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Creating a Financial Wellness Program

Alison Hinson

A piggy bank with money in it, surrounded by different pills.

MMG Insurance, headquartered in Presque Isle, Maine, offers a wide variety of personal and commercial property and casualty insurances. To supplement an already-existing and well-utilized employee wellness program, MMG’s HR department debuted a 12-month financial series for employees in 2009 in partnership with a local financial services firm. These sessions included financial, estate, and retirement planning, including investment strategies and income planning.

Between 15-20% of the company’s 150+ employees attended the monthly classes. Positive feedback and post-program surveys resulted in a request for a second series of education sessions now scheduled for 2010 and 2011.

Steven C. Johnson, ChFC and Senior Financial Advisor for AspenCross Financial Group has seen first-hand the negative impact of personal financial stresses on employees and understands the need for employers to empower their workforces with financial education. “Employee’s increased levels of financial distress and anxiety can oftentimes cost employers dearly in terms of lost productivity, increased absenteeism, and turnover.”

The good news, says Johnson, is that more and more employers are recognizing the importance of providing comprehensive financial wellness programs to their employees in concert with the company’s traditional benefit offerings.  “These programs typically include worksite financial education workshops combined with the opportunity for employees to meet one-on-one with an experienced financial advisor that can help them better understand how to best integrate their current benefit programs with their personal financial and retirement plans.  That’s a winning combination that, when implemented successfully, can help to increase the financial wellness of a company’s employees. That can lead to higher productivity, retention, and overall job satisfaction,” says Johnson.

What is financial wellness and why is it important to my company?

Financial wellness results from making informed short- and long-term financial decisions that result in optimal health, productivity, and a solid foundation for every stage in life. Financial stress is gone, replaced by actions that support well thought out goals. In a nutshell, you mindfully manage your money, instead of your money managing you.

Financial issues affect more employees than smoking and obesity combined. While 20% of the US population smokes and 30% are obese, more than 70% may be concerned about their finances. Consider the following statistics reported by careerbuilder.com in a recent survey:

More than half of the US workforce lives paycheck to paycheck.

  • 61% of workers say they usually or always live paycheck to paycheck.
  • Increased income does not necessarily solve the problem as 30% of people with salaries over $100,000 also live paycheck to paycheck.

Many people save little, if any, money at all.

  • 36% of workers do not put any money into a retirement savings plan.
  • 33% of people don’t put any money aside for personal savings each month, and 30% save less than $100 each month.

Living paycheck to paycheck and failing to save money results in a high percentage of stress among employees. According to the American Psychological Association’s 2009 ‘Stress in America’ survey, approximately seven out of ten Americans report that money is a significant source of stress. Financial stress, just like any other kind of stress, leads to health issues and reduced productivity.

According to Elizabeth Scott, M.S., anxiety over stress can negatively affect your health and productivity in several ways such as:

  • Increased eating, drinking, and smoking due to the inability to constructively cope with financial stress.
  • Reluctance to spend money on doctor visits, so small health issues escalate into larger problems which result in potential lost work time and more stress.
  • Loss of sleep which can impair your immune system and cognitive abilities. A diminished immune system can lead to illness and, ironically, a decrease in cognitive skills can result in poor financial decision making.

These behaviors can also reduce participation in traditional workplace health and wellness programs, compounding existing issues.

When your employees show up for work, they bring their financial concerns with them. An article in a 2005 Delta Pi Epsilon Journal noted the following problems when employees experienced personal financial stress:

  • Increased absenteeism
  • Frequent personal phone calls
  • Lack of ability to concentrate
  • Personal bankruptcies which could reflect badly on the company
  • Risk of fraud and/or theft.

All of these issues will affect the productivity and profitability of your company. For example, a company with 100 employees can easily lose $115,000 annually in productive wages due to financial stress.

How do I recognize if a financial wellness plan is needed in my company?

There are several situations that may indicate a financial wellness plan could benefit your company. Common areas of concern are:

  • Under-utilization of retirement plans

○    Many companies that offer a matching component to their retirement plan often wonder why some of their employees don’t take advantage of this employer contribution. However, employees struggling to pay their monthly bills don’t believe they can allocate 1% – 3% of their annual pay to a retirement savings account.

  • Usage percentage of traditional health plans vs. consumer driven options

○    Financial concerns are a large barrier to employee participation in HSA and HRA plans. Ironically, these plans are both the wave of the future and a way to encourage employees to take personal responsibility for their health.

Tracking utilization rates and benefits plan statistics are critical to understanding needs and developing appropriate programs.

Your HR staff may be observing the following employee behaviors, all of which indicate financial stress:

  • Requesting 401(k) plan distributions to avoid foreclosure or to pay credit card debt
  • Becoming creative in how they use benefit accounts to access money

○    Overdrawing their healthcare plan

○    Collecting sick time and short term disability compensation at the same time

  • An increase in the number of employees asking to talk with HR about the stressors in their lives, which may or may not include a discussion about financial stress
  • Working as many hours as they can, sometimes to the point of overwork

Let’s go back to the example of a company with 100 employees that is losing $115,000 annually due to financial stress. If 25 employees participate in a financial wellness program and spend 50% less time stressing about money during work hours, the company will save over $20,000 annually due to increased productivity. In addition, productivity can also increase due to the following:

  • Employees feel valued and appreciated because their company cares enough to provide them opportunities to improve their financial health
  • Employees begin fully utilizing voluntary and involuntary benefits options or become more willing to participate in other employer-sponsored programs
  • Employees improve their chances for a healthy retirement

Higher productivity, improved morale, reduced turnover, increased engagement in company-sponsored education or training and the organization itself, and smarter use of benefits options are all results of a quality financial wellness program.

