To achieve financial wellness, employee behavior must change
- Financial wellness programs are becoming more mainstream, but employee participation is lagging behind, according to a new white paper released by Russell Investments. The report rejects financial education as the sole means of achieving financial well-being for employees. Engaging employees in these programs will require behavioral changes, a psychological approach used in health wellness programs, aided by advancements in technology, said authors Carla Dearing, CEO of Sum 180, and Holly Verdeyen, senior director of defined contribution strategy at Russell.
- The authors define financial wellness as "the ability to meet immediate financial needs and to make decisions to manage for long-term financial goals." The report lists the kinds of financial needs that programs can address, such as basic budgeting, saving enough money for retirement, ending the practice of making hardship loans using account funds, and devising an alternative to payday borrowing.
- In designing financial wellness programs, the authors said employers should draw on behavior-change theories rooted in psychology, starting with: 1) social cognitive theory, in which social interaction improves people's ability to change; 2) positive psychology, which leads to change when people feel good about themselves, the present and the future; 3) stages of change, in which small steps allow people to transition from change to action; and 4) gamification, which frames situations as games to make change fun.
A 2017 Aon Hewitt report agrees that a successful financial wellness program requires employees to make behavioral changes in their attitude towards and handling of money. The report found that financial wellness programs that just teach literacy are less likely to achieve their goal as those that address altering behavior.
Employees want employers to offer financial products, along with financial education, according to an American Workers Survey, released in March. The topics employees in that survey said they want most are the same as those listed in the Russell Investments paper, with the exception of identity protection. Also, personal money problems plague many employees at work, leaving them stressed out, less productive and often faced with chronic health problems. Financial wellness programs may be worth the investment in maintaining a healthy, productive workforce, just like any other wellness program.
Some of employees' meager involvement in financial wellness programs might stem from being at odds with employers over what the end goals should be. A study released in August found that while employers were focused on providing financial wellness activities with short-term goals, such as budgeting, employees wanted activities that provide long-term financial security, such as retirement planning. Financial wellness programs that offer a mix of short- and long-term activities and that focus on behavioral change could help workers overcome their money struggles and secure a better financial future for themselves.
- Russell Investments Wellness is Wellness