Financial wellness programs should have measurable, tangible impact: study
While many employees say they’re open to using employer-provided financial wellness assistance, some are hesitant, citing lack of trust and a need for employers to be transparent, according to a new study by the U.S.-based Defined Contribution Institutional Investment Association.
The DCIIA’s Retirement Research Center, which conducted focus groups that explored low- and moderate-income workers’ views on financial wellness, found most people interested in financial wellness guidance suggested employers offer sessions during a variety of times and days to accommodate diverse schedules. Specific requests included: educational classes on a variety of topics; workshops to help implement a budget or plan with ongoing help; and independent financial advisors to help holistically review and assist employees.
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While most participants agreed that adjusting their financial behaviour can influence their future financial wellness, few have taken action, with some noting anxiety about the unexpected and their lack of control of the future. As well, most participants indicated they want to improve their financial situation, but they need to first clear a few hurdles.
Among these hurdles, study participants cited a lack of financial means, with the majority saying they lack adequate income and resources to prepare for unexpected costs or emergencies. They also worry about inflation and the rising costs of everyday goods. Another hurdle is a lack of knowledge, with the majority of participants saying they don’t know where to begin. Study participants also indicated they’re overwhelmed by stress and anxiety, with nearly all participants reporting feeling overwhelmed, with a decreased capacity to plan.
Most workers were interested in receiving help with their financial wellness, although they noted they have time and capacity constraints. However, for those wanting to learn how to make changes, they prioritized the following financial wellness topic areas: budgeting, both initial and ongoing check-ins; emergency savings planning; general financial help to understand things like retirement savings and investments. Women were generally more pragmatic and focused on planning, while men sought short-term solutions and investment opportunities.
Read: 80% of U.S. employers set to have financial wellness program by 2023: survey
Among the key takeaways of the study, it noted many employees are struggling, so employers need to help them improve their present financial situation before they can look towards the future. It also suggested that employers meet people where they are now and not assume all employees are the same, noting engagement is critical and practitioners should ensure their messages align with reality.
In terms of how employers can effectively help employees improve their financial wellness, the study recommended they offer programs with a measurable and tangible impact. “For example, curricula related to budgeting or emergency savings can tangibly and quickly help them gain financial control and potentially confidence.”
In addition, it said employers have a unique opportunity to help employees, particularly low- and medium-income workers who have diverse needs and can greatly benefit from assistance. “To make a financial wellness program attractive to workers and gain their trust, employers must communicate clear objectives and authentic intentions.”
Read: Employers building relevant financial wellness programs for both DB, DC pension members
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