Tuesday, 16 February 2016 20:11

Making Today’s Financial Wellness a Priority - Address the basics first so investing is realistic

Written by Kristin V. Dunlevy, QPFC, AIF® and Elizabeth Rankin, CPA

Ready for a rude awakening? According to the Personal Finance Employee Education Foundation, seventy-seven percent of Americans live paycheck to paycheck. That severe financial stress costs employers an average of two thousand dollars each year for every employee.

I have been a retirement plan consultant for twenty years and often explain to my colleagues that, when we only encourage employees to pursue long-term financial goals without giving attention to present-day financial wellness, we’re putting the cart in front of the horse. Put another way, we encourage employees to contribute significantly to their 401(k) accounts without addressing foundations of good money management, such as maintaining an adequate balance in checking and savings accounts, following plans to reduce or eliminate debt, and sticking to a monthly budget.

Until we address financial basics, we will always fall short in properly preparing people for successful retirement. For that reason, this article does not focus on retirement savings, employees’ 401(k), or the other popular benefits discussions in HR. Instead, the message is about the importance of financial wellness, its foundations, and why today’s proper money management makes a difference to Human Resources and to the organizations we serve.

Poor financial knowledge, attitudes, and behaviors are pervasive problems in the US workforce. Consider the following data about the American worker, compiled in Financial Literacy Pays Dividends, a white paper by Financial Fitness Group.

• 77% of Americans live paycheck-to-paycheck.
• 56% of American adults don’t have a budget.
• 41% of Americans grade themselves as a C, D, or F in personal finance.
• 40% carry credit card debt month-to-month.
• 32% have no non-retirement savings.
• 29% can handle emergencies only by using a credit card.
• 28% don’t pay their bills on time.
• 22% don’t know how much they spend on food, housing, and entertainment.
• 21% believe that winning the lottery is the most viable way to fund retirement.
In turn, eighty percent or more of employees—over one hundred million people in the United States—suffer from moderate to high financial stress, according to Financial Fitness Group.

Research suggests that financial stress costs employers an average of $1,140 per employee each year through turnover, absenteeism, payroll expenses, and healthcare. In total, financial stress could cost US employers more than one-hundred-fifty billion dollars each year in lost profits and productivity.

It is estimated that financial illiteracy costs organizations more than one million dollars in lost profits and productivity for every one thousand employees. And it can affect more than just the entry level or support positions. Financial stress plagues top earners as well, as they too can be burdened with significant debts.

Financial stress can be the largest obstacle for your company’s physical wellness program, as these stresses commonly lead to certain unhealthy behaviors such as smoking, weight gain, and alcohol or drug abuse according to the American Psychological Association. A survey by the Associated Press and AOL shows Americans with significant debt also suffer more health problems, including higher rates of depression, high blood pressure, heart attacks, back pain, migraines, ulcers, and insomnia.

In other words, financial stress has real, painful, and permanent consequences that could be—and probably are—affecting people all over your organization. Yet when HR thinks and talks about financial well-being, they usually aren’t thinking and talking about the everyday financial challenges people face.

Unfortunately, the reach of financial stress extends beyond our wallets and our arteries. It can affect all aspects of our lives, including our personal and intimate relationships.

“A couple with $10,000 in debt and no savings is twice as likely to divorce, as a couple with no debt and $10,000 in savings.” CNN

The good news is that foundational finance goals are often simpler, and the first one is no exception: maintain an adequate balance in your savings account. This has been shown to reduce financial stress materially and should be the first financial goal of a financial wellness program.

Most employers are aware of the personal consequences; according to a 2015 AON Hewitt survey, Ninety-three percent of employers plan to add or improve a basic financial wellness program to their development initiatives in the next twelve months.

However, we need to rethink how we deliver these financial wellness programs, as past programs have not been as effective as people hoped. Employers spend over two billion dollars annually on employee benefit communications, but with very few meaningful or measurable results. For example, I have a new client that offers expensive quarterly employee education workshops. Over the past six years, their best attendance rate is a little over two percent each quarter, and less than nine percent of their employee base attends the workshops. This is not effective and I believe it cannot continue.

“If you want something you’ve never had, you must be willing to do something you’ve never done.” Thomas Jefferson

We can have more financially sound employees through programs that cover the basics:

• Savings
• Debt Reduction
• Budgets
• Employee Benefits/Insurance
• Retirement Savings
• Giving

However, the program can amplify the results if it embraces education, psychology, and our competitive spirit. An effective and scalable approach could be as simple as: assess, educate, inspire, reward, reassess.


Wellness assessments are nothing new for employers. According to research conducted by Wisconsin University professor, Dr. John Hoffmire, employers spend seven billion annually on Health Risk Assessments to help the corporate wellness programs improve physical fitness. Fortunately, Financial Risk Assessments are easier and more cost-effective.

