Employee A cashes out a
retirement plan to help with the costs of buying a house, then learns the tax
penalties will be higher than he thought. Concerned about that and credit card
debt from the move, he cuts back on his current 401(k) contributions.
Employee B has four active
kids, and although she has employer-sponsored health insurance for the family,
the out-of-pocket costs mean she, too, cuts back on her 401(k) contributions.
She also neglects medical care for herself, choosing to ignore potential
warning signs in an attempt to lower the family’s health care costs.
As if common scenarios
like these weren’t enough, financially fragile employees are barraged with
advice from superstar financial gurus, hometown consumer finance bloggers,
and everyone in between.
‘Don’t get that latte at
Starbucks and you’ll save five dollars a day!’ ‘Pay down your highest interest
credit card first!’ ‘Set up an automatic withdrawal from your paycheck to a
savings account!’ ‘Don’t buy a new car!’ And so on.
Some of that advice is
good. Some unfortunately assumes that all workers actually have extra money to
start a savings account or pay extra to a credit card debt.
But the latte-shaming is
the worst. Workers read in the news how Kardashians are robbed of $10 million
rings, CEOs are lapping up bonuses equivalent to all of their employees’
salaries combined, Trump nominees are “forgetting” about a couple hundred
million they own in investments, and some reporter or financial expert is
slapping them on the wrist for splurging on a $5 coffee?
No wonder employees are
Poor employee financial
literacy and health costs employers thousands in productivity and health care
costs, not to mention employee morale. It also costs advisors, as employees cut
retirement plan contributions — or never even start.
And employees want help. A
recent Mercer study found that 85 percent of all adults, and 93 percent of
18–34-year-olds, are interested in online financial tools to help manage their
finances, but, the study notes, “they must be secure and easy to use.”
It’s a trend that sponsors
and advisors can’t ignore.
But when plan sponsors
look for financial wellness programs that they hope will help employees’
financial lives, they find a bewildering array of offerings. Mercer puts the
number of financial wellness vendors “at well over 300.” Even a quick search at
Shortlister turns up companies with all kinds of programs, coaching, and
This chaotic array of
offerings poses a challenge, but also an opportunity for advisors to help plan
sponsors make sense of it all.
Advisors need to remember
that just as every plan sponsor is different, so are workforces and employer
goals. As advisors dive into the smorgasbord of financial wellness solutions on
the market, they might want to start by considering common features most
financial wellness programs have. Researchers at Washington University in St.
Louis found that most financial wellness programs incorporate the following:
Rewards for saving, budgeting or other helpful financial actions
Personalization for individual employees’ situations
Easy access and interactive features for employees
A focus on proactive rather than reactive behavior
Typical features the
researchers found that are commonly recommended in financial wellness plans
include the following:
Financial education, counseling, and planning
Targeted benefit and retirement counseling
Online access to personalized financial management tools
Automatic credit reports
Employer-sponsored lending programs
But just as important,
there are three more things many employees would want in a financial wellness
program that plan sponsors and advisors should note:
They want financial wellness to be interesting, a fun challenge, not yet
another depressing thing to do.
They want security for their data and reassurance that no one else will know
about their financial status.
And last, but not least, they want and need support and encouragement along the
way, with no “latte-shaming” allowed.
here for the original article from Benefits Pro.