What is a Financial Wellness Program?

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Financial Wellness 101

Financial wellness programs are still a relatively new part of employee benefits packages. In fact, they are so novel that most employees have never heard of them. These programs are such recent optional additions to many employee benefits packages that even CEOs and executive directors are not sure what they entail. And who can tell the difference between financial literacy, financial capability, and financial wellness programs? If such ridiculous questions keep you up at night, well, besides considering professional counseling, you have come to the right place.

Is Financial Literacy the same as Financial Wellness?

No. First of all, Financial Literacy is a term use to describe financial education programs that promote the understanding of how money works, including how to budget, how to build credit and savings, and how to reduce debt. As with general literacy, it is assumed that once an individual has the ability, he or she will use it properly. I have been heavily involved in the financial literacy movement since 2004 and believe that it has made some great strides against financial illiteracy. Many financial literacy programs have incorporated counseling and coaching aspects to expand their impact.

Is Financial Capability the same as Financial Wellness?

No. Financial Capability programs convert the concept of understanding money to the ability to use it properly. Financial Capability programs emphasize the application of understanding. I am all for Financial Capability programs, since I know they are sorely needed across all socio-economic levels around our country.

So then, What Is a Financial Wellness Program?

A Financial Wellness Program is typically an addition to standard employee benefits and go beyond retirement planning and investing information. A well-rounded Financial Wellness Program will promote the accurate understanding and proper application of using money to maximize the likelihood that the employee (or association member) will develop a healthy relationship with his or her money and establish stable, fulfilling and satisfying personal finance scenarios at home and work, now and in the future.

What do Financial Wellness Programs Offer?

Unlike the retirement-centric financial benefits programs of the 1990s and 2000s, current Financial Wellness Programs offer information, training, and support for the employee’s day-to-day personal finance concerns. Additionally, a strong Financial Wellness Program should include online, telephone and, where possible, live counseling, coaching and/or workshops on the following aspects of financial wellness:

  • Personal and household budgeting
  • Consumer credit building
  • Consumer debt reduction
  • Student loan repayment management
  • Emergency and short-term savings
  • Spending behaviors and consumer attitudes
  • Financial goal setting
  • Financial crisis management (dealing with collections, extended unemployment and even certificates required for filing bankruptcy)

Such programs do not replace the financial education programs of the past that concentrate on investments and preparation for retirement. While it will be wonderful someday to see financial wellness programs include these services as well, it is important to know that day-to-day money management addressed by the new generation of Financial Wellness Programs requires a very different skill set (and certification) from that possessed by financial advisors, planners and CPAs.

What Are the Benefits of a Financial Wellness Program?

Any good Financial Wellness Program needs to focus on the employee. Benefits that minimize employee financial challenges and maximize financial opportunities help reduce employee stress. Additionally, the employee’s job satisfaction goes up for two reasons: first, he or she can concentrate better on the task at hand rather than the problem at the bank and, second, he or she appreciates the employer for providing a service that is hard to find and trust elsewhere.

The Federal Reserve Banks of Kansas City and Atlanta[1] identified additional benefits to the employee, including increased asset building (home ownership and retirement account growth), reduction in debt, and a greater ability to retire early or even just on time (versus the trend toward working beyond 65 and 66 years of age).

Consequently, the employer benefits through a reduction in employee absenteeism, moderated employee turnover rates, decreased costs related to employee paycheck garnishments, increased employee productivity, higher employee 401(k) program contributions, and even a reduced incidence of theft by employees.

Which Financial Wellness Program Is Best?

This is a trick question. You may as well ask, why do some people love Fords, others Chevys, others Toyotas and so forth? Each Financial Wellness Program has unique offerings, sometimes due to the services provided and sometimes due just to the staff and its service model. A few organizations offer just “one time” counseling while others offer ongoing support to employees. Some charge a large fee while others charge no fees.

Similarly, every organization varies in its Financial Wellness Program needs. Some businesses will benefit from a full range of financial wellness services while a few businesses will only need a few. Bigger does not always mean better, although most employers appreciate a range of options.

Where Can I Find a Good Financial Wellness Program?

Of course, we are going to recommend our own Money Fit service for employers, associations, churches, membership organizations and other groups. However, if you want to start with your benefits broker, ask them specifically for a Financial Wellness Program that includes the services mentioned above. If they do not currently have relationships with such programs (and many brokers still do not), ask them to reach out to us or to other such providers. In the fast-growing environment of Financial Wellness Programs, you will likely want an organization that has been around for decades and that has hundreds of thousands of satisfied former clients. After all, experience matters.

Now that's some advice that everyone has heard of.

[1] Federal Reserve Bank of Kansas City and Federal Reserve Bank of Atlanta. The Case for Financial Education at the Workplace.