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Employer Credit Unions have an opportunity to work with Financial Wellness providers

Written by FinFit on .
Employer Credit Unions have an opportunity to work with Financial Wellness providers

David Kilby
President, FinFit

Financial wellness programs are becoming a staple in the employee benefit universe. With this adoption comes the evolution of exactly what financial wellness means, and what a successful financial wellness program should look like. As a rapidly growing industry, we often lack a consistent definition for financial wellness. This leads to organizations believing they have implemented a financial wellness program when in reality, they are only offering a handful of tools or resources that may present more challenges when offered in a silo.

I define Financial Wellness as the process by which an individual can efficiently and accurately assess their financial posture, identify personal goals, and be motivated to gain the necessary knowledge and/or resources to create behavioral change. Behavioral change will result in improved emotional and mental well-being, along with short- and long-term financial stability.

78 percent of U.S. workers live paycheck to paycheck to make ends meet1. The need for financial wellness is clear, but there are consistent pillars that must be addressed in any successful financial wellness program to affect change: spend, save, borrow and plan. When evaluating employers’ financial wellness plans, it’s important that these dots all connect if an employer is truly going to motivate behavioral change and recognize the ROI of a comprehensive, holistic platform.

78 percent of U.S. workers live paycheck to paycheck to make ends meet.

FinFit provides over 150,000 employers with our financial wellness platform across all sectors, areas and demographics. We support organizations that employ over 100,000 employees, as well as organizations with less than five employees. Typically, smaller employers offer little to no financial wellness services, while larger employers have at least some level of financial service offerings available to their employee base. The biggest challenge is helping each unique organization define what a successful financial wellness program looks like, determine what aspects are currently being offered, and identify gaps.

The following are the most common financial services that are mistaken for holistic financial wellness programs.

Fact:As of September 30, 2018, there was over $5.6 trillion invested in 401(k) plans.3
Credit Unions/Banking Partners. Many of our larger clients have their own Credit Union that can provide member-based banking services. Some of our employers have strategic banking relationships established to the benefit of their employees. These two options provide great opportunities to get employees to take part in traditional and alternative banking services. The value of such to employees can be substantial and valuable, partially serving elements of the financial wellness pillars. However, there are reasons why these services need to be included in a larger financial wellness initiative:

95% of Americans already have banking services4 and prefer to maintain those relationships.

The lack of personal assessments based on data and current behaviors does not provide an opportunity for the credit union/bank partner to impact employee development.

Credit and other services are typically based on traditional credit scores and underwriting criteria which may disallow services to employees who have the greatest need. One-quarter of adults who applied for credit were denied at least once, and 32 percent were either denied or offered less credit than they requested.5

Tools, resources and aggregators of spending habits that create visibility and awareness are not typically found with these relationships.

Personalized, motivational roadmaps based on the unique position of each employee are not typically found within these relationships.

The opportunity for organizations is to complement a holistic financial wellness platform with an existing credit union or banking relationship to drive membership and account creation within the existing partnerships. Linking these programs can provide both the employer and the financial institutions with valuable data on their members so they can better provide services and opportunities that are needed and desired by the employee, relevant to their personal financial wellness path.FUN
Fact:Credit unions in the United States serve over 100 million members, which equates to 43.7% of the economically active population.6
Employee Assistance Plans (EAPs). The existence of these plans within organizations is always encouraging and emphasizes one thing to me: culture. It means the employer cares about their employees and recognizes that life happens, often presenting unexpected challenges. Nearly 3 in 4 workers say they are in debt today – more than half think they will always be7. 40% of Americans can’t pay $400 for an unexpected expense8. EAPs show me that the employer genuinely wants to assist when unforeseen challenges arise, and the employee does not have a viable solution. I applaud these programs, and the generosity of the employer. However, these resources are generally made available to a limited and extreme audience of employees. Though helpful in the immediate situation, this solution does not drive financial wellness or behavioral change.FUN
Fact:EAPs were conceived in the 1940s as “Occupational Alcohol Programs.” They were further developed by Yale for both business and government applications.9
Educational Platforms. We are seeing more and more highly interactive platforms that involve gamification, video, mobile and virtual environments. Educational technology is evolving at record speeds and financial education is moving down a similar path. Education is a critical element of financial wellness because most often, it is the knowledge that encourages and reinforces behavioral change. We started inquiring early on with the question that drove our parents bonkers – “why?” – and for most, we never stop asking. Providing the “why” is a critical part of financial wellness if we expect behavioral change. However, it must be smart and meaningful. The educational content must be relevant and timely for the individual consuming it. The answers must be personal, unique and have an impact on current habits surrounding the four pillars: spend, save, borrow and plan. Each employee’s situation is unique, relevant to their financial position, goals and level of education. Motivation and rewards must be equally unique, tailored to each unique individual. However, education without a means to solve financial challenges and plan for tomorrow is only part of the solution.FUN
Fact:It is estimated that gamification in education increases learning by more than 23% compared to traditional teaching activities.10
Financial Advisors. This service is typically offered alongside the retirement plan “financial wellness “program.” Although the financial advising services can provide vast value to some individuals, it can be cost-prohibitive and is often not accessible to most of the employee base. Financial advisement generally focuses on long-term savings and goals, often through traditional investment vehicles. Financial advisors can certainly provide value, but the pillars of ‘spend’ and ‘borrow’ are usually ignored.FUN
Fact:There were 325,000 financial advisors in the US in 2008. That number continues to fall, coming in around 285,000.11 Both the recession and robo-advising has impacted the profession.

There are other areas of employer-provided services that could be mistaken for financial wellness, but the areas I outlined above are the most common we encounter and discuss. I don’t want to take away from the value of these services – they are excellent tools, resources and services that can provide enhanced value to a comprehensive financial wellness platform. Absent of a holistic financial wellness program to support any of these initiatives, the potential value to the employee and employer will not be realized.

What’s the most efficient and effective way to assess your current financial wellness services to determine ultimate value and return? Ask yourself these questions:

Does the platform offer a personal assessment of each employee’s unique situation, circumstance and goals? Does the assessment return quantifiable and qualifiable data?

Does the platform address 100% of your employee base, including the least sophisticated employees? Much of your ROI from a financial wellness program does not come from your top performers, it comes from creating behavioral changes within your less advanced employee segments.

Does the platform integrate the various components to provide a tailored path for each employee, including assessment, education, tools, feedback and solutions?

Does your platform offer solutions for short-term financial challenges like cash flow issues, as well as long-term financial challenges associated with savings and development? A major return on your investment comes from reduced employee stress, which is substantially driven by short-term triggers versus long-term planning objectives. You must deal with current financial challenges before you can ask for longer term vision.

Does your platform provide real-time data that quantifies the behavioral change within your employee base, while motivating and recognizing employee accomplishments?

If you would like a personal assessment of your financial wellness platform, or simply want to know how you can implement an effective program, please Contact us for a no-cost evaluation.

1 Living Paycheck to Paycheck is a Way of Life for Majority of U.S. Workers, According to New CareerBuilder Survey

2 Majority of young workers have already tapped their retirement savings

3 Retirement Assets Hit $29.2T: ICI Report

4 Report on the Economic Well-Being of U.S. Households in 2017 – May 2018

5 Many Americans Continue To Struggle With Credit

6 Credit unions around the world: USA

7 Living Paycheck to Paycheck is a Way of Life for Majority of U.S. Workers, According to New CareerBuilder Survey

8 Report on the Economic Well-Being of U.S. Households in 2017 – May 2018


10 10 important facts about games and learning

11 Number of U.S. financial advisers fell for fifth straight year – report