The Emergence of Employee Financial Wellness Programs

Over the past few years, financial institutions have significantly increased their investment in initiatives to grow consumer and small business financial literacy.  An even more recent development has been the emergence of workplace-based financial wellness programs: a 2018 survey by Strategic Benefit Services found that 59% of employers offer financial wellness programs or planned to do so.  And recent research by Alright Solutions found that 64% of employers say their organization’s financial wellness program is more important now than it was two years ago.

This rise of workplace financial wellness programs has been driven by several factors, including:

  • The overall growth of investment in financial education programs by the financial services sector in response to concerns about gaps in financial literacy levels, and the proven positive impact that financial education programs have in driving smarter financial behavior by consumers and small businesses.
  • Employer desire for additional benefits and services to attract and retain staff. 
  • Employee need for financial education: PwC’s 2018 Employee Financial Wellness Survey found that 41% of employees say their employer’s financial wellness plan has helped them get their spending under control.
  • Recognition of the value and critical role the workplace channel can play in teaching financial concepts, as well as in providing advice and potential solutions. 

Financial firms providing workplace financial wellness programs include banks, investment firms, and employee benefits providers.  Many of the leading firms in these sectors have launched new or enhanced existing financial wellness programs over the past year:

  • Principal launched Principal Milestones, which provides personalized information based on an online assessment.
  • MassMutual introduced MapMyFinances, a financial and benefits planning tool that features a financial wellness score.
  • Morgan Stanley Wealth Management launched an enhanced Financial Wellness Program for employees of mid-to-large sized corporations, which features a digital portal, a catalog of financial wellness materials, financial assessment as well as the option to collaborate with a Financial Advisor or through Morgan Stanley’s online investing program.
  • Prudential introduced a range of new financial wellness capabilities, including expanded digital and on-demand solutions, as well as needs-based and life-event solutions.

Unfortunately, financial wellness programs do not tend to be immediately embraced by employees.  This can be attributed to a number of factors, including a lack of interest among employees, perceived complexity of the programs, and the lack of resources to manage the program. To overcome these challenges, employers must clearly communicate to employees how they will benefit from engaging with the financial wellness program.  To that end, financial institutions need to support employers in marketing the program to employees. It’s also important to gather feedback from employers in order to enhance features and improve the user experience.

The growth in workplace financial wellness programs shows no sign of abating, and we expect financial institutions to further improve and differentiate their programs through new features and options (such as enhancing access to the program via digital channels), as well as continue to develop financial wellness-related content.

Key Considerations for Effective Financial Education Programs

Banks and other financial providers have recently increased their focus on developing financial education programs, driven by a number of factors:

Numerous studies have highlighted deficiencies in financial literacy among U.S. consumers.  FINRA Foundation’s National Financial Capability Study found that only 37% of people were considered to have high financial literacy in 2015, down from 42% in 2009 and 39% in 2012.  Studies also show that consumer exposure to and engagement with financial education programs leads to smarter financial decision making.  Therefore, the onus is on a range of entities (government, educational institutions, nonprofit organizations, industry associations, and of course financial firms) to develop programs to improve financial literacy.

Many financial firms are looking to (re)position themselves as trusted providers of not just products and services, but also of information and advice that can help people better manage their finances.  To that end, financial education programs can act as a means to help banks cement relationships with their clients.

The following are some key considerations for financial firms in establishing a new financial education program—or in enhancing an existing one:

  • Conduct research to gain insights into consumers’ financial literacy levels, attitudes to financial services, preferred channels for consuming financial information, and favored sources of financial information and advice.
  • Create a dedicated and branded financial literacy program that brings together the diverse range of financial education initiatives under one umbrella.  These programs can take the form of an online portal, such as the TD Bank Learning Center, John Hancock Retirement Plan Services’ My Learning Center and MassMutual’s FutureSmart program.
  • Conduct financial education surveys.  Surveys are an effective way to raise consumer awareness and interest, highlight commitment to raising financial literacy, and gain insights that inform financial education program development and execution.  U.S. Bank recently published two financial education surveys: the Parent Financial Education Survey (July 2016, focused on the parents of college students aged 18-14) and the Student and Personal Financial Survey (September 2016).  Last month, Bank of America published the Bank of America/USA Today Better Money Habits report, which was versioned for 7 of its markets.
  • Ensure that financial education content reflects the different ways that consumers process information.  Keep content short, with easy-to-follow tips and soundbytes.  Incorporate images, infographics or video to enhance its visual appeal.
  • Distribute content through a range of channels.  These channels can include online portals (as described above), events, in-person and online courses, and social media platforms. (PNC announced in August that it would be using Pinterest to promote its financial and early childhood education initiative.)  In addition, a number of banks (e.g., First Tennessee, First National Bank and SunTrust) have partnered with Operation Hope to open HOPE Inside offices in its branches.  SunTrust recently announced an ambitious plan to expand the Operation HOPE Inside program from 7 branches today to 200 by 2020.  The number of individuals receiving financial counseling through these offices is expected to rise from 6,000 to 150,000.
  • Partner with schools and nonprofit organizations that promote financial literacy in communities.  This partnership can take the form of joint programs, funding or employee volunteer hours. Fifth Third recently introduced an initiative to deliver its Empower U financial literacy course through 60 local nonprofit organizations throughout its footprint.  And Allianz Life recently awarded $275,000 in financial literacy grants to 14 nonprofit organizations in the Twin Cities.

Well-constructed, well-delivered financial education programs improve financial literacy.  This in turn leads to smarter financial decision making, benefitting both consumers and their financial providers.