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Changing the Way You Approach Financial Wellness

03/15/2022 Written by: Jeremy Gerardy, QKA, AIF®

We often use and hear many buzzwords in our industry like fiduciary, plan sponsor, fees, savings rates, asset allocation, and financial wellness. All of these have varying degrees of importance when it comes to running a successful retirement program. The buzzword I want to talk about today is financial wellness and, more importantly, how to approach this as an employer who is invested in their employees.

First, let’s define what financial wellness is. Borrowing a definition from Josh Itzoe, financial wellness is what you do or the steps you take in order to lead a healthier financial life. This covers things such as having a written financial plan, having adequate emergency savings, saving enough for retirement, having appropriate insurance coverages, and paying off credit card debt, among other things. These actions ultimately influence our financial well-being or how we feel about the steps we are (or are not) taking.

Financial wellness has been used frequently in the past few years by advisors and other service providers to change the conversation with employers. It is incredibly important to offer a financial wellness program to your employees, but how do you deliver an often under-used benefit to your employees?

If you are offering or looking to offer a financial wellness program to your employees, you must be all-in and advocate for your employees to use the benefit you are offering them. Think of your financial wellness solution as something employees must do throughout the year, much like other forms of mandatory training. For manufacturing companies, it could be required safety training; for healthcare companies, it could be HIPAA training, and the list goes on. Once you treat this tremendous benefit you are offering your employees as something they must do as part of a yearly curriculum instead of something that’s simply available to them, we will have addressed the low utilization.

By garnering greater engagement from your employees, you will better understand your employees' unique financial challenges and needs. This will allow you and your advisor or service provider to implement a comprehensive wellness program designed to better address those needs. We know that financial wellness programs work when employees engage and take positive steps to improve their financial wellness and well-being. I challenge you to stop thinking that simply offering a financial wellness program is good enough and truly get behind it to get more of your employees on the path to financial freedom. Your bottom line will thank you later!

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