Financial Wellness Needs Diverse Among Employee Groups

Research from Fidelity Investments reveals how retirement plan participants define financial wellness and what they need to feel financial stability.

Based on a focus group of 65 participants in Fidelity administered plans and a survey of 483 retirement plan participants, Fidelity found one-third had not heard the term “financial wellness” before participating in the research. Only 12% have heard of financial wellness at their workplace, while most heard of it through the media or elsewhere.

Asked for definitions of “financial wellness,” key themes emerged from participants’ responses, including “being not stressed out about money issues,” “having savings/emergency funds,” and “saving for the future.”

While “not being stressed” and “being on track for retirement” were key conditions of being financially well, being free of debt, having enough income to cover expenses and having an emergency fund all were secondary.

Brian Murphy, SVP of employee insights for Fidelity in Boston, tells PLANADVISER the biggest takeaway from the survey is the combination of the diversity of needs among participants with the consistency of emotions.

Financial wellness needs can be age-based, income-based, or based a number of other factors, so any financial wellness solution needs to address the broad spectrum of needs, he says. Murphy gave a few examples:

• A worker living paycheck to paycheck wants to be able to pay bills and have a little left over to save or enjoy; having a budget and emergency savings is important;
• Millennials may also be living paycheck to paycheck, balancing a desire to live in the moment with the need to look forward to expenses such as buying a home; they need to learn how to balance living today with saving for the future; and
• Some employees make good basic financial decisions, but they have trouble with trade-offs between paying down debt, saving for children’s college and saving for the future.

The key emotion for all is feeling a lack of control over near-term decisions, a lack of confidence and a lack of stability. Fidelity says this is true across all demographics and income levels.

The overwhelming majority (83%) of participants in the study agree that being financially well helps them feel physically well.

Murphy explains that emotions employees feel about finances turn into stress, and if they are not brought under control, this leads to distress, “which really becomes a problem.” The study revealed that employees do not leave stress at door when they come to work; it remains a distraction on the job and impacts productivity. Some employees have to use work time to handle financial issues and some even miss days of work to deal with them. “In addition, financial distress can lead to physical issues as well, that turns into another impact for both individuals and employers, so managing emotions becomes critical,” he says.

“So financial wellness is about providing content, tools and support to help employees make better near-term decisions. This will help their emotional state,” Murphy adds. “Managing behavior and emotions are equally important.”

According to the study results, most participants are aware of financial wellness programs or resources offered at their workplace; however, in most cases, being aware of the programs doesn’t necessarily lead to usage.   

“Engagement is one of toughest challenges across all benefits,” Murphy notes. “We’re seeing employers putting more emphasis on financial wellness and working with providers to help drive engagement.”

Murphy offer four areas of best practices to drive engagement in financial wellness programs:

• Personalization – Given the breadth of employees, the financial wellness solution has to include a broad range of needs, but participants will only engage if they feel it is personalized to them. Murphy suggests using provider data to make financial wellness programs relevant to each need.
• Be at right place at right time – Employees go to different places for information. Financial wellness topics and solutions should be found on websites and blogs, for example, so employers do not miss an opportunity to engage employees. In addition, Murphy says, employees are more receptive to financial education at key life moments, for example, after having a baby or getting divorced. These are good times to engage employees.
• Simple and engaging content – most employees aren’t financial knowledge seekers, so employers need to present content in a way that is simple, interactive and personalized or employees won’t engage.
• Employer advocacy – if the employer is really behind the program, employees know the employer cares and thinks financial wellness is important for them, so engagement increases.

Fidelity anticipates a full release of study results next month.