The employer-employee relationship is financial, first and foremost. Inflation’s attack on an already vulnerable workforce have recast a spotlight on the importance of that core relationship, and the urgent need for financial wellness. For employers and consultants who are ready to prioritize workforce financial wellness, this article introduces you to a systems design approach to selecting and launching a comprehensive financial wellness program.
Financial Wellness is Dead. Long Live Financial Wellness.
The field of financial wellness has existed in many forms, though it may have not always been called by that term. Financial education programs, cost-support essential services like housing, retirement plans, employee ownership, and, yes, even saving have existed.
Over the last couple decades, perhaps in the spirit of efficiency, the forms of financial wellness became simplified into a “check the box” approach of coaches, calculators, and content. The theory of change with this solution set was simple: if employees take the first step to learn, they will surely follow through with actions and realize meaningful outcomes. Unfortunately, we have seen low engagement and uncertain outcomes, causing employer leadership to question the effectiveness of a learn-then-do approach.
But financial wellness remains important, and employers have consistently not been on the same page. According to the 2024 Wellbeing Diagnostic Survey by WTW, 59% of employees said their employer should prioritize financial wellbeing, 18% higher than the next closest category including mental health. However, only 22% of employers prioritized financial well-being. The resulting 37-point differential is a glaring smoke signal of misalignment of resources.
Thanks to advancements in data-driven research and technology like AI, we now have a much stronger understanding how to deliver solutions that create worker financial security and resilience, perhaps even financial freedom, as outcomes. It is no longer just about offering occasional workshops on budgeting – it’s about crafting a comprehensive program that meets your employees where they are to generate tangible, measurable outcomes. By focusing on clear organizational outcomes and adopting a systems approach to design, companies can create an impactful financial wellness program that drives results.
Start With Why: Clear Outcomes and Goals for Financial Wellness Programs
When launching a financial wellness program, it’s essential to define the outcomes you expect from the initiative. These outcomes can exist at three levels: the program itself, the organization, and the individual worker themselves. We will address the individual’s outcomes in the next section. Clear program and organization goals will help shape your program and provide benchmarks for success. These goals often fall into categories such as employee engagement, retention, productivity, and the broader benefits ecosystem.
Participation: Engagement and Net PromoterScore (NPS)
Employee participation is one of the strongest indicators of a program’s success. High participation in the program—such as employees signing up for financial wellness tools or attending financial education sessions—indicates that employees see value in the offerings.
But what does good participation look like? The answer varies significantly by the type. Financial education-focused programs may consider high single-digit participation as good, whereas programs with automated actions like retirement savings or emergency savings may be an order of magnitude higher.
Another important metric is the Net Promoter Score (NPS), which measures how likely employees who participate in a program in turn recommend the program to others. A high NPS score suggests the program is perceived positively, driving increased buy-in from both participants and potential program beneficiaries.
Retention: Annual or Monthly Turnover, Re-Hire Rates
Financial wellness programs can significantly reduce turnover rates. Financial stress is one of the main drivers behind employee departures, particularly for those in lower-income brackets. A well-designed program that addresses these financial pressures can reduce turnover by up to 25%. Furthermore, employees who feel supported are more likely to stay within the organization, lowering rehiring and recruitment costs. A study by the Consumer Financial Protection Bureau (CFPB) indicates that employees who feel financially stressed are more likely to leave their job, while those who feel financially secure are 35% more likely to stay.
Another study by AARP found that participation in emergency savings accounts, the top driver in financial wellness, reduced likelihood of turnover and increased likelihood of job advancement at statistically significant levels.
Productivity: Absenteeism, Safety, Output Per Capita, Project Completion Rate
Financial stress can lead to significant productivity losses. The American Psychological Association reported that 72% of employees claim financial stress impacts their performance at work. Employees who are constantly worried about money are more likely to experience absenteeism, which in turn affects overall productivity and project completion rates. A financial wellness program can alleviate some of this burden by helping employees manage stress and offering access to resources that improve financial health. Employees with access to emergency savings or tools for managing debt are 20% more likely to maintain or increase productivity.
Newer research shows that there is likely a positive impact on safety outcomes as well. For example, a study discovered an 87% reduction in traffic citations among savers after a large logistics company rolled out an emergency savings-centric financial wellness program.
Ecosystem: Retirement Plan, Health Plan, and More
Organizations can also gain an ecosystem effect, or a “halo” effect, from a comprehensive financial wellness program. These effects have been observed with retirement plans, health plans, and other initiatives.
