Tools, apps, investment advice,or 401(k)s may do a lot of good—but only after employees havelearned how to leave behind bad habits and replace them withpositive behaviors around money. (Photo: Shutterstock)

HR professionals are always on the lookout for the best inemployee benefits – more specifically, a robustwell-being program for companies who truly wantto help their teams get in better shape financially.

It's no longer possible to ignore the ongoing personal finance crisis that's affecting thelives of millions of American workers. Many employers already havea financial wellness program, and the number who do keeps rising. Despite those efforts, theaverage employee is still broke:

Vulnerable to emergencies. Sixty-nine percent of Americans would be unableto cover a $1,000 emergency today without borrowing. They're onebad day away from a financial catastrophe.

Staggering levels of debt. Nearly half ofAmericans owe at least $25,000 in non-mortgage debt, with $37,000 beingthe average amount. Among all borrowers, 40 percent spend abouthalf their monthly income servicing it.

Unprepared for retirement. Because of the firsttwo issues, most Americans can't even think of beginning to investfor the future. So it's no surprise to find that about half(49 percent) of non-retired adults don't believethey'll be financially prepared to retire when their careerends.

Why aren't existing financial wellness programs helping? Becausetoo often there's a mindset of checking the box instead of gettingat the habits preventing employees from gaining and maintainingreal financial wellness. If all we need to do is help employeesmanage their debt, we'll never address the underlying issuescausing widespread money stress: the wrong behaviors around debtand savings.

Related: 5 steps to a successful financial wellnessplan

To get the right focus, it helps to view financial wellness thesame way you would physical fitness. To get in shape, having a gymmembership, world-class equipment, a library of fitness books andeven elite coaching are not enough to get the job done. All ofthose things are great, but none are as essential as changing dailyhabits toward healthy eating and exercise.

Financial wellness is the same! Great options like tools, apps,investment advice, or 401(k)s may do a lot of good—but only afteremployees have learned how to leave behind bad habits and replacethem with positive behaviors around money.

One-on-one meetings

One popular approach to financial wellness is the offer ofone-time or annual face-to-face meetings with a financialadvisor. There's just one problem with this as a blanketsolution—it addresses an issue (how to invest wisely) that manyemployees simply aren't ready to jump into yet. And it ignores whatthey're really going through with debt and emergencies. Not tomention it's hard to scale to large workforces—the time andlogistics alone require a large step from participants that arebusy and scared to death.

From the snapshot we saw of the typical worker's wallet, mostaren't even budgeting well. So how many are going to show up for ameeting to plan new investments for retirement? Thiswell-intentioned idea misses the mark. Retirement is indeed a keypart of financial wellness, but the only way to help get employeeson track for the end of their career is to help them address thebasics of emergency savings and debt elimination.

Tools and apps

Many financial wellness programs offer tools designed to helpemployees in key areas: budgeting, mortgage calculators andinvestment calculators. While these are all essential piecesof the wellness puzzle, they must be paired with crystal-clearteaching around wise spending, getting out of debt and havingenough savings and insurance in place to protect employees' assets.Otherwise, they're just curb appeal on a shack.

Apps are another popular angle of financial wellness that aresometimes driven more by hype than substance. For example,micro-investing apps are becoming a pretty popular form ofinvestment. The concept allows users to sync with a bank account toset up automatic savings transfers or invest small amounts of moneyin stocks. Some companies are even offering access tomicro-investing as an employee benefit.

There's a lot of hype, but what does it all add up to? The truthis the name says it all: micro-investing yields micro returns. Itsets the bar far too low and could have the unintended effect ofmaking employees underestimate how much they need to change theirmoney habits in order to achieve excellent long-term results.

Auto-enrollment

An interesting approach many employers have taken to improvingfinancial wellness has been automatic enrollment into company 401(k)s. Theshare of employers using this approach has doubled from 34 percentin 2007 to 68 percent today. As a result plenty of people who mightnot have otherwise enrolled have started saving for retirement! Iapplaud the efforts and intentions of any company that's trying tohelp people save more for the future.

