By: Marthin De Beer
CEO & Founder of BrightPlan and a former executive at Cisco, is a longtime Silicon Valley innovator and business leader.
More U.S. employers are offering financial wellness programs, yet the increasing popularity of this employee benefit has raised an important question: What exactly is “financial wellness”? If you asked 10 people this question, you’d likely get 10 different answers ranging from employee financial education, retirement planning, 401(k) advice, budgeting, debt management, estate planning and emergency savings. All these are valid responses, yet they describe only part of what true financial wellness should be: holistic personal financial and wealth management.
Total Financial Wellness
This broadened definition of financial wellness requires a new approach to meet the needs of employees. This more comprehensive approach is what I call Total Financial Wellness, and it is a significant departure from the previous notions of financial wellness. Unlike piecemeal offerings of financial information and calculators that defined the first generation of financial wellness, Total Financial Wellness is being embraced by a growing number of employers across the U.S. today. It is the future of financial wellness.
A Universal Need
From a strategic perspective, this holistic approach is driven by the new understanding that financial wellness is a universal need, much like education and healthcare.
Total Financial Wellness should ultimately lead employees to financial success on their own terms at every stage of life—no matter what the financial challenges or goals. A financial wellness program using this approach must educate employees and give them the opportunity to take control of their future.
It also must be accessible to employees across an organization, not just senior executives or a subset of employees. The program must be highly personalized and agile enough to meet the evolving needs of employees. It should enable your team members to automate investing, which is a proven and powerful way to build wealth. Perhaps most importantly, any solutions used to facilitate the program should act in a fiduciary capacity and ensure that financial guidance is delivered in the best interest of your employees.
Solutions that support Total Financial Wellness have the potential to anchor an organization’s employee benefits program and drive deeper employee engagement.
A New Day
Employers are responding to the need for a Total Financial Wellness approach. Progressive enterprises and HR teams realize that financial wellness is key to employee well-being, as well as their talent acquisition, retention and engagement strategy.
Studies over the past few years have consistently shown that financial issues are the top concern of employees. PwC’s 2020 annual financial wellness survey found that 54% of employees said financial matters are the No. 1 cause of stress in the workplace. That’s three times higher than the No. 2 stressor, which is an employee’s job.
Financial worries also negatively impact employees’ personal relationships and health. This translates into reduced productivity or days missed at work. A separate PwC report from 2019 found that 47% of employees who report feeling stressed over their finances miss work or are less engaged on the job due to financial stress.
For employers, financial wellness has emerged as a competitive advantage in attracting, retaining and engaging employees. At least three in four Millennial and Gen-X employees say they might consider a position at another company that emphasizes employee financial wellness. That’s consistent with the finding that 71% of employees use their company’s financial wellness program.
The difficulty today for employers is working through the thicket of marketplace claims about the best approach to financial wellness. For those charged with making the decision, the challenges include the following:
• Fragmented solutions: Lack of trusted and integrated digital and human advisor solutions that give employees an optimal path to success.
• Incomplete financial wellness program: Inability to deliver a holistic financial wellness solution that addresses all the financial needs of employees.
• Underutilization of benefits: Lack of employee understanding and utilization of company programs.
• Disjointed experience: Inconsistent employee experience with minimal service.
The Four Key Pillars
The solution to these challenges is for employers to take a comprehensive approach and build their financial wellness program on four key pillars: learn, plan, invest and manage.
Learn facilitates employee education and knowledge through informational content. Once employees have a better understanding of their finances, plan creation assists in building a personalized financial roadmap. The capability to automatically invest builds wealth over time and methodically advances the financial well-being of employees. Manage allows employees to oversee their entire net worth by tracking their spending, savings and investing toward their various goals.
These four pillars are essential to employee success, but they are not enough. Total Financial Wellness success is assisted by providing employees access to digital tools and a team of experienced financial advisors to support these four pillars.
A Total Financial Wellness approach can accelerate the financial well-being of your employees, no matter what their specific financial challenge. For employers, this kind of holistic approach supports key business objectives—attracting and retaining talent, strengthening employee loyalty and increasing productivity.