Photo by Xan Griffin on Unsplash
Most of today’s financial wellness programs are not doing enough for employees. So despite the best of intentions among employers, their employees’ financial health isn’t really improving.
The question then is, what constitutes an effective financial wellness benefit program? What makes for a great one?
We had deep discussions with more than 100 middle-income employees in various functions like manufacturing, retail, warehousing, etc. From these discussions, we discovered that there are 3 elements to a great financial wellness program.
A. Balancing long-term and short-term financial health
Historically, most financial wellness benefit programs have focused on the long term. Retirement planning and contribution has been the centerpiece of all financial benefits from employers for decades.
No doubt, a focus on long term financial health is absolutely critical.
But that’s not enough.
Many employees are actively struggling today. Many more are living paycheck to paycheck. Very few have anything significant saved for an emergency. Most don’t have good financial practices of saving or investing.
The more pressing need is to help them improve their finances in the short term.
Products such as emergency savings funds, spend management tools to bring better control over expenses, habit builders in goal-oriented saving and growth-oriented investing — these are of critical importance to employees.
Great employee financial wellness programs strike a good balance between long-term and short-term financial health.
B. Minimizing the number of places to go to access their tools
Today, employees need to use one provider for health insurance, another one for their 401(k), yet another one for physical wellbeing benefits, another for short- and long-term disability insurance…the list is as long as the number of benefits you offer them.
Single-sign-on is a game changer. Click a link from your benefits administration portal, and it takes you right into your benefit provider’s app.
But your employees in manufacturing, retail, supply chain, restaurant kitchens, etc. don’t get easy access to a company computer. They probably don’t even use their company email much (if they even have one).
If you now imagine they also get access to distinct tools for emergency fund savings, investment building, spend management and more…
They will do what they are doing now. Not use any of it.
For those who do use them, the many different tools and platforms split up the employees’ money into many locations and hamper easy visibility. This severely reduces the impact and nullifies the intent of these benefits in the first place.
Great employee financial wellness programs try to consolidate as many of their financial benefits into as few platforms as possible.
C. Reducing cognitive load in using the benefits
Today’s financial education or financial planning benefits, where they are offered, are not effective for one reason.
They cause severe cognitive load on already stressed employees.
Financial education programs rely on employees to learn how to manage money (generally using complex strategies), make decisions on how to apply those learnings, take action to realize the benefits (hopefully) of their decisions, and remain consistent in their actions so they see progressive improvement in their financial health.
Psychology research has shown that these are hard things for anyone. And for people who are already stressed about money, the need to do all of these things on their own can be crippling, which it often is.
Great employee financial wellness programs try to reduce as much of this need to do things on their own as possible. Solutions that leverage digital automation, AI-based decision assistance, and positive reinforcements are key to reduce the cognitive load on employees.
At River, we are building an end-to-end financial wellness platform starting with products that help employees achieve near-term financial health.
And we’re building these products to fully automate your employees’ financial wellness journey. The less effort from them, the more they’ll stick to new habits and build wellness over time.
If you’d like more information on how we can help, please reach out at hello@getriver.co.