Wellness programs are nothing new, with nearly 60% of American employers implementing the programs since 2008. But employers are
always looking to get more for their employees, and when it comes to these programs, this means adding a new angle: financial wellness.
Employers are starting to realize that it is not just physical health that impacts their employees but also everything around them — and employees have a lot to worry about financially. PwC’s 2013 Employee Financial Wellness Study found that half of employees surveyed worried about not having enough emergency savings for unexpected expenses, and 45% worried about not being able to retire when they want to do so.
Bank of America/Merrill Lynch’s 2013 Workplace Benefits Report also found that employees are “not financially well.” In the study analyzing 10 financial considerations, 65% of respondents scored a 0-4, the lowest score. Further, 90% of those surveyed reported feeling some degree of stress about their financial wellness — even when participating in employer-sponsored retirement and health care plans. And it is not only long-term problems that are draining employees. In the PwC survey, 38% of respondents said they find it difficult to meet their household expenses on time each month, while 48% carry balances on their credit cards.
Just like physical health, financial wellbeing affects all aspects of one’s life. “When you don’t have control over [your financial wellness], it can cause issues in your family life, work life and your physical health,” says Dave Ramsey, a radio host and financial author. “When you have control over your money, problems seem to be less frequent because you have the money to handle emergencies that will inevitably happen.”
How we got here
Focus on financial wellness began in earnest during the recent recession when people worried about not meeting their mortgages, not receiving merit increases or bonus pay, all while their 401(k) matches were suspended, says Lenny Sanicola, senior practice leader, professional development, at WorldatWork in Scottsdale, Ariz. A number of organizations started providing financial wellness services between 2008 to 2010 and employers began to realize it’s a low-cost benefit. “During a time of a lot of cost reductions, this was a way to help people stay afloat in a low-cost way,” Sanicola says. “It’s an employer-employee win-win.”
In 2008, the amount of money people were saving versus putting away hit an all-time low since the Great Depression, which caused a ripple effect on their overall financial situation, adds Bob Harris, assistant vice president of professional development at Overland Park, Kan.-based financial planning firm Waddell & Reed. People started to spend more than they were making, accumulating debt and became stressed. “Foreclosures and bankruptcy. That’s what not being prepared financially and having a good handle on your finances can result in,” Harris says. “[2008] was a major shakeup and in many cases it does not have to be that big. It can be a spouse lost their job or a car broke down. What we saw ... was a wake up for consumers, and really everyone, in this country.”
Historically, companies have taken a physical approach to healthy, focusing on diet/exercise as opposed to a holistic approach to wellbeing. Research shows that financial stress takes its toll physically, so it’s not just enough to say, “Eat well and get exercise,” Sanicola explains.
Further, when employees are financially sound, they make better use of other benefits. In the Bank of America/Merrill Lynch report, 61% of financially well participants reported being very satisfied with benefits, compared to 27% of not financially well participants. “It is all about finding that balance of living responsibly today and planning wisely for the future,” Harris says. “[Employers] provide overall compensation through benefits and if an employee does not utilize or understand it, you are not getting the best return on investment for an employer.”
Major stress
Financial worries are the No. 1 cause of stress and responsible for 65% to 75% of doctors’ visits, according to Liz Davidson, CEO of El Segundo, Calif.-based Financial Finesse, a financial education provider. What happens scientifically, she says, is that humans are wired for flight-or-fight when put in a stressful situation. In a car accident, that’s a good thing, but “when you struggle constantly every day and worry will you be evicted, or have to file for bankruptcy,” it becomes a bad thing.
The workforce that is under financial stress is driving up health care expenses and causing issues. “When they are not happy, the drag is not only on their morale, but [also on]those that work with them,” Davidson says. “This issue is causing more and more companies to say, ‘We need to add some sort of financial wellness.’”
It’s beyond physical health, adds Ben R. Leedle, Jr., president and CEO of Franklin, Tenn.-based Healthways, because in the workplace everything factors in, including how employees identify their life around a purpose. “People with higher financial stress,” he says, “are [experiencing] a form of stress that can affect a whole lot of factors in your life.”
‘A process, not an event’
There are many ways employees can become financially sound. Every company tries a unique approach, but there are a few key takeaways for the process. Just like traditional wellness tactics — such as biometric screenings — the programs are tailored to each individual and outcomes are monitored. “We think it is as fundamental as supporting someone who has a Biopharma prescription and needs support to adhere to the medication. Or someone who wants to be a healthier weight and develop those habits,” Leedle says. “There are behavioral habits around a financial situation that can afford [employees] relief from their financial situation.”
Some people need more help than others, so the employer can take a number of steps, including telephone coaching. “The same type of coaching conversation that you think of classically with wellness,” Leedle says. “At certain a point, people are in short-term crisis. They are in a gradual crisis where overall health does not get done.”
Financial Finesse’s Davidson explains becoming financially sound is not an overnight or one-time event. Historically, the programs would be taught as lunch-and-learns, but she’s found those don’t work — just like telling employees to go to the gym for one hour, there won’t necessarily be a direct health outcome. Every employee is very different and programs need to reflect that and reinforce it, she says.
Instead, her company’s model is based on behavioral finance and getting people “addicted to positive habits as opposed to the addiction most of us have in consumption.” This involves doing items in small steps that cause the brain’s reward center to activate — the same part that regulates addiction — and developing routines, such as sitting weekly with a spouse to go through a budget. “You get into a routine and it becomes a lifestyle,” Davidson says.
Coming full circle
Leedle’s Healthways recently partnered with renowned financial coach Ramsey and before launching a nationwide program tested it on 80 of Healthways’ employees, representing close to $200,000 in debt. Leedle says the results were surprising as employees put themselves in control and their on-job performance increased. They were also able to tackle traditional wellness programs’ goals right away.
“They told us, ‘I’ve been trying to quit smoking for years and it was my stress management for financial issues. Once my financial issues got settled, it afforded me to quit smoking,’” Leedle recalls.
“This begins to push at the edges of traditional wellness being about ‘eat better and be active.’ Both of these things are really important, but [we can] go even deeper,” he says. “What is causing the barriers for people to behave in healthy ways?”
“We hear from people all the time that tell us when they got their finances in order, they lost weight, quit a bad habit or started a healthier routine,” Ramsey says. “There is definitely a link between your financial health and your physical health.”
Aaron Benway, CFO of Washington, D.C.-based HelloWallet agrees. His data found that financially secure employees are better consumers of benefits. “There is a correlation between your 401(k) match and your credit card statements, your participation in flexible spending accounts,” he says. “… It’s no surprise that smokers tend to have credit card debt.”
Employee reaction can be mixed, says WorldatWork’s Sanicola, since it’s highly personal. But that’s where communication comes in. “You have to be clear about why you are offering the program, the benefits,” he says. “You are not looking to get into people’s personal situations but to give them resources to help them get their act together. … You have to share that the info they provide is confidential and vendors are not there to sell you something.”