For example, the inclusion of an emergency savings program can drive financial confidence and resilience, thereby increasing the likelihood for new participants to enter an organization’s retirement plan or for returning participants to increase their contributions. Researchers have found that offering options like emergency savings, cash grants, or payroll-deducted loans can help reduce the chance of people using their retirement savings early. These alternatives can prevent participants from taking 401(k) loans or early withdrawals.
Financial wellness programs can also benefit health plans’ effectiveness. For example, reducing financial stress can improve cost-related nonadherence. That means people are more likely to follow medical prescriptions and instructions to treatment, reducing long-tail events like dramatic surgeries.
Other programs company volunteerism can also improve when employees achieve economic stability and mobility. Thinking through what else is important for the organization and connecting them to the knock-on effects of financial wellness threads then into its cultural fabric.
Define Employee Journey: Financial Stress to Freedom by Urgency and Purpose
The reason for financial wellness of course is the individual employee and potentially their household. Understanding the employee journey and curating an offerings menu with life stages and purposes in mind is critical to meeting diverse needs.
Urgency – Immediate, Near Future, Far Future
Employees have evolving financial needs throughout their careers. Financial wellness programs must be designed to meet those needs at each stage:
Immediate: Think managing day-to-day expenses and overcoming financial emergencies. Programs including emergency savings, earned wage access, payroll loans, and cash grants can meet this need.
Near future: Financial wellness programming can help employees start thinking about personal milestones, such as moving into a new home or starting a family. Budgeting, term insurance, disability, and debt counseling can play important roles.
Far future: Retirement is of course the primary focus of the far future, but it’s more than just a 401(k). It can include retirement income, life insurance, planning for large health expenses, will or succession planning, and more.
Purpose – Economic Security, EconomicMobility, Economic Freedom
Financial wellness programs should also address the specific financial goals of employees:
Economic Security: The foundational goal of economic security is to meet non-discretionary needs of an individual and their household. While mostly aligned with immediacy, security can also extend into longer horizons – think insurance, most notably.
Economic Mobility: Economic mobility is ability for an individual to move up (or down) the economic ladder over time. Often associated with achieving certain milestones, like owning a home or attaining a college degree.
Economic Freedom: The final destination for any individual or their household is to have the ability to splurge on true wants without restrictions.
These three goals are inter-related, but thinking of them separately helps us map a financial strategy that meets the personas of any workforce’s respective personas.
Understand Organization's Constraints: Budget, Time, and Complexity
After starting with understanding the desired outcomes at the program, organization, and individual worker level, the next step is to take stock of the resources available to achieve those outcomes. Designing a financial wellness program requires a realistic understanding of your organization’s constraints. These constraints often relate to budget, time, and complexity, and recognizing them early helps ensure the program's feasibility.
Budget – A Holistic Picture
Budget for financial wellness is often misunderstood as a line item under HR. In reality, a well-structured program likely involves multiple functions and their budgets. It may include total compensation, carrier wellness dollars, unmatched retirement savings, retirement plan administration dollars, safety bonuses, holiday bonuses, retention bonuses, and so on. In essence, the delivery mechanism for those “leftover dollars” becomes a thoughtful financial wellness program where those dollars are amplified.
The budget is also not the same thing as a vendor price. The final program may include one or more vendors who together deliver the budgeted cash incentives to a portion of or the full workforce. For example, a program can include an , a financial coaching service, an emergency cash grant, a tuition savings and loan servicer, and a wealth management and retirement plan advisor can all be a part of a comprehensive program. The fees for these services may come from the employer, the employee, or a third-party, but any incentives almost always come from the employer.
When calculating or setting aside budget for financial wellness, remember again that the core relationship between an employer and employee is ultimately financial. Investing in a modern financial wellness program thus acts as a multiplier to compensation, achieving collectively beneficial outcomes.
Time – Internal Resource Allocation
Budgeting money is one thing, but setting aside time is another important variable. Leadership that values financial wellness as a people strategy may choose to have a dedicated person or team (depending on the size of the company). But it doesn’t have to be that intense. Setting aside project time for structured rollouts can yield more meaningful results.
For example, highlighting a financial wellness program during April’s National Financial Literacy Month or Financial Capability Month is an excellent way to market existing initiatives. Some companies have found success with 10-15% increased participation when leadership recorded a 30 second marketing video.
