Financial wellness is more than the annual 401(k) enrollment meeting, and you know it.  Or, maybe you don’t.  I wish we could offer a 401(k) to employees and have them become financially successful by osmosis.  Just like I wish we could offer gym memberships to employees and they’d magically get healthier.  But we know that’s not how it works.  

Here’s some context on why holistic financial wellness is needed:

  • 40% of Americans have less than $300 saved.
  • Average credit card debt is $6,270 per family. 
  • Most Americans won’t be able to afford to stop working at “normal” retirement age.

Americans are financially sick.  That sickness costs over $400 billion a year based on what financial experts calculate from absenteeism, presenteeism, stress, and many other factors.  We’ve been sick for a while, and we’re getting sicker and sicker.  

So, just to drive this home, the presence of a 401(k) and any associated meetings have not and will not solve this problem.  

How are big problems and systemic problems solved?  We need to recognize the existence of these problems, take action, and intervene to help the affected individuals.  Recognizing that most Americans haven’t ever really figured out how to save money and that they’re not getting help to learn how to save is an important first step.  When pensions disappeared decades ago and 401(k)’s took over, ways of saving for retirement changed dramatically.  But most Americans didn’t drastically adjust the way they personally save for retirement following this change.  In fact, less than 20% of Americans will ever work with a financial professional, which equates to a low level of financial literacy and a lack of positive financial action.

Thankfully, some positive actions are starting to become the norm:

  • Automatic features on 401(k)’s like auto-enroll and auto-escalate are beginning to grow in popularity, but have been absent for decades.
  • States are opting to implement their own versions of required retirement plans.  Time will tell how this will unfold.
  • An entire industry is rebranding “financial services” as “financial literacy” or “financial wellness” (However, the content of employee education sessions haven’t changed much.) 

Better than nothing, but not really.  

So what is financial wellness and how do we stage an intervention?  

Financial wellness isn’t one size fits all.  I’m tough on big financial companies, but I recognize the challenges they face: it’s hard to create programs that serve the diverse needs of Amercans.  

Your 25 year-old employees have different needs than your 45 year-old employees and your 65 year-old employees.  Each employee needs a personalized plan to address the many variables that make their financial situation unique if we’ll have any success changing financial behavior. 

There are three key factors that need to be present to support and inspire positive financial behavioral change.

  • Autonomy. People need to be able to choose when and how they want to learn.  Are there events and courses they can view on demand and opportunities to interact? 
  • Mastery. People need to have access to materials they can learn, absorb, and apply.  Are the courses, videos, or podcasts of varying levels?
  • Community. People need the support of others.  Programs like AA are successful because of this.  Is individualized support available to participants?

From there, incentivize participation, celebrate wins, guide them in their journey, and keep support of the financial wellness program going. We’re pulled in a lot of directions these days and our resources (time, attention and money) are spread pretty thin.  

Maybe advocating for a meaningful financial wellness program isn’t your cause right now.  But, the need for financial wellness is not going away.  When the time is right for you to address it, use these concepts to build a successful program.  
Now I’d like to hear from you, what are you going to do first or next?  What has worked? What hasn’t? Have a question?  Ask it here. We answer all of them.