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Measuring ROI on Financial Wellness Programs

Considering the woeful state of employee financial wellness statistics and the number of individuals living paycheck-to-paycheck, employer-sponsored financial wellness program should be relatively effective. But how can we determine whether the programs are working as intended?

There has not been a lot written on measuring the return on investment for employee financial wellness programs. Understandably, the effectiveness of these programs is important to employers to ensure that their money is well spent.

To address this issue, I recently collaborated with a group of peers at the Retirement Advisor Council to produce A Return on Wellness—Measuring Financial Wellness Programs, the third in a series of financial wellness/financial independence position papers.

The piece provides quantitative stats about the potential savings of financial wellness programs. For example, citing survey data, a hypothetical 10,000-employee firm’s employee wellness program resulted in a return on investment of approximately $2.4 million annually in employee productivity gains, due to less time spent at work addressing personal financial issues.

The paper also considers an example of an actual employer (Prudential), that implemented a financial wellness program for its employees. Over an eight-year period, employee financial stress levels were cut in half, with related employee productivity gains.

The piece also enumerates baseline metrics that can be measured over time to determine the effectiveness of an employee financial wellness programs, including:

  • Number and amount of wage garnishments
  • Number of absences and tardiness
  • Number of retirement plan loans and in-service distributions
  • Enrollment and contributions to retirement plan and HSAs (if applicable)

I personally believe that financial wellness is the missing piece to the retirement plan engagement puzzle; thus, effective measurement of these programs should not serve as a barrier to implementation. The Retirement Adviser Council’s piece aims to overcome this concern by tackling the tough topic of return on investment. I encourage you to take a few minutes to read the paper in its entirety. For more information on the series, click here and here.

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Note: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice. Opinions expressed are those of the author, and do not necessarily represent the opinions of Cammack Retirement Group.

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