Financial education has long been a mainstay of workplace financial wellness programs. However, as these programs evolved, many employers found that access to information and education alone was not enough to support the financial challenges facing their workforce. Employees and their employers were looking for a more personal touch, one that helped individuals navigate and address their own unique financial situation and goals. These circumstances led to the emergence of financial coaching as a workplace benefit, and it continues to grow. As of 2022, as many as 43% of employers have implemented a coaching program with an additional 35% indicating they plan to.1
Financial coaching offers individuals access to one-on-one personalized support from qualified coaches. This coaching can be tailored to the specific needs, challenges and opportunities of each individual and ideally is available as often as employees need it at every stage of their financial journey. The contours of coaching programs vary, but the benefits of working with a qualified coach are becoming clearer as more employers provide this resource to their workforce:
- Behavior matters and coaches can help: At its core, financial wellness is about behaviors. Sometimes these behaviors can be facilitated by defaults (e.g., auto-enroll in an employer-provided retirement plan), but often financial habits are developed without the aid of behavioral nudges. Working with a financial coach gives an individual the chance to set goals, prioritize and develop the behaviors that support financial well-being. From exploring spending habits to creating a budget to understanding the emotional components of dealing with money, coaches can work with individuals to reorient their habits in a financially healthy direction. And since changing human behavior can take time, it is critical that the coaching relationship is ongoing and available on the employee’s terms.
- Coaches can help improve financial well-being: A key question with any financial wellness benefit is: does it work? A study by the Consumer Financial Protection Bureau (CFPB) found that financial coaching programs corresponded to meaningful and statistically significant improvements in financial capability for those who used the services.2 Specifically, individuals who worked with financial coaches saw improvements in money management skills, savings balances, debt levels and credit scores. Just as important, individuals reported feeling more confident in their financial well-being.
Ultimately, employees can benefit from having a trusted resource to help them navigate their financial goals. This is especially true during times of uncertainty. With inflation at a 40-year high, and many employees worried about and struggling to navigate its impacts, employers have an important opportunity to support their people with qualified coaches.