Repeated Use of Financial Wellness Programs Needed to Improve Outcomes

Financial Finesse observes ways employers drive repeat usage of financial wellness programs.

Employees who repeatedly engage with financial wellness programs offered by their employer are benefiting from a compounding effect, whereby gains in financial health grow over time, according to Financial Finesse’s “Financial Wellness Think Tank 2017 Year in Review” research.

The firm’s analysis of its business finds repeat users increased from 33% of total users in 2016 to 58% in 2017.

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Repeat users of employer financial wellness programs show substantial improvements in key areas. For example, 79% of repeat users reported having a handle on their cash flow in their last assessment, compared with 69% on their first assessment. Fifty-nine percent of repeat users said they had an emergency fund to cover unexpected expenses during their last assessment, compared with 49% during their first assessment, and 43% indicated they are on track to reach their income goal in retirement at their last assessment, versus 22% at their first assessment.

Compared with new users, repeat users are 24% more likely to be on track for retirement, 21% more likely to have confidence in their investments, and 19% more likely to have adequate life insurance, according to the research report.

Driving repeat usage

Financial Finesse says many of the employers represented in its study use technology, coupled with live financial coaching, to promote employee behavioral change.

To drive repeat usage, these employers are:

  • Marketing their financial wellness program as an employer-paid employee benefit;
  • Integrating financial wellness with other employee benefits;
  • Offering incentives to participate;
  • Offering unlimited one-on-one financial consultations via phone, in person or both; and
  • Encouraging employees to use technology to measure progress.
The “Financial Wellness Think Tank 2017 Year in Review” research report is here.

Legislation Would Establish Retirement Benefits Commission

A press release about the bill mentions a Government Accountability Office report in which the GAO said: “Congress should consider establishing an independent commission to comprehensively examine the U.S. retirement system and make recommendations to clarify key policy goals for the system and improve how the nation promotes retirement security.”

U.S. Senators Todd Young (R-Indiana) and Cory Booker (D-New Jersey) introduced legislation to establish a federal commission charged with reviewing private retirement benefit programs and submitting a report to Congress on how to improve private retirement security in the United States.

A press release from Young notes that private retirement systems have undergone significant changes over the past 40 years as traditional pensions have become less common. Individuals must now prudently plan for their own retirement security through retirement savings accounts like 401(k) plans. In addition, Young notes that the economy is undergoing another shift, as workers are more likely to work in the ‘gig economy,’ defined by serial employment or the contingent workforce. For these workers, it is particularly difficult to save for their own retirement.

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“With many individuals reaching retirement with little to no savings of their own, we must take a serious look at our current retirement programs and make the changes necessary to help secure the futures of so many hardworking Americans,” says Young. “Our bill would enact a commission to better understand how we can strengthen private benefit programs and ensure our current and future generations have the tools necessary to plan for retirement.”

The press release also mentions a Government Accountability Office report in which the GAO said: “Congress should consider establishing an independent commission to comprehensively examine the U.S. retirement system and make recommendations to clarify key policy goals for the system and improve how the nation promotes retirement security.” According to the GAO report, the three pillars of the current retirement system in the United States are anticipated to be unable to ensure adequate benefits for a growing number of Americans due, in part, to the financial risks associated with certain federal programs.

Specifically, the Federal Retirement Commission Act calls for the creation of a commission comprised of the Secretary of Labor, Treasury, Commerce, two presidential appointees, six U.S. Senate appointees, and six U.S. House of Representatives appointees. The commission would be charged with:

  • A comprehensive review of private benefit programs existing in the United States, with a particular focus on moving from defined benefit to defined contribution models;
  • A comprehensive review of private retirement coverage, individual and household accounts balances, investment trends, costs and net returns, and retention and distribution during retirement;
  • A comprehensive review of societal trends, including wage growth, economic growth, unique small business challenges, serial employment, gig economy, health care costs, life expectancy, and shrinking household size, that could lead future generations to be less financially secure in retirement compared to previous generations;
  • A comprehensive review of other countries’ retirement programs; and
  • Submitting to Congress recommendations on how to improve or replace existing private retirement programs upon the affirmative vote of at least three-quarters of the members of the Commission.

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