greater employee financial wellness often translates to fewer distractions and more productivity on the job. It also affects employers’ retirement plans, because workers who have sufficient emergency savings, minimal credit card and student loan debt generally have lower financial stress and can save more of their salary for retirement.

For employers, the definition of financial wellness varies, ranging from everyday budgeting and day-to-day financial behavior to long-term savings.

PLANSPONSOR spoke to numerous retirement industry sources and compiled their responses to the question, What does financial wellness mean to you?

Gerald Wernette

Principal and director of consulting services, Rehman

“I would sum up financial wellness as: Tools and resources to better educate employees and plan participants on the resources that are out there, that are available to them and how best to utilize what’s at their disposal as far as their own personal income and other resources. [It’s] trying to marry the two, help educate, help people understand A) what’s out there and B) how to best utilize it for themselves.”

Brian Coleman

Vice president of total rewards, Dawn Food Products

“We are an early adopter of financial well-being. We started our journey back in 2008, so it’s very popular, it’s a great buzzword today, but we’ve been doing it since ‘08. We started very early with looking at what do team members across the board need? How do they save more? How are they happier? How do we look at getting more people involved? [Because] if you’ve got more money in your pocket, you’re more apt to be happier.”

Rob Austin

Head of research, Alight Solutions

“Financial wellness for employers means having their workers be able to cover their current expenses, plan for the future and deal with anything unexpected along the way. So when you look at that framework, employers are offering tools that kind of help things in all three of those buckets. Some employers will offer things that will help a worker set a budget or help a worker with managing debt, [or help a worker with] a student loan program or something that’s just designed to [remind people], ‘Hey, [this can] help get your debt under control.’ We’ve even seen some employers help with refinancing of mortgages, [benefits] that can help with getting today’s expenses under control and [resources that help] planning for the future.”

Amber Brestowski

Head of institutional investor advice and client experience, Vanguard Group

“At Vanguard, how we think about financial wellness is [addressing] things that from a participant’s ability to be able to retire successfully.For us, that really falls into sort of three categories. The first is debt and expense management. Student loan debt is a great example of that, and [people] need help understanding how to get the expense and debt side of their balance sheet under control, so they can even envision saving for retirement. Credit card debt is another example of one of the challenges that are faced that’s facing our participants

The second pillar is emergency savings: having the ability to withstand financial shocks. We want participants to be able to handle expenses, and obviously making sure they have the right cash reserves and liquidity to handle a financial shock is really important before, again, they can even contemplate saving for retirement.

The last category is multigoal savings, this idea that our participants are often thinking about competing financial priorities: How do I think about balancing saving for a home, saving for a child’s education, saving in some instances to take a sabbatical and time out of the workforce, which we’re seeing more and more, and how do I how do I stack those objectives against retirement if I have a discretionary dollar?

Zara Nanu

CEO and co-founder, Gapsquare

“There’s a photo [showing] two kids watching a football match, and it’s behind a fence. Then one of them stands on a box and another one doesn’t, and then they have different viewings because of that. I think we started seeing equity as them standing on different-size boxes that ensure that they have the same viewing over the fence: So how do you put them on equal footing?

I think we are now moving towards a world where, How do we actually just remove the fence in front of them so it doesn’t matter where they are [and] they can have the same viewing of the game? It’s removing those barriers in terms of education, in terms of [the] language we use in terms of our historical baggage of what those [employer benefit] plans mean, how we interpret them and how they link into our economies and overall financial institutions.”

Sandy Gleason

Vice president of industry consulting, Alegeus

“Employers understand, and they need to understand, that there are four generations in the workforce now coming from all types of backgrounds, demographics, and there’s a need for those employers to meet employees where they are in their life journey. That’s what it means to me: understanding that…the one-size-fits-all doesn’t work any longer—that employees have different needs at different times in their lifetime, and employers need to meet them where they are now.”

Nicky Brown

Vice president for advocacy and government affairs, HealthEquity

“What first comes to mind is: I think that there’s certainly some inequities when you think about financial wellness. I think [financial] literacy is a big part of that where you have so many demographics that don’t understand financial literacy. We’d actually take a look at some socioeconomic information, as it relates to our products, and understanding that you have lower-income individuals that may not participate in a particular plan because they feel like they can’t afford it, and thinking about how employers can help … bridge the gap with these lower-income workers.

’How do you get access to these benefits to individuals [who] may not think that they can afford it? When there’s only a few vehicles that can even help them when they have these higher, out-of-pocket [health care] costs.

[When] you think about, in retirement, how much money you’re going to need for just health care alone, [wellness is also] starting to talk to employers about how they can bridge the gap, and employers looking at benefits a little bit differently, plays a part in that.”

Nick Maynard

Senior vice president, Commonwealth

“For Commonwealth, that means thinking about financial benefits that impact workers who are living on low-to-moderate incomes, and … beyond just retirement, what benefits folks might need as part of a financial wellness strategy to get them on the road to, potentially, retirement. One of the things, obviously, that we think is important is that emergency savings programs and benefits can move the needle. We think that emergency savings is a foundational, do-no-harm pillar of inclusive financial wellness strategy, and we think it can be a core part of financial benefits that are designed to meet the needs of a diverse workforce.”

Ilyce Glink

CEO and founder, Best Money Moves LLC

“I think [the term] is confusing employees. Financial wellness means, ‘I want to feel better about my money, have less stress and stop staying up all night worrying if I can make ends meet.’ And of course, 64% of Americans are not making ends meet. To employers, financial wellness is, ‘How do I get my employees to stop knocking on my door with their credit card debt questions?’

From an employer point of view, it’s about flexibility: ‘How do I bring new people on, how do I keep people, what are other benefits I need to offer these days?’”

Jay Schmitt

Principal, Strategic Benefits Advisors

“A lot of financial wellness programs have come online in the last five to 10 years that can help you make budgets and stick to budgets. … That’s really what the conversation needs to be about: How do you take a limited resource of money and apply it across your personal situation?”

Anqi Chen

Senior research economist, Center for Retirement Research, Boston College

“Why do employers offer financial wellness programs to their employees? I think it is to improve their financial security. It’s clear with programs that are actually giving [employees] money that improves their financial wellness. If your goal is to improve the balance sheet or their wealth in some way, then giving them money helps achieve that goal.

’’The goal of financial wellness programs is to improve the financial security of participants. The direct measurement of that would be, ‘Does the [program] actually improve the financial security of participants?’ Financial security can be measured in different ways, but it’s generally, ‘Do people have more money? Do they have more savings? Do they have less debt?’

For emergency savings, ‘Do they have a little pile they can tap into?’”