“What’s the Goal of Your Financial Wellness Program?”

If the goal of your financial wellness program is to get employees to take action and achieve their financial goals, then it’s critical to have a financial coach that helps keep employees accountable and feeling confident about their finances.

By incorporating real people into a financial wellness program, you’re able to achieve a much greater impact. Any financial wellness service that does not directly incorporate a coach or advisor into the employee financial wellness program is missing out on what is potentially the biggest driver of behavior change, namely a financial expert to keep employees accountable to their goals.

Since, we recognize that accountability is a key missing ingredient in financial wellness programs, we also believe that when employees do not feel a sense of accountability towards their stated financial goals, they are significantly less likely to achieve them. People work with personal trainers to ensure they exercise regularly and make progress on their fitness goals. Similarly, employees need a financial coach to keep them on track, and ensure that they are making progress on their financial goals. As we all know too well, personal finances can be confusing and that confusion leads us to procrastinate. When an employee is matched with a financial coach, they have an “accountability partner” that helps to keep them engaged and provides them with actionable steps, while coaching them one step at a time.

Additionally, by designing a program that is finite and time-bound, it creates in employees a sense of urgency to complete the program. By setting up the first part of the financial wellness program as a “sprint” when the employee’s motivation is near its highest point, you’re able to get the most action from employees.

Moreover, we believe that the financial education model that nearly all financial wellness programs employ is an ineffective approach. Research has proven that financial education and literacy programs are completely ineffective in getting employees to take action. A meta-­analysis of 188 financial literacy and education programs conducted in 2013 and published in “The Effect of Financial Literacy and Financial Education on Downstream Financial Behaviors” by Fernandes, Lynch and Netemeyer found the following:

 

“Content­-based, financial education interventions explain only 0.1% of the variance in financial behaviors.”

 

In contrast, a World Bank study entitled “The ABCs of Financial Education : Experimental Evidence on Attitudes, Behavior, and Cognitive Biases” found that coaching was dramatically more effective than education.

Nearly all financial wellness providers tout content-based solutions, such as videos, articles and resources centers, when point-­of­-fact, this approach provides literally zero impact when it comes to behavior change.

At Retiremap, we believe in what behavioral research has shown to work: personalized coaching, multi­channel messaging and just­-in-­time delivery.

That’s not to say that we don’t provide content to help keep employees engaged, because Retiremap does send employees personalized “I saw this article and thought of you…” messages. However, we do not rely on content to change employee behavior, because that flawed approach does not work.

Retiremap Highlighted in InvestmentNews Article

InvestmentNews recently ran an article written by our partners at Duke University, on why education doesn’t doesn’t work and lasting ways to change employees’ unhealthy financial behaviors.

Check out the article here:
http://www.investmentnews.com/article/20170521/FREE/170529991/how-401-k-advisers-can-create-effective-financial-wellness-programs

The #1 Reason Retiremap 2.0 Will Change Financial Wellness

To create our new financial wellness platform, we partnered with Duke University’s Common Cents Lab and the renowned behavioral economist, NY Times bestselling author and WSJ columnist, Dan Ariely. It’s the skillful application of proven, research-based, behavioral economics principles that sets Retiremap 2.0 apart.

More education is not the answer. More Powerpoint presentations are not the answer. More one-off employee 1:1s are not the answer.

Personalized, affordable, long-term coaching is the answer (see our data sheet below for details).

So join us when we showcase Retiremap 2.0 alongside our partners from Duke on Thursday, 9/22 at 11am PDT. Space is limited to the first 250 people who register, so sign up today for the free launch webinar.

But the BIG problem with coaching is that it’s so labor intensive and expensive!

With Retiremap 2.0, we’ve designed a way to scale up financial wellness coaching using mobile technology, CRM automation, multi-channel messaging and the 3 Key Concepts Missing from Financial Wellness Programs. It’s very exciting and ground-breaking stuff.

 

3 Key Concepts Missing from Financial Wellness Programs

You already know that there’s a ton of buzz around financial wellness.

But what you might not know is that there are three key concepts that are completely missing from financial wellness programs. By not including these key behavioral economics concepts, advisors, providers and employers are losing out on their opportunity to have a big impact.

duke-and-retiremap
Retiremap’s partnership with Duke University’s Common Cents Lab uncovered three missing key concepts

Don’t just take my word for it. These key concepts are the result of 10 months of product development between Retiremap and Duke University’s Common Cents Labs, headed by the renowned behavioral economist, NY Times bestselling author and WSJ columnist, Dan Ariely.

I want to talk briefly about three missing concepts and how they’ll shape the future of financial wellness. They’re not what you expect.

MISSING CONCEPT #1: Start with goal-setting

If we focus on explaining more of the fundamentals of personal finance, will employees change their under-saving behavior? No way. People care about themselves, their goals, their future. Start every engagement with a detailed discussion about which financial goals they want to accomplish, in order to motivate behavior change.

