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Why Do Some Financial Wellness Programs Flop?

“One big reason financial wellness programs fail is that they focus on aspects of education and financial literacy which simply do not inspire or empower behavioral change,” says Carla Dearing, CEO of financial planning service SUM180. 

By Amanda Umpierrez editors@strategic-i.com | October 14, 2016

It’s no surprise that financial wellness programs are trending. The shift has been on the rise, recently with 56% of employers reporting a commitment towards their workers’ financial well-being, according to an Aon Hewitt study. Programs are grabbing employees’ attention too. In a TIAA survey, 71% of Americans expressed an interest in receiving financial advice.

As growth in appeal increases, the question still remains: Why do some programs continue to flop?

“One big reason financial wellness programs fail is that they focus on ‘education’ and financial literacy, which simply do not inspire or empower behavioral change,” says Carla Dearing, CEO of financial planning service SUM180. “It’s very tempting to think, ‘If we just show people the steps, they’ll be able to do them.’”

Whereas financial literacy focuses on specified concepts and how-to’s, Dearing recommends offering programs that incite principles of behavioral finance such as privacy, control and feedback to help employees succeed.

One tool Dearing suggests can improve financial wellbeing is a personalized assessment, where workers’ needs are pinpointed to then offer detailed solutions. Whereas many may feel uncomfortable speaking about finances in a group setting, personalized assessments offer key resolutions tailored to an employee’s vulnerabilities and lifestyle. “They really need to start where the employee is. And they can’t know without asking for information,” says Dearing.

Like Dearing, Liz Davidson, CEO of Financial Finesse, believes these assessments give employers’ the ability to better assist workers. “What they’re [employers] doing is really targeting the specific groups with the right type of topics and the right kind of messaging, so it’s much more relevant and focused.” says Davidson. “Once you know more about your different employee groups and what those points of intimidation or vulnerability are, you can develop a strategy around how you take down those walls.”

Employees seem to be supporting fans of the tool as well. Surveys have reported workers prefer personalized assessments and one-on-one advice that study unique conditions to then offer detailed solutions.

These assessments take a worker’s financial challenges, priorities, family structure, investing confidence, retirement preparedness and more into account. As a result, employees acquire habits and strategies that result in success, rather than study new ideas through traditional educational means.

“It’s something that you do each and every single day, and it’s something that you control, says Davidson. “Versus education, it is a way to assist with making specific decisions or understanding concepts.”

NEXT: Education is still important

Although personalized assessments provide insightful material to employees, this does not mean education should be completely thrown out the window, Davidson adds.

“In areas like investing or deciding to choose either a target-date fund [TDF] or allocate your assets, education actually works very well there because people don’t really have to make a personal sacrifice, they’re just making a different decision than they would otherwise make,” she says.

Additionally, Davidson says financial literacy may enhance confidence for employees making informed financial choices, and then lead them to take the right steps in protecting themselves.

While privacy and personalization are large contributors in crafting the best financial wellness program, benefit prices also play a significant role. Workers may feel unconvinced in paying for a plan intended to assist financial challenges, and therefore Davidson recommends employers offer fully-funded programs, in order to surge participation and lessen biasness.

“One of the major objectives is to help employees maximize not only their pay, through savings and investing that properly, but their benefits so that the employer becomes the partner in employee financial security,” says Davidson.

Once workers are immersed in the program, Davidson and Dearing urge employers to utilize a ‘gamification’ approach that can motivate employees and inspire a financial change. At this point, more employees are addicted to the ‘small wins’ achieved, and therefore cultivate lifestyle changes to continue their progress. Similar to physical wellness, these financial modifications develop into a process, not solely an event.

“The psychological way to do that is you show them what their immediate next steps are, what you need to do to address some things that will help you,” says Dearing. “Feedback is all about keeping it alive.”

One distinctive method includes touching base with those who have benefited from financial wellness programs, in order to share personal testimonials with those either skeptical or motivated to continue.

Dearing and Davidson recommend working with human resources, as well as key thought leaders, who can provide positive feedback and inspiration on multiple touchpoints, including digital media, workshops, open forums and more.

“Mobile, Web, even print in the right circumstances can still work. It’s really pulling all of these together, making it a cohesive benefit,” says Davidson. “Workshops, webcasts―the employer might be offering from any source that is accurate in doing it the right way.”

As more programs are adopted, it is imperative to understand how employer-support can cause such high financial achievement. Not solely through paid programs, but in providing quality services to their employees. “They can do everything in their power to enable it and partner with their employees to get there,” says Davidson. “And that’s the next best thing.”