Companies begin offering ‘financial wellness’ programs

Kern Business Journal
March 2015

Employers have long recognized the benefits of maintaining and recruiting a healthy, productive workforce through “wellness programs,” which provide physical and mental support. But as workers’ concerns mount over their lack of savings to meet every day needs and to prepare for retirement, many companies are launching “financial wellness programs,” as well.

Towers Watson, a global job placement company, recently surveyed its business clients. Researchers reported that three in four large- and mid-sized employers said insufficient personal savings is a top concern for their workforce. A survey presented by the Society for Human Resources Management revealed money issues are having a negative impact on productivity, and contributed to such problems as absenteeism, stress and the inability to focus.

Consider my financial planning client, a supervisor at a local Bakersfield business, who recently came into my office complaining about a subordinate he overheard wasting an entire afternoon at work trying to convince his bank that he had not exceeded his credit card’s limit.

The 50-something subordinate and his wife are the parents of two college bound teenagers. The couple has not saved for either their children’s educations, or their retirements. They are such impulse spenders that they have trouble paying their day-to-day bills. To say they are stressing is putting it mildly. The subordinate is so distracted that my client fears he may soon have to discipline the worker. The productivity of my client’s entire work unit is suffering.

A priority benefit realized by a company that establishes a financial wellness program is that its bottom line is likely to improve. An employee who is not consumed by money problems will be able to focus on company goals and be more productive.

But there are other associated benefits:

  • Participation is likely to increase in company retirement plans, such as 401k plans. Plan administrators estimate that 15 percent of 401k participants are “active.” They have their own financial planners and they take a “hands on” approach to how their money is invested. About 85 percent are uninformed, lack advisors and only half-heartedly participate. If more workers understood their company’s retirement plans and how to direct their money, it is reasonable to assume more would participate with greater amounts invested.
  • Offering a “financial wellness program” is clearly an enhanced benefit that can help in the recruitment of new employees and retention of others.

The most ideal financial wellness program would be to offer workers unlimited one-on-one counseling sessions with qualified financial planners. But a company many not be able to afford this type of program for all of its workers.

There are many other options for setting up financial wellness programs. The administrator of a company’s 401k program, for example, may provide free, or at- a-cost occasional personal or group counseling and educational sessions. A local financial planner also may have a program that would fit into the workforce.

However it is structured, the financial wellness program should educate workers on managing investments in the company’s retirement plan, as well as beyond the plan. The emphasis should be on the whole financial picture. Educate workers on such financial concerns as budgeting, debt, estate planning and taxes.

I have found with the retirement planning classes I teach at Bakersfield College’s Levan Institute for Lifelong Learning that it is most productive to involve a worker’s spouse in the educational process. Create a financial wellness program around the entire family, when a family will be impacted.