Gone are the days where the personal finances of your employees are their problem alone. Whether or not employers do something about it, employee financial stress has a much broader impact than just keeping them up at night. This so-called personal issue is costing employers billions of dollars. Further, the International Foundation of Employee Benefit Plans found that 80% of employers say their employees' personal financial challenges are causing productivity issues, like workers’ inability to focus on the job and increased absenteeism and tardiness.
Additionally, 44% of employees who are under stress from carrying high debt suffer from migraines, 51% have muscle tension, and 29% experience severe anxiety. All of those ailments are at significantly higher rates than their peers who aren’t under high debt stress. This can result in increased health care expenses for employees, as well as benefit premiums for employers.
But there may be a solution. The Society of Actuaries found that financial wellness programs are correlated with lower health care costs. Employees engaged with financial wellness actually reduced their health care spending by 4.5%, while those who never used the program increased their health care spending by 19.4%. Companies that implemented a financial wellness program realized a savings of $271.50/year, per employee. That data is from 2017, before the pandemic, so imagine the impact of the additional financial stress it has caused in recent years. What will things look like after a year or more of drastically increasing inflation?
Keep in mind that not all financial wellness programs will make an impact. The offerings in this space can range anywhere from a collection of blog posts behind a login, to integrated tools that help employees learn, and then apply their new knowledge to their own finances. Choosing the right program for your organization shouldn’t be about checking the box and just getting something in place; it should be about finding the option that is most likely to have an impact.
Here are some do’s and don'ts to help you evaluate potential financial wellness offerings, or assess your existing program.
Education beyond content
Don’t buy a collection of blogs
Programs that are essentially a collection of blogs with a login, no matter how well they are organized, aren’t likely to produce great results. Research shows that financial information decays quickly if it’s not used soon after the learner is exposed to the concepts. Articles alone don’t tend to be easy to turn into action. Not to mention, your employees can probably access hundreds of thousands of personal finance blogs on their own without a program. If that worked, we wouldn’t need these types of programs, and everyone would be financially healthy.
Do invest in interactive lessons
Look for a lesson-based program with learning objectives and activities for the learner to apply some of what they are learning to their own situation. The employee should be able to see what parts of the program are complete, and jump back where they left off. Lessons should also include objective ways for the learner to assess their own finances. Example: A lesson that shows an employee how to calculate their emergency savings need, and then how to figure out how much they can put towards building up those savings each month.
On-demand, bite-sized learning
Don’t rely on live education alone
Workshops or presentations can seem like they’ll provide great motivation for employees to get started on improving their financial wellness, and they come with the added benefit of being able to ask questions. Information learned in live events can be engaging, but it can be difficult for employees to translate into immediate action. Months later, when the next financial decision pops up, the impact of that financial education has dissipated.
Do offer a combination of live and on-demand educational opportunities
Live events (virtual or in-person) are good catalysts for engagement, but a well-rounded program will ensure additional self-guided education and tools are available. This way, employees can access the knowledge when they need it. Financial education shouldn’t be something you finish; it should be a tool kit you revisit every time you have a new financial challenge or opportunity to evaluate. Live events also tend to be much longer in order to justify gathering everyone. The stickiest learning may be gained in bite-sized segments. Look for eLearning that provides value even when the learner has as little as five minutes to consume a session.
Integrated tools & financial profiles
Don’t create frustration with siloed web-based calculators
Programs that don’t include any digital tools are a poor choice in this day and age. However, not all digital tools are created equal. It can be very frustrating for employees to use web-based calculators that aren’t backed by a login, especially if they have to re-enter their information over and over whenever they want to evaluate their situation.
Do provide tools with an integrated financial profile to update over time
Employees will be more likely to use a tool that allows them to update their original financial profile as they learn and make changes over time. They can also use these tools to test scenarios and weigh options. This type of resource is a crucial inclusion to a program that will help employees predict the consequences of their financial choices before they make them.
Don’t limit your program to active employees only
It can seem like a good idea to limit who can access your employee financial wellness program to keep costs under control. But not everyone will use it, and you will get the most bang for your buck when employees and their families truly embrace improving their financial health.
Do encourage a broader enrollment
Expand access to your employee financial wellness program as far as possible to maximize the seats you’re already paying for. Encourage spouses and partners of employees to sign up, even adult children. Employees on parental leave can benefit from access to the program during their time away from the company. They’ll have the tools they need to make the most of their leave cash flow, making it easier for them to maintain their benefits, and their connection with the company. This makes for a smoother transition back when their leave is over. Even retirees can benefit from maintaining their access. Your financial wellness program can make the ultimate companion to your pension or group RRSP plans.
Don’t measure engagement alone to determine success
Be careful not to get lulled into a false sense of efficacy by vanity metrics, like surface-level program engagement stats. How many people create an account isn’t an indicator of an improvement in financial health, nor are changes in financial confidence.
Do measure changes in objective financial health of those using the program
Ensure the program you use allows reporting of both engagement data, as well as objective changes in financial health from anonymized aggregated data. Employees will truly become more financially healthy when their savings are increasing, and certain types of debt are decreasing.
Do you already have a financial wellness program? Or do you think your employees and company would benefit from an overall improvement in financial health? Be sure to check out our on-demand webinar: The cost of employee financial stress. This is a great session for business owners, HR professionals or managers to attend. We’ll cover how employee financial stress is impacting the overall productivity of your team, and what you can do to get things moving in the right direction. To successfully engage employees in a financial wellness program, it needs to be easy to find and top of mind. We’ll cover that too!
Real changes will take time, and employees need employers to treat financial wellness programs like long-term investments. Your team needs you to make personal financial capability a meaningful workplace benefit. This will improve everyone’s well-being, and set your company up for success.
CacheFlo is a financial education company that builds eLearning and tools to help financial professionals and individuals make behaviour-based changes, which allow them to get more life from their money. We want to make it easier for people to predict the impact of their financial choices before they make them.
About the Certified Cash Flow Specialist (CCS) program
CCS professionals go through enhanced cash flow-based training to develop the skill set to deliver behaviour-based cash flow advice. They start the financial planning process with a cash flow plan to genuinely help their clients get more life from their money.