MISSING CONCEPT #2: Focus on pre-commitment

How can we ever get employees to change their behavior if we don’t ask for a specific commitment? We need to engage them around their goals and then get them to commit (multiple times, in different ways) to follow through. The use of positive social proof (i.e. 78% of people aged 34-45 selected this option) is also key.

MISSING CONCEPT #3: Accountability drives behavior change

We all know how easy it is to ignore an email from a personal finance app. But if that email, SMS or in-app message comes from someone that we’ve been matched with and we have committed to work with them on our goals, it’s a very different story. The trick is how to scale that accountability (more on that in another email).

Last week, we were discussing with our research partners at Duke how we could get the word out on these concepts so that your current and future financial wellness programs will achieve better results. We decided to put together a cheat sheet to show you what you need to know. Introducing, the first ever cheat sheet on the 3 Key Concepts Missing from Financial Wellness Programs:

The financial wellness cheat sheet contains all new material that:

  • Highlights each concept’s “Superpower”
  • Examples of the “Superpower In Action,” so that you can apply it to your programs

Retiremap Improves Financial Wellness [Case Study]

When the Evening Post, a major media and information organization, was undergoing a plan transition, the plan sponsor recognized that employees were satisfied with the change in provider but they still needed a more holistic retirement readiness assessment. To ensure that employees were prepared to improve their overall financial wellness and reduce stress related to personal finances, the plan sponsor brought in Retiremap to help.

Our first workshop enabled nearly 70% of employees to increase their paycheck deferral rate. Moreover, 77% of employees wanted to meet with a financial advisor one-on-one to continue making progress against their financial goals.

Employees reported feeling more prepared to take the next step to improve their financial wellness and believed that Retiremap had provided helpful tools to reduce stress. Because of our efforts, the plan sponsor was also able to gain insights around employee concerns and high-level trends, which can help foster continuous improvement in financial wellness offerings.

To learn more about how Retiremap helped the Evening Post implement a comprehensive program and better understand employee needs, check out the full case study.

Insights cover_case study 2

 

This case study is presented as part of the Financial Wellness Insights series. If you’d like a white-labeled version of the case study or any of our other studies, just let us know.

 

How to Talk to Employees about Financial Goals

It’s easy to feel overwhelmed by financial planning. According to a recent survey by T. Rowe Price, 18% of workers avoid dealing with their financial situation because it is out of control; among Millennials, the number bumps up to 25%. This alarming datapoint highlights the need for open and thoughtful discussions around employees’ personal finance challenges.

Retiremap believes that focusing on financial goals appeals to what employees really want to do with their money and motivates them to take meaningful action. Here are some tips for talking to employees about their top financial goals:

  1. Saving for Retirement
    • Remind employees about saving plans at work and outside of work
    • Discuss the basics: A) How to Save, B) How Much to Save,  C) When to Save, and D) How to Invest
    • Remind them to start saving for retirement now and to contribute as much as they can
  2. Eliminating Debt
    • Understand what kind of debt they are most concerned with, where they are in their lives, and their other financial goals
    • Help them understand the relative cost of debt and help them target accordingly
    • Acknowledge that some employees may not be able to pay
  3. Buying a Home
    • Remind them of key considerations, such as how long they will live there, school districts, and additional costs
    • Go over different property types and non-financial factors
  4. Investing Better
    • Go over common investing myths
    • Stick to common best practices depending on their needs, instead of getting bogged down by the details of their financial situation
  5. Creating an Emergency Fund
    • Remind them that an emergency fund is different from setting aside money for a major purchase
    • Encourage them to contribute money to an emergency fund regularly until they reach a sizable cushion

Employees in the most need of guidance are often the ones who push off thinking about their finances. Start the new year off right by helping them create a financial plan and achieve their goals.

Financial Goals

Finanical Goals Infographic

Our latest Financial Wellness Insights found that saving for retirement is the top goal among employees. Other leading goals include eliminating debt, buying a home, and investing better. To find out more about financial goals and how they rank among different employee segments, download our full study: http://retiremaphq.com/financial-goals

 

 

Saving for Retirement Comes Out on Top

Saving for retirement is the most commonly cited financial goal among employees, coming ahead of many short-term goals, including eliminating debt and creating an emergency fund.

We found that saving for retirement is a goal for the majority, 56%, of employees surveyed. Saving for retirement came in far ahead of the second most popular financial goal, which was chosen by 40% of employees.

In the latest issue of Financial Wellness Insights, we discuss the top five goals among employees. Check out the full study here: http://retiremaphq.com/financial-goals

Financial-Wellness-Insights_Goals_11.2015

Highlights of the issue include generational differences, financial motivations across different income groups, and tips for talking to employees about their top financial goals.

