Offering a financial wellness program is a great way for advisors to provide more value to their clients, not to mention stand out from their peers.
According to the February 2020 MassMutual Financial Wellness Trends Study, employer-sponsored financial wellness programs are gaining substantial traction in the United States. Currently, 42 percent of employers offer one or more
, 19 percent have begun implementation of a new program, and another 19 percent plan to introduce such a program to employees within three years.
However, it’s important that advisors consider the specific needs of their clients when selecting a financial wellness program. For example, large plan sponsors may prioritize program features that aren’t as important to smaller organizations.
The following five features are typically the most important for larger employers considering a financial wellness program:
No 1. Customization
Employers that plan to offer financial wellness programs often have specific visions and objectives for their financial wellness initiative that may relate to:
- Employee demographics: For example, age, sex, race, income and education level
- Employee distribution: For example, the percent of executives, mid-level management and entry-level employees
- Company vision or mission statement
- Retirement-benefit participation goals
- Employee-retention goals
The only way a financial wellness program can meet the individualized needs of all employees is to offer a high level of configurability to reach employees in all demographics and at all levels within the company.
A highly customizable program will appeal to a much higher percentage of your plan sponsor clients.
No 2. Integration
A major goal when offering financial wellness is for employees to have the ability to take control of their financial well-being. This is done by helping employees make better financial decisions and take specific actions to improve their financial understanding and situation.
A study by Charles Schwab shows that 60 percent of employers say the best way to have this happen is to integrate financial wellness with existing benefits.
Unfortunately, this is not the norm. The study found that 46 percent of employers just communicate that the option is available, 30 percent endorse participation, and only 24 percent have full integration.
Full integration includes such things as:
- Single sign-on: Employees can access all their benefits with one login
- Cross-boundary content: Financial issues do not exist in a vacuum. Large companies want financial wellness content that addresses such things as stress, mental health, and physical wellness.
- Cross-tracking data: Technical integration of programs to allow comparison of data to find trends, such as the reduction of stress leads to better health indicators.
- Incentives integration: Larger organizations often have an employee incentives program, and want new benefits easily integrated into this. API’s or integrated reporting are typically preferred to make this easy.
- Custom calls-to-action: When employees are on the financial wellness platform, they should be able to navigate directly to the plan sponsor’s other related service providers. Custom calls-to-action can facilitate this, directing users to their 401(k), health plan options, and EAP services.
Integration allows organizations to tie actions to education. Integration capabilities are not only important to plan sponsors, but also to advisors seeking to fuse the program’s value proposition with their own.
No 3. Demonstrable effectiveness
Offering benefits with a negative return on investment makes no sense, nor does offering a benefit in which it is impossible to determine the return.
Companies offering financial wellness programs want to know that the program is working and meeting the set goals. Specifically, they want programs that result in:
- Positive behavior change, i.e., more employees having an adequate emergency savings fund or fewer employees taking out payday loans
- High engagement rates
- High satisfaction rates
Several financial wellness programs have published data regarding the positive behavior changes resulting from their solution. Advisors should look for a program with behavior change data that aligns with their goals as well as the goals of their clients.
No 4. A holistic approach
Financial wellness programs that take a holistic approach address all aspects of an employee’s life.
Unlike employee financial benefits of the past that focused completely on retirement planning and the use of the company’s 401(k) program, financial wellness programs today address the financial needs and concerns of employees so they have the information and skills needed to create a healthy relationship with money.
In addition to retirement planning, financial wellness programs also can offer training and support for such things as:
- Personal budgeting
- Building credit
- Reducing debt, including student loan repayment
- Emergency and long-term savings strategies
- Spending attitudes and behaviors
- Financial goal setting
- Understanding financial implications of their health plan choice
- Handling a financial crisis
Holistic financial wellness that offers a wide variety of content, tools, and courses gives employees the information and skills they need to create new behavior patterns that will impact all aspects of their lives. A holistic and comprehensive program will be more appealing to a wider range of plan sponsors.
No 5. Established track record
Large companies want to see that the service provider is a profitable company with no financial concerns. These plan sponsors are investing significant resources in this initiative, so they want to make sure that the company will survive through economic downturns.
These plan sponsors also want to see a successful track record of working with other companies of similar size and type, as well as a history of long-standing client relationships. Advisors should always check a financial wellness company’s references when considering such a partnership.
Advisors should understand the needs of plan sponsors they work with prior to investigating financial wellness solutions. A survey is a great starting point.
Kris Alban is executive vice president of iGrad, a San Diego-based financial technology company that provides artificial intelligence-powered financial wellness solutions to employers, financial institutions, colleges, and universities. Its Enrich Financial Wellness platform is used by more than 20,000 employers and more than 300 financial institutions.
Kris Alban is Executive Vice President of Enrich Financial Wellness.
