In response to the growing demand for workplace financial wellness programs designed to help employees navigate this difficult economy, prepare for the challenges ahead, and manage financial stress in the workplace, Financial Finesse has announced the publication of a best practices guide to help employers design and implement behavior changing financial wellness programs.
According to Financial Finesse Founder and CEO Liz Davidson, the trend towards workplace financial wellness programs is pronounced, with inquiries about these specific programs increasing from 20% of the firm’s total inquiries in 2010 to approximately 80% in 2011 and just over 90% year to date. Other industry experts have experienced the same trend, with a host of new services being developed to address this issue—from account aggregation services that automate the budgeting process for employees to retirement plan consultants addressing the issue strategically to increase the amount of money workers save in their company sponsored retirement plans.
Judith Cohart, executive director of the Personal Finance Employee Education Foundation, a non-profit research organization that has conducted numerous studies over the years evaluating the effectiveness of different financial education approaches and programs in the workplace, says that 2012 has been a “watershed year for the foundation,” with a significant increase in financial education providers reaching out to her organization, as well as increased interest from employers looking for research and best practices on the topic.
“Financial wellness programs have not yet reached the critical mass that physical wellness programs have, but they are starting to become a sought after employee benefit, especially among larger employers,” Cohart says.
Davidson adds that the trend stems first and foremost from employers who are anxious to help employees reduce expenses, pay off debts, and save more so that they are protected in the event of a double-dip recession, a change in benefits, or increases health care costs, inflation, and taxes.
Davidson adds that employers who follow best practices are starting to see results from the programs, with much higher retirement plan deferral rates (2-3x higher for employees who regularly participate in financial wellness programs vs. those who don’t participate), improved participation in flexible spending plans and other key benefits, reduced absenteeism, and most notably, lower health care costs due to reductions in financial stress.
Says Davidson, “What we’ve learned is that there is a world of difference between the traditional approach to financial education, delivered by financial professionals interested in selling employees financial products or services, and a true financial wellness program that centers on helping employees develop and sustain positive financial habits.”
The guide, says Davidson, is an attempt to encapsulate the latest research in behavioral finance into a step-by-step handbook that employers and financial professionals can use to create programs that empower employees to change the way they manage their money and invest for their future.
“It has been a long journey,” notes Trisha Brambley, president of Retirement Playbook, Inc., a consulting firm focused on improving the effectiveness of employer sponsored retirement plans, “but the change we’ve been working towards is gaining critical mass. Employers are ready, and so are employees.”
For an abstract of the guide, click this link.