Financial wellness programs are an add-on to an employer’s existing non-monetary incentives. The purpose of these programs is to improve employee financial judgment and bring about positive financial outcomes in their lives. A complete program will also include employee incentives or rewards when positive objectives are achieved.
The argument is that if employees worry less about their finances they will be more focused, engaged and hence productive at work. This translates to improved operational efficiency and returns for the business. In fact, according to the Consumer Financial Protection Bureau (CFPB)*, a financial wellness program could save companies anywhere from $1 to $3 for each dollar they spend. Given that 7 out of 10 American workers worry about their financial obligations, the argument is convincing. Therefore, employee financial health and business performance share a direct relationship.
There are numerous financial wellness programs on the market. Some include retirement planning, financial literacy, investment planning, debt management, savings schemes, emergency funds, and so on. Businesses must decide for their workforce which program to offer that genuinely improves an employee’s financial well-being.
The ideal financial wellness offering should result in a Win Win situation for both employee and employer. Therefore, usage should measurably reduce an employee’s financial stress by encouraging and promoting a certain type of behavior or lifestyle change. A positive behavior change could mean a contribution to a savings plan, or avoiding a payday loan. While it should help the business achieve greater operational efficiency by way of reduced turnover, increased productivity, reduced absenteeism and greater recruitment.
Some programs that are packaged as financial wellness benefits can be detrimental to employee financial well-being. These products are often masked and positioned as benefits but in reality are incomplete offerings, create negligible value addition and encourage unnecessary expenditure.
A 401(K) plan is a great benefit for employees to build long term financial security should a business offer it – not all do. But while it can help employees save, it has plenty of restrictions and conditions on usage thereby limiting the impact it could have on helping employees deal with short term financial obstacles.
Financial education programs are effective for creating general awareness on how and where to spend, invest and save money. Though these literacy programs may have a long term impact provided the employee remains part of the organization offering it, they do not offer a measurable short term benefit.
Some financial assistance facilities are disguised installment loan products that may have lower interest rates but still add to overall indebtedness as usage increases. In fact most loan programs are disguised predatory loans.
Catalogue sales programs with salary deduction is another popular program that does not truly contribute to employee financial health because the same products are likely to be cheaper elsewhere. It preys on an employee’s time sensitive needs and provokes over-spending.
PayActiv has created an award-winning financial wellness program that helps employees overcome financial shocks while they wait for paychecks. The program takes into account an employee’s immediate and long-term financial needs while not creating any additional debt. The core service allows employees to access a portion of already earned wages for a small ATM like fee. Also included at no cost are services like electronic bill payment, electronic bank transfers, and budgeting and saving. In addition there is a feature for employers to add rewards for employee incentives.
A good financial wellness benefit should serve a dual purpose – it should improveComponents of a financial wellness programs employee financial health while also improving business performance. PayActiv helps businesses invest in their employees and build a productive engaged workforce.
PayActiv financial wellness program has been voted the best FinTech innovation at Finovate Spring 2016, the best HR product for employee financial wellness by HR Executive 2016 and was the finalist amongst financial inclusion products at the Color of Wealth Summit 2016.
The recipe for success of PayActiv financial wellness program is in its foundation – financial security, dignity and savings for all working people.
Security: where one is not afraid in times of financial stress.
Dignity: where one is self-reliant.
Savings: where one is prepared for a rainy today or tomorrow.
“Beware of little expenses; a small leak will sink a great ship” – Benjamin Franklin
* The CFPB Approval Order relates only to Payactiv’s Payroll Deduction EWA Programs and not to all Payactiv products or services. The Approval Order is a public document, and may be reviewed here.
In fact, a study found that only one in five (21%) employees would describe...
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1 Many (but not all) employers, government benefits providers, and other originators send direct deposits early with an effective of 1-2 days later. Beginning with your second direct deposit of at least $5 from the same source, Central Bank of Kansas City (CBKC) will post the funds to your Payactiv Visa Card when we receive it, rather than on the effective date. This may result in your having access to the funds sooner. The date CBKC receives your direct deposit and the effective date are controlled by the originator.