When selecting an initiative, understand that some solutions may require upfront time as well, especially if they’re focused on systems automation. However, that upfront work could also yield more measurable outcomes and a better user experience for the employees.
Complexity – Technological, Regulatory, and Legal Constraints
Finally, remember that money can be complicated. Incorporating technology into financial wellness solutions can streamline service delivery, but it also brings challenges. Whether it’s AI-powered financial tools, secure mobile apps, or data privacy concerns, employers must carefully navigate these issues to ensure compliance with labor laws, ERISA and tax regulations, and other legal requirements.
Weigh What’s Important for Financial Wellness Program Outcomes and Constraints
The next step is to understand which factors are most important to the organization and decision-making committee. Receiving alignment on what matters upfront reduces the debate and misunderstanding on the final results.
We discussed three sets of factors thus far: outcomes for the organization, outcomes for the individual, and constraints for the program.
Within each set are the factors themselves. For example, for the outcomes for the organization, there was participation, retention, productivity, and ecosystem impact. There were more sub-factors underneath, but for simplicity, let’s omit those for the moment.
Now we turn to leadership’s direction or people strategy to drive our weighting. Let’s say they say, “we want something that almost everyone will do, which we hope turns into better retention.” We can then weigh expected participation really high (let’s say 50%) and retention pretty high (let’s say 35%), with productivity relatively lower (10%) and ecosystem impact as the lowest (at 5%).
A similar approach can be used for individual outcomes. Let’s say that leadership wants “employees to meet their immediate needs while taking advantage of their retirement match.” That means we’re more heavily focused on a combination of immediate and far future, and mostly along the lines of economic security and economic mobility.
While weighting on constraints is also possible, the reality is constraints are just that – typically hard and fast. It’s not possible (or at least ill-advised) to do a financial wellness program that breaks a regulation or a law, that could potentially break fiduciary duty and open the employer up to lawsuits. And it’s hard to do something outside of budget, even when pooling from multiple areas of the organization. Rather, it’s best to think about how flexible any of the constraints can be. For example, if the resulting financial wellness program is expected to cut hiring costs by 75%, which would be four times the cost of the program itself, how can the cash flow for the program be structured to make it a reality?
Menu of Financial Wellness Solutions – Mapping Capabilities to Benefits
Only after we have set up the goals to be achieved and the relative importance of and constraints to achieving said goals should we enter the solution space. See below a menu of solutions and some example providers.
Retirement Savings and Matches
Providing access to retirement savings plans, like 401(k)s or 403(b)s, is essential for building long-term financial wellness. It’s also a market expectation. Employers should consider offering matching contributions or other incentives to encourage employee participation.
Emergency Savings Accounts as Tip of the Financial Wellness Spear
Emergency savings programs (also known as Emergency Savings Accounts or ESAs) are critical in helping employees navigate unexpected financial crises without falling into debt. Research shows that 59%of Americans struggle to cover a $1,000 emergency expense through savings and thus rely on other forms of payment, including costly debt solutions.Because of the broad-based need for and applicability of emergency savings, it may be wise to leverage the ESA as the tip of the . In other words, use this first action by the employee to nudge the next step, such as a budgeting session with a financial coach. An example vendor in this space is Sunny Day Fund, a leading high-yield, with customizable .
Financial Coaching
Financial coaching helps employees address specific financial issues they face. These coaching services go beyond general education, providing one-on-one or group-based support to address goals such as reducing debt, saving for large purchases, or improving credit scores.
- One-on-One Financial Coaching: Partnering with financial coaches or companies like MySecureAdvantage or GreenPath, which offers personalized financial coaching, can be a game-changer for reducing debt, creating budgets and financial plans, and setting up the basics like a will. Almost all such services are now digital.
- Group Financial Coaching Workshops: For larger workforces, group workshops can be more cost-effective while still providing valuable support. Programs such as America Saves, which offers a free, comprehensive toolkit for employer groups to educate their own employees, have seen 12% higher engagement in savings behavior among participants compared to non-participants.
Payroll-Deducted Loans
Payroll-deducted loans allow employees to take out small loans through their employer, with repayments deducted directly from their paycheck. This feature can help employees manage short-term financial emergencies or larger planned purchases.
Companies like FinFit provide small-dollar loan programs that deduct repayments from the employee’s paycheck in installments. By working directly through the employer, they’re able to underwrite much better rates to workers who may otherwise be ignored by financial services companies or be taken advantage of by credit cards and payday loan companies.
