Both Ends of Financial Wellness Spectrum Benefit from Coaching

According to Financial Finesse’s “Workplace Financial Wellness in America” report released Wednesday, workers either with numerous financial struggles or those with positive financial situations reported the greatest improvements from working with a financial coach.

In the category of those struggling, Financial Finesse found that 5.2% of respondents said they were in “crisis,” which was reflected by a financial wellness score below three. The 2023 figure is a one-percentage point increase from the year before, which was at 4.2%. Among those in financial crisis who initially failed to achieve stated milestones, 36% are now able to meet basic needs, 28% know their credit score, 21% have set beneficiaries for retirement accounts, and 18% now have health insurance coverage in place. 

“Optimizers,” or those who had a financial wellness scored eight or above, made up just 4.1% of respondents in 2023, up from 2.4% in 2022. In this group, 25% now have disability coverage in place, 23% have conducted an investment fee analysis, 22% have made sure investments are allocated appropriately, and 21% have put a healthcare directive in place.

Financial coaching, as it turned out, was beneficial for both optimization and people with financial difficulties:

• After working with a financial coach, over half of employees (52%) who previously reported high or overwhelming levels of financial stress now report little or no financial stress.
• The number of people with a financial score higher than five, those in the planning or optimizing stages, increased by 53% in 2023 after engaging with a financial coach.

Financial Finesse stated that this implies that rather than having to work on meeting their immediate financial demands, these employees may now concentrate on their long-term financial goals.

Financial Finesse’s “Think Tank Research: Best Practices,” also released on Wednesday, suggested combating workers financial stress by taking advantage of “decision moments,” in which employers can highlight access to financial coaching when employees are thinking about their finances.

“This includes open enrollment, when annual bonuses are paid, during stock purchase periods, when retirement plan loans or withdrawals are requested, or when facing a major life event (e.g., marriage, having a baby),” the research stated.

Overall, when compared to 2022, the first financial wellness score for individuals who were new to their employer’s financial wellness program decreased only slightly in 2023. Less than half of American workers would be regarded as financially resilient, even though the majority live at or below their means. Only roughly one-third of people feel they are on track for retirement due to the difficulty of saving for emergencies due to rising costs of living.

The “Workplace Financial Wellness in America” survey is based on the analysis of 52,553 employees who interacted with Aimee, Financial Finesse’s AI-enabled virtual financial coach, between January 1, 2022 and December 31, 2023. The Financial Wellness score is measured by a series of questions from Aimee, which assigns a score of one to 10, with one indicating no financial wellness and 10 indicating optimal financial wellness. “Think Tank Research: Best Practices” draws from the findings of “Workplace Financial Wellness in America.”

Correction: Updates timing of participant results.