And while the intention of helping employees is great,auto-enrollment hasn't actually helped most of those workers growfinancially. In most cases, they're worse off today than beforethey enrolled! Simply put, higher participation rates don't bringabout the kind of financial wellness behavior change you're reallylooking for.

The big problem is employees placed in a retirement plan bydefault aren't saving nearly enough there to ensure a healthyretirement. Most financial experts agree employees should beinvesting about 15 percent of their income as soon as possible toguarantee the best long-term outcomes—far higher than the level ofinvestment for most auto-enrollment programs. Placing workers in aplan automatically can create a false sense of security where theythink, “Well I'm investing up to the match. That ought to beenough!” But going up to the match is not nearly enough. In fact,if employers raised the default savings rate to what employeesneeded to save, most would opt out.

When you look holistically at what's happening in the life of atypical auto-enrolled employee, it's clear that just putting theminto a 401(k) isn't solving their real issue. Instead of helpingemployees get in better shape financially, research shows thatauto-enrolled workers eventually go deeper into debt than peers whowere free to opt in or out!

It's an example of doing something smart (helping people savemoney) in an ineffective way—the net result for auto-enrolledworkers was to go $2,000 in the wrong direction! That's a badoutcome you can't really view as making progress toward retirement.It would be like giving a drunk another drink and believing you'vehelped; it might cheer them up for a few minutes but it's going tohurt them in the long run.

If you force broke people to save, you may feel as if you'vechecked the retirement box—but the money they saved won't bringabout a more disciplined lifestyle. Research shows that the realoutcome is a slight uptick in savings that's more than canceled byborrowing. If debt is increasing side by side with “savings,”you're not really progressing. You have to solve the realproblem.

Not surprisingly, when people are put into an investment bydefault they'll see it the wrong way—in this case, they'll say yesto a payroll deduction with a company match, believing they can“set it and forget it.” But they'll often remove the same moneythey were “investing” back out in the form of loans, defeating thepurpose of the benefit.

To avoid this employees need to understand the real reason forinvesting, which is to save money and let it grow for the future.Auto-enrollment has given many companies a false sense that they'vefinished the job of helping workers prepare for retirement. Butit's another example of a financial wellness standby that paints anincomplete picture for both companies and workers. Retirement plansare great but they only work as they should when paired with theright information as well as sharply focused coaching on betterfinancial behavior.

What we should be doing

In all of the above approaches, we see attempts to helpemployees with one aspect or another of their finances—and they'reall hitting on legitimate issues. But even with all of theseefforts in place, we'll never see any powerful and long-lastingimpact on financial wellness until employees are first convinced tomake several key behavior changes.

The winning approach is a program that changes behaviors. To dothat, a financial wellness program must:

• Help employees to think differently about money. That meansseeing it as a long-term wealth-building tool instead of somethingthat comes and goes like the wind.
• Change their view of budgeting. Take budgeting from somethingthat cramps their style to something that gives them permission tospend.
• Be intentional and inspirational. Real behavior change must begradual and built around goals, so the best programs will outlinesimple and realistic action steps that get people moving with theirmoney.
• Provide a personal touch. Most people won't be able to go italone in any kind of big life change. That's true of losing weight,quitting smoking or getting out of debt and building wealth. Find aprogram that allows employees to keep an eye on their progress andmeasure success.
• Teach with authority. A great financial wellness program shouldinclude powerful teaching from experts who share their learningwith authority and warmth. And if the employee's spouse can getaccess to the same materials, it could make all the difference intheir financial journey!
• Deliver big and measurable results. Simply handing employees aplan they may or may not implement won't change their corebehaviors. Your employees need a program that really shows resultsaround debt eliminated and dollars saved as they progress. Areporting system can even help you prove and share ROI withstakeholders.

Such programs exist, but you have to be intentional aboutlooking for them—not just solutions that simply check a box. It'sworth every penny of benefits money you spend, not to mention waysin which such a program ultimately winds up contributing back tothe company bottom line.

After decades of insufficient programs and dangerous retirementoutcomes, it's time employees get the foundational behavior changethey need in their financial wellness program so they can get ontrack to retire with dignity!

Brian Hamilton is vicepresident of SmartDollar, Ramsey Solutions' financial wellnessprogram.