The most effective financial wellness programs? Tools, education & one-on-one counseling

Despite eased inflation, American employees are paying a steep price for deficient financial planning, as life events often derail their saving for emergencies and retirement – putting their families at risk and leading to potentially delayed retirement and saving shortfalls.

“The survey results in the Goldman Sachs Asset Management 2024 Retirement Survey and Insights Report show employees overwhelmingly are looking for their employers to provide education and services around retirement savings and investment, with budgeting being a distant second,” say Nancy DeRusso, Head of Financial Planning, Financial Wellness and SurvivorSupport® for Goldman Sachs Ayco.

We talked to DeRusso to further help employers offer enhanced retirement planning services in order to make retirement planning effective for their employees.

Q: What kind of financial education and advice do employees want most from their employers?

A: It’s helpful to set the stage for what an effective financial wellness program really looks like. The focus should be on providing resources necessary for employees to create a comprehensive plan that incorporates all aspects of their finances and financial goals, inclusive of retirement. Managing competing priorities is one of the most common challenges for employees. Most employees have multiple financial goals (housing, transportation, child care, debt, etc.) and it can be difficult to build additional savings into their budget.

Comprehensive financial wellness programs can help employees not only get and stay on track to meet their goals, but also bring to light the issues they may not be thinking about that impact their financial well-being. These programs can help employees build a plan to navigate this financial vortex while still building toward retirement. Some of the benefits and tools employers offer in this space are fragmented and/or do not offer a full suite of services to tackle the issues that can arise across an employee’s financial life.

What we are really seeing in terms of the evolution of retirement advice is to combine the benefits of digital financial wellness tools, financial coaches, and in-plan retirement education and advice. These comprehensive offerings are designed to help employees understand the gaps they may have in their financial knowledge and the benefits available to them, so they can develop a holistic financial plan that incorporates retirement — and actually execute the plan in conjunction with their 401(k) retirement assets. Financial wellness programs are generally offered at no cost to employees.  There is a lot of value to be gained by employees who are made aware of some of the free or low-cost benefits they can get through their employer.

Q: How can employers foster financial literacy in their employees?

A: Financial literacy is key. You just don’t know what you don’t know. Without the right foundation, employees may develop a plan without fully understanding their risks and opportunities.

Financial wellness programs can really help employees build a foundation and an understanding of how to focus and take small steps to make progress over time. Most people recognize the importance of saving for a goal, but they don’t understand how they can get started, especially when they are overwhelmed and feeling stressed by their current situation.

Effective financial wellness programs include relevant and timely communication on available benefits, access to webinars, tailed communications, digital tools, live coaching and tools to help employees execute on their plans. The more personal you can make it, the better. Communications should be targeted, such as sending separate messages to employees who are not contributing at all vs. those who are only doing the match. Employers can also use targeted communications to take advantage of moments that matter when employees are focused on their benefits and finances, such as at onboarding, annual enrollment or when an employee is experience a life event.

Q: How can employers help employees develop a personalized plan?

A: Retirement plans are increasingly integrating new features to address the specific needs of employees, such as emergency savings, student loan repayment, and financial education. Access to financial education and guidance is one of the most impactful things plan sponsors can offer.

Related: Retirement saving is a journey: How employers ca help foster ‘financial grit’ in plan participants

The most effective financial wellness programs offer a combination of digital tools, group education and one-on-one financial counseling. Employers should also focus on highlighting and building employees’ understanding of how these advice and plan features can take stress out of their lives.

Financial coaches can provide another set of eyes to look at financial habits and help identify small steps to actually execute a financial plan. We see this more and more – there was a trend toward digital-only financial wellness services but only so much can be done that way. They’re often not personalized enough to create an actionable plan.

Coaches can help simplify things and provide ongoing support as life changes. There is no one-size-fits-all approach and financial plans cannot be static. They are not one and done – your life changes year over year, as do your priorities, family dynamic and financial situation.

I am sure that the plan I put together 10+ years ago is virtually irrelevant today. Employees need continual support to evolve their plans as their circumstances change. A personalized financial plan, combined with targeted education and advisory services, can serve as the crucial element that empowers individuals to make informed decisions on their priorities. By providing employees with such a plan and the support they need to execute it, they can more effectively utilize savings and investment features, enabling them to make well-informed decisions about their financial future.