Yesterday’s Leadership Daily Advisor discussed a new view on making employer-sponsored financial wellness initiatives more impactful—the idea that financial courage may have a lot more to do with employees’ motivation than financial literacy. Today we offer four points to consider to help incorporate some courage-building and meaningful return-on-investment metrics within your financial wellbeing programs.
The Conduit to Financial Courage
Take a wide but curated view. While you want to offer choice, change is most likely to happen with smaller steps, suggests 2017 Inside Employees’ Minds: Financial Wellness, a new survey by global consulting firm Mercer. After all, making small financial decisions can help build courage gradually. What to avoid? The more traditional approach of trying to build financial literacy by overloading employees with as much information as possible. Effective approaches might include personalized, curated communication that points employees to the programs that best fit their situation. Employers can also leverage defaults, not just to get employees on a positive path but also to work on building courage. And tools like budgeting and coaching, as well as benefits like student loan refinancing, credit management, nonretirement savings vehicles, and income protection can help staff manage finances more holistically.
Deliver your offerings in a trusted way. Employers tell the U.S. Consumer Financial Protection Bureau (CFPB) that employees highly value effective financial wellness programs delivered in the context of a trusting work environment. Employers who accepted where their employees were financially and responded with programs to meet pressing employee needs in a trusting, nonjudgmental, and unbiased manner reported increased employee engagement, fewer days lost to absenteeism, and lower administrative costs associated with 401(k) loans and wage garnishments.
Consider the bevy of new assessment tools. Matching the popularity of the financial wellness benefits trend are a growing number of questionnaires, indexes and benchmarking scores—all of which are aimed at assessing employees’ current financial wellness. Among them are CFPB’s Financial Well-Being Scale; the Personal Finance Employee Education Fund’s Employee Survey and Personal Financial Wellness Scale; and Mercer’s Financial Wellness Index, and Mercer’s Financial Courage Index. Your company’s benefits consultant may have a preferred method or product.
Use some creativity to gain participation. Lack of time, knowledge or plain denial—indeed, all these things can prevent employees from improving their financial literacy. Making the issue more real for them might help. For example, in one study where college-aged students were shown digitized images of their potential future selves in older age, they allocated twice as much to retirement compared to students who were shown contemporary photos.