Updated Aug. 18, 2019
The concept of the financial wellness program as an employee benefit has finally gained traction. A study by ADP and SourceMedia showed one in five companies currently offer this benefit, and 34% are now considering it. If you’re a financial advisor or part of a financial institutional, you may also be looking to offer a financial wellness program to your clients. One option to consider is the white label financial wellness program.
Instead of developing your own program from scratch, you simply contract with a financial wellness provider who offers a white-label option. You’ll end up with a full program that uses your logo and colors, but somebody else updates and maintains the content for you. It’s a great solution for those who would like to create a new service offering, but prefer not to attempt to develop it in-house.
Since it’s a very new field, however, it’s important to note that not all financial wellness programs are created equal. Consider the results of a recent survey:
- 56% of employees whose company offers a financial wellness program say they wished the program used friendlier language.
- 36% say their company’s program is intimidating to use.
See the problem? The very program that was brought in to help may actually be intimidating the participants more!
These findings emphasize that you must choose carefully. With this in mind, here are things to look for when evaluating your options.
Is the program really user-friendly?
Like it or not, we live in a world where most American adults are not very financially literate. Surprisingly, it’s not just less-educated or lower-income people. Per the Chicago Federal Reserve, “A large proportion of consumers are not financially literate, even among the wealthiest and most educated population segments.” Combine that with the knowledge that money is a highly emotional subject and most Americans are swimming in debt, and it all adds up to an extremely sensitive subject.
Therefore, you need to choose a financial wellness program that is extremely user-friendly and non-technical.
It’s vital that the program avoids jargon and uses plain language, but it needs to go further than that. After all, the goal is not just to educate. People already know they should spend less and save more. Our goal is to motivate them to do it!
How can we achieve that? By working with natural human behavior, not against it. At Wavelength, we do that by focusing on the psychology of money, which most people find quite interesting. Contrast that with a personal-finance website where you learn how to prepare a budget, then you learn you can never go out to dinner or on vacation again for the next ten years if you want to stick to it. There’s no wonder people aren’t lining up for this stuff.
As an example, Wavelength takes a totally different approach:
Forget the focus on budgets. ‘Budget’ is one of those words that has a similar ring to it as ‘diet’. Although it contains more than four letters, it communicates one big, unattractive message: deprivation. Even if some participants actually sign on and start budgeting, the results are likely to be short-lived. Not surprisingly, budgeting has been shown not necessary to achieving financial security.
Instead, we teach how a mindful spending techniques can help us painlessly choose to spend less. Totally different approach. Then we use that as a building block to get people starting to spend less on everything so they can save more consistently. Instead of being a drag, it becomes entertaining and rewarding to find easy ways to save more every day.
We also point out that corporations spend over $200 billion every year to convince us we really “need” their products. From cars, to clothes, to watches, to perfume…it’s no wonder that most people have more possessions than they ever can use, but not enough savings to provide financial peace of mind. This awareness can help create powerful changes.
When it comes to investing, we help people understand the real risks to most people’s retirement nest eggs. Forget technical price-earnings ratios; instead, we teach users about how the stock market naturally brings out fear in all of us. We show them how panic selling is the biggest reason most retirement investors fail. We want them to have that awareness next time there’s a big drop in the market and most participants feel the natural urge to hit the sell button at the worst possible time.
Does it look different than most financial websites?
Having a navy-blue, calculator-filled financial wellness website is likely to get our “I’m just not good with numbers” person breaking out in hives. Instead, a nonthreatening, different look and feel will give the program the best chance for success. Research exists showing what colors and layouts work best to make finance consumer-friendly; find a company that used that research – along with user-testing – when developing its program.
Remember, we’re competing with Game of Thrones, pizza night, and happy hour—in today’s busy world, we’ve got to capture our learner’s interest fast. Successful programs spark curiosity and engage people in a variety of ways; video, quizzes, and interactive e-learning can be especially effective to entice exploration.
