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Working Well

The Convergence of Health and Wealth

Financial wellness programs are on the rise. Given the different individual and external factors that contribute to a person’s poor financial situation, how can companies create an effective program?

Let’s talk about money. Every time I read an article or internet think-piece about how people are stressed about money, I have to actively stop the incoming eye roll. Of course people are stressed about money. Is that a surprise?

Financial Wellness

“You can’t just assume that everyone who doesn’t save isn’t educated, is making the wrong decision and is a mess. That’s very much not the case,” said Nathan Voris, managing director of business strategy at Schwab Retirement Plan Services.

CNN recently reported that half of Americans are spending their whole paycheck; they have no financial cushion. And although individual spending habits contribute to this to some degree, much more of this problem could be associated with the bigger picture. “People are spending a shockingly large amount of income on housing. They have to pay for transportation to get to a job. These costs are going up while their wages stay the same,” said Jennifer Tescher, president and CEO of Center for Financial Services Innovation, according to a CNN article. CFSI is the organization that released this study. Also a factor: irregular income, a problem that won’t go away as the gig economy becomes bigger.

Keeping this in mind, it’s no wonder that so many people aren’t contributing the maximum to health savings accounts and retirement funds. Does raising the HSA contribution ceiling or auto-enrollment/auto-escalation solve that problem? I recently heard that people should be contributing 20 percent to their 401(k) or Roth IRA, which is laughable even for people who don’t spend all of their paycheck. I can contribute 20 percent now because I’m saving money, paying off student loans and living with my parents, but for any self-supporting person out there with expenses for rent, food, utilities, child care, eldercare and health care, is that even possible? And is it possible to do that while also contributing a maximum amount to an HSA?

OK, end of rant. For all of these structural elements in place, of course at least some of these money management problems fall on the individual. And from the company’s point of view, of course individuals need to learn how to be responsible for their own finances. In my experience, money management isn’t something that’s taught in a formal/academic setting; people learn that from role models like their parents or don’t really think about it at all. It’s a positive thing to give people those tools once they enter the workforce.

That’s why I was very interested to stumble upon a New York Times article that highlighted a company with a unique perk: fiscal health days. A paid day off to go over your finances and strategize.

What a fantastic idea. The two people mentioned in the article used their day off in different ways. One man found out his wife had a tumor that would take $100,000 worth of surgery to treat. The two of them used this day to go over their finances and figure out how they would pay for it. According to the article, the man made the decision to change his health insurance to be better protected, attended classes about financial health and learned how to communicate with his wife about money, which helped them sort through everything effectively.

Another man highlighted in this article didn’t use the day for his own financial health. He visited his father and aunt at their retirement community and helped go over their finances. They were all able to have this important conversation about living expenses and insurance.

Nathan Voris high resolution headshot

Nathan Voris, managing director of business strategy at Schwab Retirement Plan Services 

For more information on financial health strategies, I recently spoke with Nathan Voris, managing director of business strategy at Schwab Retirement Plan Services about financial health tips. Schwab recently released a survey of 300 executives that found that more and more, companies are considering financial wellness programs as a core part of a compensation package.

A few highlights of this conversation: Financial wellness has moved from something “fringe” to mainstream the past two years, said Voris. “It went very quickly from a concept to an expectation,” he added. “You don’t see that quick movement in the 401(k) world very often.”

He also mentioned the “convergence of health and wealth,” which I think is a really spot-on way to articulate how companies are treating fiscal stress as part of total well-being. It’s basically just another way to say “holistic well-being” or one of the other buzz phrases out there, but it’s solid. And it’s relatively new, in the context of the employer space and what companies are doing.

On the topic of employee engagement and usage of these solutions, engagement can be as low as 3 percent and as high as 40 percent, Voris said. It depends on the population, partly. Also, it depends on what you’re communicating about the plan. At Schwab, they tend to be data-driven and evidence-based, added Voris. They dig into the data, figure out the specific pain points of an individual and design things around those issues rather than have a “canned wellness strategy.”

This “personalization” approach isn’t anything new, but worth mentioning considering the stark differences between people’s individual financial situations.

I also asked him how companies can deal with different types of employees, like those who are simply bad with money versus those who are not in a financially secure situation because of some unavoidable, unexpected high cost things (like a major surgery, for example).

“What life stage you’re in has a lot of different factors,” said Voris. “You can’t just assume that everyone who doesn’t save isn’t educated, is making the wrong decision and is a mess. That’s very much not the case.” Again, his company tries to tackle that through data-driven solutions.

The message he tries to drive home for people not in a financially secure position is that small things do matter, even if it doesn’t seem like they do. “Don’t try to boil the ocean,” he said. “Scratch one little thing off the list at a time. Over time, over a few years, those little things turn into big things. That’s how we approach it, recognizing that everyone is a little bit different.”

Voris’ final piece of advice? “We need to stop the guilt trip,” he said. “This picture of a handsome, gray-haired man leaning up against the Corvette and looking out into the ocean … the reality is that’s not real for a lot of people. We need to teach people how to retire with dignity and own their situation.”

That’s a good trend we’re seeing in financial wellness, he added. The solutions are becoming more well-rounded to address the needs of people of different financial situations.

Andie Burjek is a Workforce associate editorComment below or email editors@workforce.com. Follow Workforce on Twitter at @workforcenews.