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Stymied by slow wage growth, workers increasingly turn to a money coach

Financial wellness benefits on the rise in U.S.
Posted: 10:02 AM, Jan 21, 2019
Updated: 2019-01-21 23:05:31Z
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Vicky Carroll is getting her financial house in order. Her employer is paying her to do it.

The financial analyst at Fifth Third Bank is among a growing number of employees with access to a financial wellness program at work. She said the bank pays her $600 a year to participate in the program, which helped her reduce student debt, establish a will and plan for health care expenses.

A CPA by training, Carroll is a single mother from Milford who grew up in a household where money talk was taboo. She said regular sessions with a financial counselor gave her more confidence in her financial future.

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Vicky Carroll, financial controls analyst, Fifth Third Bank

“I have somebody in my corner,” she said. “I don’t understand people that don’t do it.”

Financial wellness benefits are rapidly expanding in the U.S. One survey commissioned by Prudential Financial Inc. said 83 percent of companies offered such help to employees by the end of 2017, up from 20 percent in 2015. A PriceWaterhouseCoopers survey showed financial wellness is the "most desired benefit" that employees don't already have.

“It’s not always the size of the paycheck that matters,” said Brian Nelson Ford, financial wellness executive for SunTrust Bank. “There is something to be said about how you manage that paycheck.”

Economic data seems to bolster Ford’s argument. Unemployment rates fell to historic lows in 2018 yet household debt soared to an all-time high of $13.5 trillion. The economy has steadily improved since the last recession, but wage growth hasn’t kept pace with inflation.

And the percentage of American adults living in middle class households declined to 49.9 percent in 2015, down from 61 percent in 1971. That number improved to 52 percent by 2016 but the percentage of lower-income households remained at a 25-year high of 29 percent.

“We live in a country where if you don’t understand personal finance it can be difficult,” Ford said. “You have so many messages coming at you from so many different angles, wanting you to purchase things that maybe can or cannot afford, maybe you need or do not need. But the messages are strong. It’s frequent. We need equal messaging on the other side that says, ‘Look, let’s make sure we understand what we care about in life. Let’s make sure our hard-earned money goes towards those things that we care most about in life.”

What’s the message?

Ford visited Cincinnati last week to launch a new financial-wellness benefit at the medical-staffing firm, Health Carousel. SunTrust’s Momentum onUp program preaches an “8 pillar” program that emphasizes regular saving, establishing budget priorities, planning for retirement and building career prospects.

Ford developed his program about ten years ago. Atlanta-based SunTrust was one of his early customers. It liked the program so much it bought Ford’s company, which now offers Momentum onUp to more than 160 workplaces, including Talbert House and Health Carousel in Cincinnati.

“Health Carousel benefits from having an employee who’s free from stress, able to focus on work and the employees obviously benefit by having a more full financial life,” said Tom Herbort, vice president of compensation and benefits at the 385-employee staffing firm.

Johanna Krogh was eager to explore the program after watching Ford’s one-hour presentation.

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Johanna Kroger, employee engagement specialist, Health Carousel

“I was a mass communications major,” said Krogh, senior employee engagement and recognition specialist at Health Carousel. “So, I never had any formal training in financial management of investments.”

Krogh was particularly impressed by Ford’s “Pillar 1” advice to establish a “financial confidence fund” to cover emergencies.

“I have a cushion, if you want to call it that. But I don’t have a specific fund set aside,” she said. “I think that was probably the biggest Aha moment where I went, ‘Ooh, alright. This is going to be a good learning experience for me.’”

A plan for young and old

Krogh is in her first job out of college. Carroll, by contrast, worked as a financial consultant in Chicago for 12 years before joining Fifth Third in 2016. Both said they would rather have financial wellness benefits than the equivalent value as a pay raise.

With two adult daughters and a pile of student loan debt on which she co-signed, Carroll wasn’t sure how to refinance student debt until she started talking to a financial counselor from AYCO, a Goldman Sachs company that Fifth Third hired as its financial wellness provider.

“I’d like to retire eventually,” she said. “I was like, ‘How am I going to get out of this hole that I made for myself?’”

Carroll’s AYCO counselor gave her advice on improving her credit score and kept supplying her with new information on loan options. Ultimately, she found a lender who reduced her interest rate from eight to five percent.

“I feel much more at ease,” she said. “I’ve been able to get rid of that fear and also start thinking about, ‘OK, what else can I do?’”

Ford said financial wellness programs work for all ages, demographics and income levels. SunTrust claims participants in its program increased their retirement savings by 35 percent and those with an emergency fund increased from 68 percent to 98 percent.

“I think financial wellness is very important if you want to improve your status, if you want to increase that mobility,” Ford said. “I can have someone that makes 15, 20 grand as a college student all the way up to an executive. And if lived these principals will definitely help them manage their money.”