“Real knowledge is to know the extent of one’s ignorance.” Confucius

A quick survey of a few simple questions and emotional evaluation can assess your workforces’ overall financial stress level. A sample of these questions could include:

• “How many weeks of take home pay do you and your spouse have in an easily accessible savings accounts?”
• “How much non-mortgage debt do you and your spouse have?”
• “How many open credit card accounts do you and your spouse have?”
• “Do you have and adhere to a monthly budget?”
• “On a scale from one to ten, rate how anxious you are about your personal finances with one being no anxiety and ten being extremely anxious.”


Once you become aware of the level of financial stress your workforce is experiencing, you have learned something important about them—and even having read this chapter, you might be surprised at what you find.

“Education is the most powerful weapon which you can use to change the world.” Nelson Mandela

You need an independent financial education program that aligns with the needs and resources of employees. There are many financial education programs to consider and more emerging to meet this growing demand. When considering what might fit your organization best, assess the programs’ delivery method, technology features, behavior modification, reporting, conflicts of interest, and payment method. Although education is a necessary component of an effective program, personal finance is twenty percent head knowledge and eighty percent behavior. Remember that your program must inspire a change in behavior.

The Personal Finance Employee Education Foundation lists several providers that you may want to explore for your company.

The results of a financial wellness program in the workplace can be phenomenal, based on a five-year research project conducted by Financial Fitness Group and Wisconsin University, which covered 700 employers, more than 100,000 employees, and 400,000 hours of education. The average improvement was estimated to be $182,500 per year for every 1,000 workers.

Financial Stress


“Nothing is impossible; the word itself says ‘I’m possible’!” Audrey Hepburn

A truly motivational program can be incorporated into your corporate culture. One firm painted the core values on the walls of their conference rooms. Instead of the conference rooms being named after the founders of the company or a letter of the alphabet, each room had a name that corresponded with a core value of the organization. This was a constant source of inspiration for their workforce. This is an example of a repetitive lifecycle to have long-term and permanent results for the workforce. A good financial wellness program provider can help develop a fun, inspirational, and motivational campaign that can champion your corporate culture.

Again, we can begin to reduce our level of stress by simply starting and maintaining a small savings account. A savings account application could be included in the onboarding process for new employees. As a matter of fact, an automatic ten percent deposit of net pay with the right to opt out could be effective. This could inspire good financial habits.


“Recognition is not a scarce resource. You can’t use it up or run out of it.” Susan M. Heathfield

Think of a Fitbit that continually monitors, reminds, and reports our physical progress and lets us share and recognize our accomplishments with our friends. The “Financial Fitbit” concept can provide virtual rewards, constant support, and the motivation we need to achieve our financial goals. Some creative and affordable ideas include free merchandise from local businesses, jeans day, time off, and gift cards.

Reward is what keeps the cycle of growth and improvement turning so be sure that your financial wellness program provides ways of monitoring and reminding about financial goals, but also, that it provides a way of connecting your employees together and recognizing personal improvements.


“Diagnosis is not the end, but the beginning of practice” Martin H. Fischer

Reassessing your employees’ financial stress level after your financial fitness program will tell you if it is worthy of being included in the corporate annual budget. Let the results tell the truth. The results of a financial wellness program in the workplace can be phenomenal, based on a five-year research project conducted by Financial Fitness Group and Wisconsin University, which covered seven hundred employers, more than 100,000 employees, and 400,000 hours of education. The average improvement was estimated to be $182,500 per year for every one thousand workers.

This does not even take into account all of the benefit that employees and their families receive that do not appear in the company’s numbers, much less all of the stress it relieves and happiness financial freedom can create. Especially knowing that over three quarters of Americans live paycheck-to-paycheck, do you still feel like discussing 401(k)s with employees?

A short ten years ago, far fewer employers had health wellness programs; now they’re commonplace. Financial wellness programs are that next need and larger employers are more aware of these issues and many are already seeking solutions. The Personal Financial Employee Education Foundation reports, “Given that financial stress is a, if not the leading cause of stress, most experts anticipate financial wellness programs will be core part of most employee benefit packages within next three to five years.” And it is my prediction that ten years from now, most employers will have a financial fitness program for its substantial and recurring impacts on profit, culture, stability and community.

This article is also a contributing chapter in Rethinking Human Resources a book many leading HR professionals co-authored which can be purchased on Amazon. Amazon proceeds benefit fully the SHRM Foundation. Kristin V. Dunlevy, QPFC, AIF® is a retirement plan advisor with a great deal of passion of simplifying the complex and amplifying plan and participant results. Contact kdunlevy@ProCourseAdv.com, 502.205.8061

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