When it comes to retirement planning, our analysis suggests that the problem is not with employee intention but with knowledge. By empowering employees with the right tools for long-term planning, advisors can effectively help employees achieve their financial goals.

Retiremap’s Financial Wellness Insights is a bimonthly research series that helps employers and advisors better understand employees. Each issue offers a blend of in-depth analysis of employee data and highlights of research from throughout the industry. As always, Retiremap is happy to offer Financial Wellness Insights with white-labeling for advisors to present and distribute.

Effects of Company Size on Retirement Readiness

Employees at large companies have better access to retirement benefits than employees at small companies, but small companies are rapidly improving their employees’ retirement confidence, according to the 16th Annual Transamerica Retirement Survey.buildings black and white The survey, which included responses from 4,550 workers nationwide, defines a small company as having 10-499 employees and a large company as having 500 or more employees.

74% of employees at large companies have access to a 401(k) or other self-funded plan by their employers, compared to 56% of employees at small companies. Unsurprisingly, employees of large companies are more likely to rely on their retirement accounts as a primarily source of income, 40% compared to 34%. The participation rate for those offered a 401(k) or similar plan is around 80% for both groups. The plan contribution rate, however, is higher for employees at large companies, 8% of their annual pay, compared to small company employees’ 7%.

Despite differences in access to retirement benefits, employees at large and small companies have similar sentiments about retirement. 60% of all employees feel “somewhat” or “very” confident about retirement, and both groups have similar expectations about age of retirement. Concerns about retirement are consistent as well. 80% of both groups agree that their generation will have a harder time achieving financial security than their parent’s, and 75% are concerned that Social Security will not help them.

While small companies still have some catching up to do in terms of offering competitive retirement benefits, multiyear data suggests that small companies have made more gains in the last few years in improving employees’ retirement confidence. Employees at small companies who felt “somewhat” or “very” confident about retirement grew 23% from 2011 to 2015; the cohort that felt “very” confident grew 88%. In comparison, employees at large companies who felt “somewhat” or “very” confident about retirement grew 13%; the cohort that felt “very” confident grew just 17%.

It is clear that employees at both large and small companies need more financial guidance. The majority of workers “guessed” at their retirement savings needs; less than 10% used a retirement calculator. 61% of all employees agree with the statement “I would like to receive more information and advice from my company on how to reach retirement goals.” However, a startlingly 41% of small company employees and 37% of large company employees agree with the statement “I prefer not to think about or concern myself with retirement investing until I get closer to my retirement date.” Interestingly, employees at small companies are somewhat more likely (37%, compared to large company employees’ 33%) to use a professional financial advisor to help manage their retirement savings. Yet, the data suggests that the vast majority of employees at large and small companies could benefit from either more advice on how to achieve financial goals or simply guidance on how to start thinking about retirement investing.

Retiremap Launches Financial Wellness Insights

Employers and financial advisors are increasingly eager to learn about and provide more robust assistance with employees’ financial wellness goals. In response, Retiremap has launched Financial Wellness Insights, a research series that will focus on a different theme in the financial wellness landscape every month. This month’s research on Millennials can be found here:
http://retiremaphq.com/millennials

Financial Wellness Insights_Millennials_9.2015

Offering a unique blend of in-depth analysis of employee data and highlights of research from throughout the industry, each issue of Financial Wellness Insights will provide timely and actionable information to help employers and advisors better understand employees and how they can strengthen their financial wellness offerings. Case studies and industry best practices will also be included in the research.

“We are excited to be offering our new Insights series to share the broad financial wellness trends we are seeing through Retiremap implementations with advisors,” said Matt Iverson, CEO at Retiremap. “The Insights series is designed to help advisors demonstrate thought leadership by sharing the latest financial wellness research with clients and prospects.”

As with Retiremap’s other communication and research pieces, Retiremap is happy to offer Financial Wellness Insights with white-labeling for advisors to present and distribute.

In the inaugural issue, “How Millennials Rank on Debt, Savings and Investing,” Retiremap finds that Millennials stack up surprisingly well against Baby Boomers and Gen X-ers across a number of key financial wellness indicators, including debt and savings rates. Millennials have far less liquid savings than Baby Boomers and Gen-Xers but are steadily catching up with an overall monthly savings rate of $425. Even though a higher percentage of Millennials carry debt across all categories measured, Millennials have less debt, in dollar amount, than Gen X-ers do.

“The research reveals that Millennials are aware of their responsibilities, which is a crucial first step in the path to financial security.” said Julia Chen, Researcher at Retiremap. “It’s also a strong signal for advisors that Millennials want to be engaged and educated around financial issues.”

“With all the concern about Millennials, it’s refreshing to see the data showing how they are paying attention to savings and addressing debt,” said Iverson. “We’ve found that the key to engaging Millennials is focusing on their financial goals, while providing a visual planning process.”