Be sure to evaluate the look and feel of the programs you’re considering to make sure the look is different and fresh.
Does the program cover critical topics adequately?
Many young people are so mired in student loan debt and focused on saving for homes and vacations that they won’t even consider investing for the future. Big mistake! Time is the only ally we really have when saving for retirement. Delay investing even a handful of years and saving for retirement becomes dramatically harder in the future. People need to hear that message so that they don’t miss out on the much-needed gift of time.
And, many younger people today are surprisingly risk-averse. Having lived through a couple stock market crashes, they often mistakenly think cash and other low-return investments are safe long-term investments. So it’s the role of the financial wellness program to effectively educate them on the hazards of taking too little risk, along with too much.
So financial wellness programs must carefully balance addressing current topics such as reducing debt with long term priorities such as investing for retirement. Unfortunately we’ve found that many financial wellness programs are surprisingly light on investing education, offering maybe 20 minutes of education, or even less.
Given the complexity of investing, too little information, which will involve a lot of generalizing, can be very dangerous.
Especially given the reality of increasing plan sponsor liability, we believe a solid financial wellness program must cover risk, investing basics and how to understand mutual funds and their fees. And on the subject of deciphering fees, is it done in a way that people can actually learn what they need to know? A simple article probably won’t help as this is a confusing topic. There should be a carefully-designed program that helps users learn and apply these critical skills.
Financial wellness programs also must address the behavioral side of investing. It should be clarified that most participants do better with outside help since most don’t have the time or interest to study investing enough to do it right. Your program should be clear in the message that people who want to DIY must educate themselves to avoid the traps that cause people to dramatically underperform the market over the long term.
Of course, this message is harder to communicate properly during times (like today) when the US stock market has gone up for over a decade. Behavioral investing must be taught so participants don’t fall into the “investing is easy” camp simply because we’ve been in a bull market. When we’re dealing with the very long term, these issues can make or break the ability for a person to live comfortably in retirement.
So, be sure the programs you consider explain the cyclical nature of investing, so your learners don’t get caught in the common traps that damage most retirement nest eggs.
Will the program help protect the employer from potential liability?
Today, there’s another issue that must unfortunately be kept in mind: that’s a growing trend toward lawsuits against plan sponsors. Investment fees are an area of focus in recent cases.
It’s no wonder why: investment fees can make a huge impact on the average workers’ ending retirement balance. In fact, the impact is so striking it can cost workers literally hundreds of thousands of dollars over their career. So it’s important that plan sponsors are open about fees and ideal if they actually help educate their employees on how to determine how much they are paying.
Sadly, the mandated fee disclosures provided by employers are generally regarded as ineffective.
To help prevent potential liability down the road, including education on mutual fund fees in your financial wellness program is a must. Unfortunately many programs do not focus adequately on this vital area, so be sure to check for it.
Is the program designed around the way that most adults learn?
Per financial wellness emerging best practices, long, in-person workshops are no longer seen as the best option.
Adults learn differently than kids. And, if you haven’t noticed, most adults are really, really busy. So pushing your adult learners into a forced curriculum that requires a fixed amount of time may backfire on you. Sure, some people will gladly use it, but these are likely the enthusiastic workers that like learning and may actually need less help. Instead, research shows that letting adult learners decide what to look at, in what order, works best.
Then, programs need to be realistic. We all have short attention spans these days. Ideally, your program has an email component that reaches out and draws learners in. Then, to best fit everyone’s schedules, the program should have short pieces that learners can do anytime, anywhere. A mobile-friendly format that can be promoted easily on social media is also a must.
Each program will have a different approach on this, but be sure to check that it is in-line with adult learning best practices.
Finding the right fit for your needs
Remember, financial wellness is a very new field. As you can probably see, you’ll want to spend time comparing financial wellness programs in-depth. Each program will have its strengths and weaknesses, of course, but by taking a bit more time to look around, you can align yourself with a provider that shares your philosophy. And more importantly, you want the financial wellness program you choose to be designed for success.
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