Financial Wellness means different things to different people
Solution needs to meet people where they are in their lifecycle
One of the biggest learnings for FINFI has been that for a financial wellness offering to be effective as an employee benefit, it must help all spectrums of the employee population, be it the youngest employee starting out who may only want digital tools to the more tenured worker who seeks complex counseling or financial planning.
Our experience now has allowed us to bunch the employees in five broad categories in terms of needs.
Strugglers with not enough income - This employee is among the lowest paid in the workforce & lives paycheck to paycheck. He tries to find additional gigs & has limited knowledge of finances. Credit profile is either poor or doesn’t exist at all. He is at severe risk of getting into high interest loans & lacks savings cushions; financial shocks can have serious impact
Over spenders - This employee earns middle class wages but still lives paycheck to paycheck. Claims to be financially literate, but behaviors contradict this claim . Poor cash flow management & no budgeting. May have poor credit that needs to be repaired. Could also be young and early in career, making entry-level wages and carrying student loans. He has debt from credit cards, car loans and other purchases. Lacks savings cushions; financial shocks may add hardships
Early Savers - This employee has some savings cushion & understands the importance of savings and is preparing for the future. Needs help fine-tuning budgeting and cash flow management skills. Looks for ways to save on taxes & wants to get the most out of workplace benefits. May still need financial literacy and education support, with an emphasis on decision-intervention communications and basic investing advice.
Extra income with decent monthly surplus - This employee makes a good income, and is among the top 20 percent of earners in the workforce. He is financially literate and thinking of the future. Owns a home or is likely to be in a position to buy one. Aggressively thinking about tax savings, savings for kid’s education & retirement and any meaningful employee benefit. Needs support with wealth management and investment decisions
Financially Secure - Among the most well compensated employee. Tax benefits are really important. Thinks often about financial planning and wealth creation. He has adequate life & health insurance. He wants high quality investment advice and great employee benefits like credit cards, club membership, financial advice membership from the employer.
As you can see each of these categories has a very diverse requirement. It is also important to note that individual move through these categories during the course of their careers with many sliding up or down during major life milestones or the stage of the economy.
My experience while talking to HR people has been that they struggle to navigate through these categories and mostly identify with the segment that they themselves fall in.
We at FINFI are committed to engage the entire employer population of our client organization.
Finfi membership provides solution like earned wage access as substitute for short term loans, savings programs & low interest employer sponsored loans that are relevant to income strugglers but also purchase linked saving plans & best in class rewards/cashback cards for other employee categories that can help extend their salaries by up to 3%. We also provide high quality financial advice on a subscription basis.