Financial wellness programs are gaining momentum despite difficulty in measuring the return on investment and lingering reservations among some plan sponsors about their value, according to industry observers.
"Financial wellness has become the No. 1 focus of employers," said Alison Borland, executive vice president of wealth solutions and strategy at Alight Solutions in San Francisco.
Ms. Borland cited "huge positive trends" in the growth of financial wellness programs, saying that the percentage of plan sponsors looking to create or expand their programs more than doubled in the last five years. Nearly two-thirds of employers (64%) say they are very likely to launch programs or focus on the ones they have, up from 30% in 2014, Ms. Borland said, referencing a 2018 Alight survey of 171 plan sponsors.
Financial wellness programs vary widely in size and scope and tackle issues that range from basic budgeting to debt management and retirement planning. But their overall goals are the same: They all aim to increase the financial wellbeing of employees in the hope that better financial health will lower employee stress levels. While some employers would like to see higher levels of financial wellness translate into lower absenteeism, higher productivity and ultimately greater financial returns — links that so far have eluded researchers — most plan sponsors are implementing the programs simply because they think it's the right thing to do, according to industry observers.
In fact, the heightened interest is driven in large part by concerns over retirement plan leakage through participant loans, hardship withdrawals and cashouts when workers change jobs, according to Ms. Borland. "Leakage in 401(k) plans is a symptom of broader financial distress, and companies and plan sponsors started realizing more and more that you can't solve the leakage issue if you don't try to solve the underlying root cause," Ms. Borland said.
That, combined with a growing belief among plan sponsors that they can talk to employees about matters beyond 401(k) savings, led to a "strong trend of employers being not just willing to but committed to implementing financial wellness programs for their employees," she said.