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Physical Wellness and Participant Action Enhance Financial Wellness, Say Studies

Practice Management

Financial wellness programs are more effective if they are accompanied by programs that address physical wellness as well as programs that educate participants and motivate them to take action, say recent studies.

Wedding of Financial and Physical Wellness

In what the firm suggests adds to the body of literature that financial and physical health are intertwined, research unveiled by Prudential Financial found that respondents who take advantage of both benefit types are more likely than others to report lower levels of stress, as well as better physical and mental health.

The study, “The Interplay Between Health & Financial Wellness Benefits,” shows that just 13% of workers using financial wellness programs say they have high overall levels of stress, versus 17% of non-users. 

What’s more, nearly 60% of workers who use health wellness programs consider their overall mental health “good,” as do those using financial wellness programs. Those numbers fall to 53% for those who don’t use health wellness programs and 55% for those who don’t use financial wellness programs.

The most common drivers of financial stress, according to respondents, are concerns about not saving enough for retirement or emergencies, and not paying off their debt quicker. They also indicate that not having access to financial wellness programs could be exacerbating their worries.

Among those with access to financial wellness benefits, 40% are worried about retirement savings, 34% about paying down debt and 32% about not having an emergency savings fund. Those figures jump to 46%, 44% and 42%, respectively, for workers without access to financial wellness benefits.

Prudential’s research also confirms that many employers are now supplementing their health wellness benefits with financial wellness programs that help employees with budgeting, managing debt, saving for retirement, investing and protecting against financial risks.

Not surprisingly, financial wellness programs are most common among larger employers. The study found that 48% of workers at large companies (25,000 or more employees) say their employer offers financial wellness benefits, versus 37% who work at small companies (fewer than 100 employees). As to geographic region, 46% of workers located in the West say their employers offer these programs, compared to 37% in the Northeast, 39% in the Midwest and 40% in the South.

The most common financial wellness offerings are:

  • paid family leave, offered by 71% of employers;
  • retirement planning tools (66%);
  • disability income insurance (63%);
  • long-term care insurance (56%); and
  • accident insurance (53%).

Of those, retirement planning tools are the most commonly used (by 36% of workers), followed by paid family leave (27%).

Most workers with access to financial wellness benefits are satisfied with their employers’ offerings. Nearly 60% of respondents say they are somewhat or extremely satisfied, compared to 25% who are somewhat or extremely unsatisfied. Among all survey respondents, 81% say they are likely to use financial wellness benefits next year if offered by their employer.

Employees also apparently have an appetite for financial wellness programs they are not currently receiving, according to the study. Nearly a third of workers expressed a desire for financial education classes, online financial management tools, digital financial advice and planning, accrued wage advances, low interest loans and debt consolidation/payment programs.

“These findings mirror our experience providing financial and health wellness programs for our almost 50,000 employees,” notes Lucien Alziari, Prudential’s chief human resources officer. “We have seen firsthand how financially well employees become more effective employees, less burdened at home and at work by the stress financial struggles can cause.”
Prudential’s survey was conducted from May 10-12, 2019, among a national sample of 2,000 full-time employed adults with access to health wellness benefits through their employer. 

Education ‘Not Enough’

Many employees continue to struggle with competing financial priorities, prompting 401(k) providers to create solutions through financial wellness programs, but it will require more than educational content, a new report advises.

According to research from Cerulli Associates, educational content has value and serves as a building block to basic financial literacy, but the success of a financial wellness program will be contingent on the ability to drive participant actions.

In its report, “U.S. Retirement End-Investor 2019: Driving Participant Outcomes with Financial Wellness Programs,” the firm explains that recordkeepers and retirement plan advisors observe that a driving force behind their decision to create a financial wellness program or enhance their current offering is client demand. 

“Plan sponsors have taken note –nearly one-third (32%) identify improving the financial wellness of employees as a top priority for their 401(k) plan,” states Dan Cook, a research analyst at Cerulli. This sentiment highlights the need for solutions that help address participants’ holistic financial needs, beyond just retirement savings, Cook observes.

Measurement of success and return on investment (ROI) for plan sponsors is often discussed as an impediment to the adoption and effective implementation of financial wellness programs, the report emphasizes. “Plan sponsors have a broad range of goals for financial wellness programs,” says Cook. But while some goals are straightforward to measure, others are more nebulous, he observes.  

For example, goals such as improving employees’ retirement readiness (27%) are clear-cut. With the help of their recordkeeper, plan sponsors can track participants’ 401(k) plan contribution rates and investment allocations over time and monitor for improvements. Other goals – such as improving financial literacy (30%), increasing workplace productivity (20%) and decreasing employee stress (14%) – are more imprecise and difficult to directly attribute to a financial wellness initiative, the report explains.


To overcome the ROI hurdle and connect financial wellness components to workplace outcomes, plan providers should structure participant engagements as action-oriented rather than education-oriented, Cerulli advises.  

“Individuals must be triggered to enact changes that impact their financial lives in a positive way,” explains Cook. “As such, providers must consistently collect data to identify engagement strategies that resonate most with specific groups and craft digital experiences through which a participant’s ‘next-best action’ is only one or two clicks away.”

As to the greatest sources of financial stress, the factors vary noticeably when segmenting plan participant data by age range, the report explains. Not surprisingly, participants under age 40 are more concerned about student loan debt, while stress over retirement savings adequacy peaks between ages 30 and 49. Beyond age 50, participants most frequently select health expenses as a primary source of financial stress.

Additional differences arise when comparing data based on investable assets and gender, Cerulli further explains. Participants with investable assets of less than $100,000 are more likely to indicate lack of emergency savings and credit card debt as a financial concern than their more affluent peers. Women participants identify retirement savings as their top source of financial stress, while men select health care expenses.

Cerulli also considers it problematic that many participants miss the opportunity to accumulate savings for healthcare needs in retirement not because they do not want to invest, but because they are not aware they can use an HSA to invest.

“This knowledge gap can be addressed through education efforts aimed at getting participants (and plan sponsors and advisors) to view HSAs as a retirement benefit,” the report advises. A useful starting point, according to Cerulli, is to clearly explain the triple tax advantage associated with HSAs and quantify the impact of healthcare costs in retirement.