Some organizations have also extended interest-free loans internally. However, the costly record-keeping and the emotional complexity that the situation causes have pushed them to rely instead on outside vendors such as HoneyBee.
Employers with credit union affiliations have also directed employees towards those resources or other affiliate banking partners for modestly better deals.
Earned Wage Access
EarnedWage Access (EWA) programs allow employees to access a portion of their earned wages before their regular payday. This provides flexibility and can alleviate financial stress for workers who live paycheck-to-paycheck. This solution is popular in the QSR and hospitality sectors especially. Examples of EWA providers include DailyPay, Instant Financial, and PayActiv.
While this solution meets an immediate need, the common critique is that it kicks the can down the road, often at a cost to the employee. So, it’s best to understand any given vendor’s specific terms.
Financial Education & Literacy
Financial education is foundational to building financial wellness. Offering employees access to financial literacy resources can help them make informed decisions about budgeting, saving, investing, and planning for retirement. Almost all solutions in other spaces come with financial education resources embedded, and it’s also most often given away by insurance companies and banks.
Emergency Cash Grants or Employee Assistance Funds
Providing emergency cash grants is another way to help employees in financial distress. Many organizations can choose to set up their own charitable foundations or partner with local organizations or select providers to offer emergency cash assistance to employees. These programs can be particularly effective in the aftermath of natural disasters or other large-scale crises. They can also be helpful in moments of personal crisis like a medical emergency.
There’s also a minor tax benefit to the employer and employee because these payments flow through a non-profit entity to the beneficiary employees only when certain conditions are met. Canary’s Grant Circle is one such emergency relief fund.
Retirement Plan Transfers
When employees move to new jobs, they often leave behind retirement savings in previous employers' plans. Simplifying the process of transferring these funds can drive economic mobility by consolidating savings into a single account. Manifest, a free retirement plan transfer provider, has found that offering this service as a part of a financial wellness program can also lower 401(k) costs.
Student Loan Repayments
Student loan repayment helps employees pay off their student debt more quickly, in smaller payments, or eventual elimination through public service loan forgiveness if applicable. Thanks to Secure Act 2.0, employers can also contribute directly to employees' loans through monthly payments or matching contributions, similar to retirement plans. So if an employee is making $18,000 of student loan repayments and no contributions into their401(k), the employer can qualify the repayment and match up to the $18K or the salary match limit, whichever is lower, into the 401(k). While the law here may actively be changing, employees with student loans appreciate this benefit to reduce their financial stress. Example providers in this space include Candidly and Savi.
Tuition Reimbursement
Closely related to student loan repayments is tuition reimbursement. Employers help cover the cost of further education, such as college courses or professional certifications. Employees typically pay for the tuition upfront and then submit receipts for reimbursement, often up to a set limit per year. Reimbursement limits vary by employer but commonly range from $2,000 to $5,000 (no more than $5,250annually per the IRS). Employers may also set policies requiring the courses to be job-related or completed with a certain grade, and some may ask employees to stay with the company for a certain period after receiving reimbursement.
529s and Junior Roth IRAs
Similarly, employers can enable their employees to save up for their kids’ eventual education expenses or create early wealth building opportunities. A 529 plan isa tax-advantaged option for employees to invest and save without having to pay for taxes on gains, as long as the funds go towards education-related expenses like college tuition. A Junior Roth IRA is a newer take on the 529 driven by the Roth conversion rule, which allows employees to create a 529 and allow the employee’s beneficiary to convert it into a Roth IRA up to a $35,000 asset limit. Both offer great ways to drive economic mobility and freedom in the near future to employees’ households who are able to take advantage. Example provider here is FutureMoney.
First-time Homebuyer Savings Accounts
HardworkingAmericans are finding it harder to purchase a home, but some states are stepping in by making the process a bit easier by enabling state tax benefits. FHSAs are one such example – they allow savers to open a dedicated account where contributions of up to certain amount ($50K in Virginia) can grow tax free up to a certain balance limit ($150K in Virginia), as long as those funds go towards the downpayment of the individual’s first home. Other restrictions may apply, and may vary state by state. However, bringing this feature to life via an employee benefit is a smart way to retain talent. Sunny Day Fund helps employees accomplish this via a dedicated housing goal that can be earmarked for first-home purchase.
