How Healthy is Your Workplace Financial Wellness Program?

Workplace financial wellness programs continue to grow in popularity. That’s good news, since survey after survey shows that Americans are stressed about money.

The bad news? According to a recent Bank of America Merrill Lynch report, the financial wellness programs that companies are providing don’t address what participants really want.

The report found that existing programs tend to focus on help with immediate needs, like getting on top of debt and budgeting. Employees, however, reported wanting something different:

• Actionable advice in the form of easy steps
• Help with investing and saving more
• Help from a professional to go along with these resources

That all makes sense. You can type the words ‘how to create a budget’ into a search engine and get thousands of great resources.   So is this really the most valuable advice an employer can be giving its employees about preparing for their financial future?

Are the Steps Provided Easy Enough?

Most of us don’t want to budget every dime and creating and implementing a strict budget is not a simple or easy step.  That approach can turn off otherwise motivated participants really fast. Fortunately, we can still teach people effective financial habits without requiring such strict measures.

Also, asking people to simply spend less is like putting a band-aid on a gaping wound.  Decades of smart advertising has turned us into a nation of consumers. Most people know how to spend.  They just have never been taught to save and invest. So it’s not just about cutting back…most people need a  whole new way of thinking about their money.

To be effective long term, financial education needs to help turn spenders into savers. Spenders love to spend.  Savers love to save.  We have to get people looking inward, thinking before spending and learning to love the feeling of getting their money working for them.

Fortunately, this can and should be taught in easy steps.  It doesn’t require telling them to never to set foot in a Starbucks.  Instead, it means teaching practical strategies such as mindful spending that helps make saving money come naturally.  And we can show participants how small painless substitutions, done on a daily basis, can add up to huge savings over time — savings that turn into earnings through the power of compounding returns.  These are the easy steps that can make a big difference.  In the process, these steps inspire curiosity and hope instead of igniting the fear of deprivation.

Is There Enough Content on Investing?

According to the report, financial wellness programs need to do more in the area of investing, too. People are asking for employer help for a reason, as there’s a whole lot of confusion out there. Along with it is distrust for the financial industry.  It is clear that people want help learning where to start.

Most programs offer only one short module on investing. Usually things are simplified and condensed.  Investing your retirement money can seem as easy as picking a target date fund or splitting your money across a few funds.

This simplified approach can be downright dangerous as we progress into a nearly decade-long bull market in stocks.  Yes, investing has definitely “seemed” easy for most participants for the past several years. Every time they check their retirement plan balance, it’s probably gone up.  But this is a bull market, not the reality of investing for the long term.

More Guidance, More Confidence

Investing through all market cycles, however, is not so easy.  With individuals, there’s a whole lot at stake…their future.  That’s why at Wavelength, our financial wellness program contains many hours of content about investing, including an entire 11 lesson course.  There’s many important topics covered, from risk, to asset allocation, to diversification, to rebalancing, to understanding the difference between an ETF and a mutual fund. There’s also content on understanding and controlling your investment expenses, which is one of the most practical ways consumers can improve their results.  Then, we include significant content on the role of emotions in investing.  This critical behavioral finance material  helps participants look out for the common emotions that cause most investors to repeatedly fall into the same trap of chasing performance and then panic selling into lows.

Fortunately, this type of information is actually really interesting!  Participants feel empowered when a good program helps de-mystify the world of investing.  But along with education, there should always be recommendation that they consult a qualified financial planner or advisor for guidance on asset allocation, rebalancing and other critical tasks that individuals often ignore.

Our central message throughout is “Get educated, or get help”.  We do not, in any way, downplay or simplify investing.  Instead, our program supports the role of the financial advisor and in fact helps educate participants on how to select a good one.

After all, the goal of a financial wellness program should be, at a minimum, to create an educated consumer of financial services.   If they then want to manage their own funds, that’s great, and they will have been repeatedly reminded that it requires ongoing study, effort and control of their emotions.  In other words, it requires more than 20 minutes of study.

Liability Prevention for the Plan Sponsor

We believe this practical approach offers significant benefits for the plan sponsor.  Right now we’re in a particularly dangerous place when it comes to retirement plans:  we’ve had increasing lawsuit activity during a rising market.  What will happen when we hit the next bear market and people see their account balances drop?

That’s why we include content on what’s really important:

• How to understand investment fees and why they are important to watch
• What’s a fiduciary and why is that important
• How to hire the right financial advisor/planner

Providing this type of practical content in a financial wellness program shows a plan sponsor’s commitment to participant education and transparency. This could go a long way should any threat of litigation appear in the future.

Is There a Link to Professional Help?

A well-designed financial wellness program can also serve another important role: providing access to the advisor for the retirement plan.  Surveys continue to show that many participants would like professional help, but may not feel confident enough to go out and find it.  At Wavelength, our financial wellness includes integrated access to the advisor, for those participants who want additional personal help.

This not only benefits the participants, this benefits the employer, as more individuals receiving professional advice will likely equate to better outcomes.

The Evolution of Financial Wellness Programs

As workplace financial wellness programs evolves, we’ll likely see more ways to help participants. But in the meantime, it starts with listening to what they want, and evolving our programs to respond to those needs.

Wavelength Financial Content Inc. provides innovative white label financial wellness programs and other digital content for financial advisors.