Financial Wellness

The state of financial wellness — Part 4

Most tools available to your employees aren’t helping — and may actually be holding them back.
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This is the final post in a series that explores the extent of financial stress among Americans, how that stress affects businesses, and what the path forward looks like. Get caught up: Read part 1, part 2, and part 3.


There’s no disputing that the marketplace is full of financial products and services that are meant to help consumers. Many employees have access to 401(k) plans to save for the futures, as well as small loan providers and even on-demand pay services. But none of these products is focused on the thing employees need the most: addressing financial stress in the moment, and then building savings as a foundation for progress.

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There are five specific areas in which existing products fail to meet the needs of employees like yours

1. They’re nonessential when they need to be immediate

When employees are in crisis, a plan that helps their future self — instead of their current in-crisis self — is nonessential. When an employee’s immediate concern is whether there’s enough gas in the car to get to work and keep their job, everything else falls by the wayside. This is why longer-term, intensive offerings such as 401(k) programs and financial literacy programs are great to offer — as long as employees have something to help them become stable enough to even begin considering the long term.

2. They’re complex when they need to be simple

Financially stressed employees are already dealing with high cognitive load and depleted resources; in this state, an overly complex solution is not useful. Most of the tools available — like health savings or financial planning assistance programs — take precious time and energy to learn. Not only does this reduce effectiveness of those programs, but adoption in the first place. If a solution breaks down the complexities of personal finances and presents them in a simple, easy-to-understand way, employees can make more progress.

3. They’re demotivating instead of being personalized

Tools meant to help employees improve their situation often have the opposite effect due to their demotivating design. Many traditional budgeting programs, and even consumer finance apps, offer negative feedback or unrealistic advice. For example: Reprimanding a user for exceeding the monthly budget by spending money on medicine for their child. This causes users to abandon the tool, and often develop a psychological condition called learned helplessness. A more successful approach would use personalized, motivating design that uses positive reinforcement to help employees develop learned optimism, significantly improving the likelihood of making sustained progress.

4. They’re scattered instead of centralized

There are, to be sure, dozens and dozens of methods to get information about one’s personal finances, and interact with them. And that’s the problem: There are dozens and dozens of methods. By using different tools for tracking work shifts, budgeting, saving, and retirement planning — all from different vendors, with different designs and approaches — consumers are overwhelmed. A solution that gives employees a centralized place to manage finances will increase the chances of making progress, simply because it’s more convenient.

5. They keep employees stagnating instead of becoming healthy

Many solution providers can only turn a profit when their customer is stagnating — that is, stuck in a position of needing to use the product. This can be seen by looking at on-demand pay providers, payday lenders, and even credit card companies. These providers have no interest in helping the customer succeed financially, because then the customer wouldn’t need to pay for the solution anymore. A more healthy approach aligns the provider’s goals with those of the customer. The provider should only make money when its customer is saving money.

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Your hard-working employees are trying to make ends meet. They’re struggling with record levels of debt, and reaching for services that claim to be a life raft, when in reality they’re just anchors in disguise. The financial institutions that should be helping are taking billions of the wages you’re paying out — annually — in the form of payday loans, overdraft fees, and credit card interest. But employers have the power to step in.

After all, the most successful companies are run by leaders who realize their most important asset is their people. These employers differentiate themselves by giving employees something that impacts them more than higher wages alone: tools for moving forward.

So, where should you start?

The first step is to redefine your benefits strategy. Yes, you’re offering financial tools — but are they the right ones? If the tools available are overly complex, hard to manage, or simply not giving employees what they need at the time they need it, then they’re effectively useless.

A holistic financial wellness program can provide the simplicity, immediacy, personalization, and centralization employees need to become more financially health. Before employees can plan for their futures by participating in things like 401(k) programs, they need to address today’s needs: getting bills paid, and building their savings. Employees need access to healthier solutions that don’t dig their holes even deeper. They need solutions that turn their paychecks into progress.


Ready to learn more? Download our newest e-book: A Guide to Financial Wellness: The Employer’s Handbook for Understanding On-Demand Pay and Financial Wellness Benefits.

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