Lack of Employee Financial Wellness Hurts Productivity

Sponsored by CUNA Mutual Group

After more than 18 years as an executive in the retirement industry, the Senior Vice President of CUNA Mutual Retirement Solutions Paul Chong is convinced that credit union employees need more than basic retirement plan education—they need “financial wellness” training.

“When you look at new laws and regulations relating to retirement savings products and other investment vehicles now available to the public, it’s clear these products have become more complex. And yet the financial literacy that employees need to understand these products and use them wisely hasn’t kept pace,” says Chong. “That’s stressful, especially as employees near retirement. It’s not good for the employee, the credit union or its members.”

Workplace survey reports from PricewaterhouseCoopers and Aon Hewitt in 2017 back up Chong’s assessment. More than half of the workers surveyed by PricewaterhouseCoopers in 2017 reported being under financial stress.

The financially stressed survey respondents were significantly more likely to become ill, miss work or be distracted at work because of personal financial matters, among other blows to productivity.

Increased Investment in Financial Wellness

Some employers are clearly getting message.

Nearly six out of 10 employers surveyed by Aon Hewett in 2017 are very likely to focus on the financial well-being of workers—beyond merely helping them make retirement decisions—and another 33 percent are moderately likely to do so.

The report states, “While financial well-being has been a hot topic for the past several years, 60 percent of employers feel its importance has increased at their organization over the last 24 months.”

In working with credit unions and other types of employers over the years, Chong says a common misperception is that simply providing employees with basic financial literacy materials will change their behavior.

“That’s not enough anymore—the days of Social Security and defined benefit pensions supporting you completely in retirement are mostly gone,” Chong says. “The burden has been shifted to defined contribution plans in which workers are the investors. If you don’t know how to invest, and you don’t understand the different vehicles and products, you’re not going to build a big enough retirement nest egg.”

Financial Literacy Isn’t Enough

Chong urges CUs to expand on financial literacy programs they conduct for employees and for their members and communities. He points to a 2016 research report published by the Filene Research Institute, which posits two levels of financial achievement to strive for beyond literacy:

• Financial capability: the capacity—using skills, knowledge and practices—to manage financial resources effectively and improve one’s well-being, and
• Financial well-being: the ability to fully meet current and ongoing financial obligations; to feel financially secure enough to enjoy life and prioritize personal fulfillment.

Filene surveyed CU executives about which types of financial outreach programs appeared to be most effective at improving members’ financial capability. (The results likely pertain to employees as well.)

Individualized financial coaching programs were the “unambiguous choice for top effectiveness,” according to the Filene report. Group seminars and workshops were rated the second-most effective programs overall.

Measuring Success is the Key

Chong stresses that whichever outreach program your CU chooses, it’s critical to measure the program’s success.

“The more our industry uses a common method of measurement, the more we can help one another. There are several great candidates out there,” Chong says, referring to financial well-being assessment tools available from the Consumer Financial Protection Bureau, UW-Madison and Filene.

He adds, “So many credit unions invest resources into financial education programs, but they don’t measure the participants’ progress. If you know what’s working and what isn’t, you can adjust your program and improve the results—which translates into a better quality of life for your employees and members.”

CUNA Mutual Group is a CUES Solutions Platinum provider. For more information about becoming a CUESolutions provider, please email kari@cues.org.