Does Financial Wellness (Still) Need an ROI?

 The ROI for financial wellness has always been elusive—but a new survey suggests that it might not matter.

Asked “Why are you creating or expanding your financial wellbeing program?”, respondents to Alight’s 17th edition of Hot Topics in Retirement & Financial Wellbeing said that not only was financial wellness their top priority, more than half (56%) said that the importance of financial wellbeing has increased at their organization over the last two years, and none said the focused has decreased. 

But—asked why they were creating or expanding their financial wellbeing program, the respondents largely ignored the traditional ROI metrics. The most common answer was nothing more concrete than to “enhance the overall employee experience (85%), and right behind that was the simple proposition that “we believe it is the right thing to do (84%). Even HR’s traditional favorite—“increase employee engagement”—at 72%—was well behind those arguably subjective gauges. 

“Engagement” isn’t exactly a new measure—but even that requires equating employee utilization with a return of value to the organization’s bottom line. It’s not that it doesn’t have value, but it’s darned hard to quantify. Indeed, some experts argue that we shouldn’t even try.

Goals Posts

Well down the list for these plan sponsors were common goals such as improved retirement statistics (e.g., improved adequacy, decreased leakage, higher participation rate), cited by fewer than half (49%), or the traditional “to increase attractiveness and/or differentiate ourselves as an employer,” which was identified by just 47%. The goals that many early advocates of financial wellness had touted—to “decrease employee time spent addressing financial issues (either on the job or through absenteeism)” was mentioned by just 43%, and as for “decreased medical costs”—a mere 14% indicated that was a rationale. Nor was it a matter of responding to worker interest—just 38% cited employees asking for these types of benefits as a factor.

Don’t get me wrong—it’s not as though there haven’t been attempts made to quantify the return on the time and monetary investment in these programs, certainly by the firms that promote these services—but getting to those results generally involves adopting not just the methodologies, but the calculus employed in assigning value to those results. 

Measure ‘Meants’

Despite the well-intentioned efforts of many, financial wellness remains one of those concepts that is still, largely anyway, (just) a concept—one with varied definitions, inconsistent applications, and disparate providers—and thus one that is notoriously frustrating to assign a dollar value[i] to—other than the cost of such programs, which when, done properly, we’re assured, costs money.

In fact, asked how they intended to measure the results of their financial wellbeing program, far and away the most common response—cited by 85%—was employee usage of benefits. As metrics go, it’s certainly an important one—because if the program isn’t being used, there can be no real impact. That said, the kinds of impact that have been more commonly associated with a quantifiable ROI—improvements in retirement statistics (55%), medical costs (e.g., health care, disability, workers compensation) (12%) and reductions in absenteeism (5%)—followed distantly. Even employee engagement—as noted earlier, a notoriously difficult aspect to quantify—was cited by only about half (52%) of plan sponsors—and 6% admitted that they did not intend to measure the results of their program.

Now, these survey results are drawn from a relatively small group of relatively large plan sponsors: 116 of them, albeit with a median employee base of 19,300 (average of 47,000). On the other hand, the patterns at evidence among larger employers have long been seen as a something of a precursor for what will eventually take hold “downmarket.” 

What remains to be seen is whether the apparent diminution of focus on traditional ROI measures among these plan sponsors suggests that those contributions to the bottom line were always illusory—or perhaps that they weren’t a necessary affirmation of the pursuit of financial wellness after all. 

- Nevin E. Adams, JD

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[i] That said, a couple of years back (see Building a Bottom Line for Financial Wellness), I was able to cobble together a formula of sorts, that looked something like “Projected reduction in turnover times current turnover rate times the estimated cost of replacing a worker times the number of employees.” That said, while it’s a calculation with discernable variables, those are still fraught with “fill in the blank” assumptions.