What does a financial wellness plan look like?

The goal of a financial wellness plan is a shift in behavior. Whether we want to improve utilization of benefits, better educate employees in order to empower them and help alleviate stress, or help create a productive and financially-savvy workforce that continues to be actively involved in the company, the necessary result involves a change in behaviors. Unfortunately, the path to sustaining behavior change is not simple. If it was, Americans would immediatey stop smoking, stop eating junk food, and start exercise regularly! A succession of information and activities around awareness, education, and behavior change is ideal for meeting intended results.

Awareness

  • Distribute financial education materials and articles from reputable vendors via newsletters, handouts, and posters
  • Keep employees informed of all changes and options in their benefits plans
  • Use success stories from co-workers to inspire and motivate the workforce

Education

  • Provide employees with understandable worksheets that help them prepare personal budgets, determine net worth, estimate retirement needs, etc.
  • Conduct lunch and learns or webinars around topics of interest to both the company and the employee base
  • Hold an annual financial fair to give employees open access to a variety of vendors and materials

Behavior Change

  • Utilize existing Employee Assistance Programs (EAP) to encourage people to seek counseling and assistance
  • Periodically host a series of comprehensive classes with experienced financial and benefits advisors
  • Allow employees access to free or subsidized personal sessions with advisors or use these sessions as incentives to participate in other programs, such as company wellness initiatives

Remember to use a variety of communication methods to reach people. This may include posting information on bulletin boards, in the bathroom stalls, or in break rooms, holding seminars via webinar along with a lunch and learn format, making announcements at staff meetings, and so on. Everyone digests information differently and will be more receptive to certain distribution channels. This makes it essential to vary where the information is placed, and to be thorough in the distribution process.

How do you measure the impact of a financial wellness program?

Measurement of any wellness program is absolutely critical to its success. Tracking and reporting results is the key to maintaining support from senior leadership, discovering weaknesses in programming, and planning for the future.

Every good program starts with baseline data. Starting points for gathering this data include:

  • Participation in retirement plans
  • Utilization of health benefits
  • Disability claims
  • Lost-time accidents
  • Turnover

Perhaps harder to track, but helpful if plausible and applicable, are data on absenteeism and productivity.

Prepare to wait! The key to tangible results will be participation in all benefits plans, including health, retirement, and voluntary plans—most of which roll out on a yearly basis. To keep momentum going in the short-term, evaluate financial wellness offerings by tracking participation and satisfaction levels, and assessing outcomes on behalf of the employee population.

How do I start a financial wellness plan?

Starting a quality financial wellness plan is no different than executing any results-oriented employee wellness program. In order to be successful, the organizer must examine company needs AND employee interests. Marry the needs of these two stakeholders, develop a strong communication plan, determine well in advance how the program will be evaluated, and you’ve got a strong recipe for success.

  • Start with a solid communication plan. Why is your company interested in promoting financial education for employees? Be completely transparent. Remember that there is always potential for suspicion and hesitation when money is involved.
  • Look at company data. Where are the gaps in benefit plan utilization? As the employer, where would you like to see improvements and what kind of training or information-sharing will help you get there?
  • Survey employees. Make it about them and their needs, not just the company. Your employee base will be much more receptive to programming and more willing to participate if they have been asked for input.
  • Carefully plan your financial wellness initiatives. Remember that you are doing this “for” your employees, not “to” them. Keep in mind the awareness, education, and behavior change models. Your first two initiatives should correspond to the:

○    Most requested information from employees

○    The part of the benefit plan the company would like to see utilized more effectively/frequently, and what methodology would help bring about the desired usage increase

  • Imbed financial wellness concepts into other established programs (think wellness!) and trainings. This is an easy way to increase the engagement and credibility of all company programs.
  • Decide in advance how you will measure your programs’ success. At the minimum, track employee participation in and satisfaction with offered programs and continue to review benefit utilization. Develop a data dashboard and set goals around intended results in order to stay on track and keep focused.

Many companies have already successfully implemented nutrition, exercise, and smoking cessation wellness programs. A next step to improving the health and productivity of your employees is through the implementation of a financial wellness program. Helping your employees reduce financial stress can increase productivity and reduce expenses for your company, resulting in long-term success for both the employee and employer.

About The Author

  • Jaime Nicole Laliberte serves as Executive Director of the Wellness Council of Maine, a non-profit membership organization that helps companies build or enhance results-oriented workplace wellness programs. She holds a BS in Kinesiology and Physical Education and a Master of Business Administration.

 

 

 

 

 

  • Alison Hinson has over 20 years of experience helping both companies and individuals manage their finances. In addition to being a speaker and writer, she hosts an award-winning financial radio show. Alison has a BA in Economics and a Master of Business Administration. For more information about her financial wellness programs, visit AlisonHinsonMBA.com or call 207-671-1491.

 

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