Lifetime Income and Retirement Annuities
Employers have an aging workforce that may feel unprepared to retire because they’re not sure how to turn their well-earned 401(k) into a regular budget. The anxiety of the conversion is amplified by maze of actuarial rules on required minimum distributions. Thankfully, lifetime income products, which shift workers from asset growth to sustained asset depletion, can help. Almost all retirement plan advisors can help direct employers to the products that may be right for your workforce.
Managed Accounts and Wealth Management
As employees finances become more complex, and as they accumulate beyond certain thresholds, it may be wise for them to engage in services that manage retirement plan accounts as well as other accounts. While these services typically take a fee, like0.50% of assets, the incremental opportunities for higher returns may be worth the journey for employees seeking economic freedom. Employers with higher income employees, such as in the tech sector, may need to consider these options more readily. Plan advisors can also direct employers in this case towards their wealth management counterparts; so, it may be wise to select plan advisors best suited to your outcomes weighting.
Voluntary Insurance Products
There are many variations of helpful insurance products that can be qualified under the umbrella of financial wellness. The basics include term life insurance, short-term disability, long-term disability, and accidental death and dismemberment. The recently popular include reduced-price pet insurance, cyber insurance, and identity theft insurance. The unique can include kidnapping and ransom insurance. What resonates with your employees here is ultimately what should be a part of your solution set, since these are after all voluntary products.
Health Savings Accounts and Health Plans
While not explicitly a part of financial wellness, HSAs and the health plan offerings are included in the solutions menu because they ultimately do impact the economic security and mobility of workers. Consider the cross-impact, particularly as you may recommend higher deductible health plans paired with HSAs, but find not many following through on the HSAs. You may have to dedicate a portion of your budget towards an involuntary contribution, or rethink the health plan offering.
Score and Choose – Bundle of Financial Wellness Solutions
Our next step is to score the solution set against the organizational goals, individual goals, and constraints. While specific provider data can be taken into account during the scoring process, remember that we’re using this framework to land on a program, not a provider.
Let’s assume that your organization has established weights across both organizational outcomes and individual employee outcomes. Then we go through each solution on the menu to assign a score based on research and market data best representing how that solution will perform with your workforce. The scoring doesn’t always need to be absolute numbers like 78% participation, one can use a graded scale of 1-5 (with 5 being best) to keep things simpler.
Let’s pick up on the earlier mentioned weighting example to see how a solution can potentially be scored.
Organizational Outcomes:
Participation and engagement: 50%
Retention: 35%
Productivity: 10%
Ecosystem Impact: 5%
Individual Employee Outcomes:
Urgency:
Immediate: 50%
Far Future: 50%
Purpose:
Economic Security: 75%
Economic Mobility: 25%
Let’s then assume that we’re scoring two new solutions: an and a financial education program. The below table shows how that scoring could potentially result. Note that this is only an example, not intended to be used for benchmarking.
By leveraging the scoring, we’re able to more objectively observe where and why the emergency savings program stands out with the organizational and individual goals. With an ideal score of 10, we’re seeing that one solution is more than twice as good as the other.
Imagine now that we compare how the solution sets do against the constraints, based on initial feedback from the market. We may find that there’s more room to operate to drive even better outcomes by providing both solutions. Here’s how that could look.
Launch, Measure, and Iterate – ROI of Financial Wellness Program
Finally, once you’ve selected your solution set, you can search for providers that meet your expectations. Some providers have multiple capabilities or integrated capabilities. For example, the SafetyNet program from FinFit offers emergency savings powered by Sunny Day Fund, emergency credit, personal loans, financial coaching, and financial education under a single platform. Work with your benefits consultants or reach out to the providers for demos and proposals.
Once you compile and launch your financial wellness program (here’s a quick guide on how to launch a program), the next step is to measure the outcomes and compare to the assumptions that were made in the framework. If they did not meet your expectations, ask yourselves whether you correctly captured the weighting of desired outcomes, whether the impact was accurately predicted, whether the provider delivered on their promises, or whether enough resources were deployed to support the launch. It is common for employers to iterate and tweak parameters, even within the first couple of years.
In conclusion, financial wellness is an employee expectation and need that employers can’t afford to not meet. Structuring a comprehensive program in an objective, outcomes-focused manner will ensure that you’re deploying your resources efficiently and effectively. Want help getting connected to a consultant that can guide you? Feel free to reach out to our team!