A multiyear study has found that workers who receive financial coaching offered by their employers are better prepared for retirement, more adept at managing their cash flow and debt, and more confident investors.
The research from the Financial Wellness Think Tank at Financial Finesse, an El Segundo, Calif.-based provider of financial wellness programs, tracked 2,458 employees over five years as they engaged in financial wellness programs run by Financial Finesse.
The share of participants in the study who indicated they were prepared for retirement jumped to 57 percent in 2018 from 21 percent in 2013. At the end of the five-year period, 69 percent felt confident in their investment strategy, up from 43 percent at the outset.
The study also identified nearly a 50 percent increase in average retirement plan contribution rates (from 6.3 percent to 9.4 percent) and a 41 percent rise in average contributions to a health savings account (from $934 to $1,319).
“When we look at nonusers [of employer-sponsored financial wellness plans] and users that are only using technology as a financial wellness benefit, there’s very little difference in their behaviors,” said Greg Ward, co-author of the report and director of the Financial Wellness Think Tank. “Where we are seeing those substantial changes in behavior is when the participants are engaging specifically with financial coaches.”
CFP professionals on staff at the Financial Wellness Think Tank provide financial coaching to the employees of Financial Finesse’s clients. Financial Finesse directly engages 45 employers representing 1,250,000 employees across multiple industries, including health care, consulting, manufacturing, mining, professional services, sports organizations, education, financial services, and entertainment, said Ward.
Another several thousand individual employers have access to coaching services through Financial Finesse’s partnership with Ascensus and hundreds of employers have access through its relationship with GRP Advisor Alliance, he noted.
Many of Financial Finesse’s client relationships are too new to have been included in its five-year study, but an analysis of more recent data across its book of business shows “consistency in how financial coaching is moving the needle for individuals that are engaged in that process,” said Ward. “We feel it is definitely something that can be scaled” to help more Americans prepare for retirement.
Liz Davidson, founder and CEO of Financial Finesse, emphasized the importance of offering coaching as an employee benefit.
“While we are not quite at the point where an employee may pass on a job offer solely because the organization doesn’t offer a financial wellness program,” she said, “I do believe an employee who is on the fence and considering multiple offers would absolutely be more likely to accept the offer that includes unlimited access to personal financial coaching resources.”
Financial coaching can help employees leverage their compensation and benefits, she said. Companies are also using financial wellness to “transform their cultures,” she said, “and cement their commitment to employees’ overall wellbeing.”