Financial wellness is critical because without it, employees can become stressed. The greatest subject-matter-specific source of stress across the country is financial, significantly outpacing any other category. The logical extension of that is if employees feel financially stressed and preoccupied by money concerns, they're going to be less focused on work and therefore less productive and efficient. As a result, the productivity of the organization is driven down and its profitability suffers.

To provide a more positive spin, financially well employees are more relaxed, comfortable, and confident. They're mentally and physically healthier, which means they show up for work more often, are better motivated and contribute to a greater extent, benefiting their employer from a bottom-line perspective.

Employer perspective

That's part of the reason why many employers now feel heightened motivation to help employees build their financial houses. Different companies may have varying reasons for offering financial wellness programs to employees. Some take a more parental approach, where the owners and executives care deeply about the wellness of their employees and these efforts aren't directly tied to profits or productivity. In other cases, and the two motivations don't have to be mutually exclusive, companies simply recognize the business is better off when their employees are financially well.

When promoting financial wellness, offering a 401(k) plan is a good first step since it can greatly benefit employees when they eventually retire. This doesn't go far enough though because it only addresses the long-term planning aspect of a person's overall financial picture, not the short- and intermediate-term planning that should also be emphasized.

For example, it's good advice to have a readily available emergency fund including at least three to six months of living expenses, in case of a layoff or otherwise becoming unable to work. These monthly expenses would typically entail some type of house or apartment rental payment and any other standing debt relief obligations, as well as a budgeted amount to feed and clothe their family, heat their home, maintain water service and other utilities, etc.

Human touch

Helpful information like this should be core to any employer-provided financial wellness program. But I would also suggest that for a program to be most effective, companies must ensure employee access to a financial professional such as an advisor, coach, or consultant.

It's true that technological communication through email or online portals has become mainstream, and many of us would likely rather text even close friends than devote time to a phone conversation.

But I believe most people would make an exception when it comes to talking about money with an expert professional. There are few things more personal than one's financial security. Accordingly, people can derive great comfort and confidence from discussing it with an actual human being.

Across the industry, some financial wellness programs are strictly web-based, while others are primarily web-based, but with an additional phone bank component accessible through an 800-number. Although the latter option is better than no human connection at all, its advantages are limited because an employee calling the number may very well talk to a different person every time.

The next level is when a company offers a dedicated individual or team to whom employees have access. That would be my primary recommendation. Once you've decided to launch a financial wellness program, before you delve into potential content, commit to hiring people to support it.

The combination of resources represented by program personnel and web-based content can provide important budgeting information and pertinent details about the company retirement plan, as well as education on retirement needs, emergency savings and other aspects of risk mitigation, such as short- and long-term disability, long-term care, and life insurance.

Psychological and mathematical

The human component is so crucial because financial wellness is psychological, in addition to mathematical — it includes a person's perception of their financial situation, beyond what the reality might be. This can be dangerous if someone is naive about where they stand, representing a trap for the unwary.

But outside of a once-in-a-century global pandemic or a catastrophic economic development like a depression, the focus of a financial wellness program should primarily be on helping participants become more confident and comfortable.

Knowledge is often empowering. Some of the worries people have about their finances stem from mystery and uncertainty. They don't know what they should be doing from a financial standpoint, or how certain investment principles work, and that lack of understanding leads to anxiety.

Personal interaction with an expert helps create needed confidence, and building a relationship with another human being can engender accountability around saving and spending habits. Each employee is also able to gather greater education related to his or her specific situation. As a result, it's a much more effective approach than just pulling information off the internet.

Matthew Eickman, J.D., AIF, is the national retirement practice leader and managing director, Omaha market, for Qualified Plan Advisors. Qualified Plan Advisors focuses on plan health and participant outcomes by providing retirement plan sponsors with professional services that include participant education and enrollment services, professionally managed allocation portfolios, plan design review and maintenance and ERISA 3(38) and 3(21) fiduciary services.

Advisory services offered through Prime Capital Investment Advisors, LLC. ("PCIA"), a Registered Investment Adviser. PCIA: 6201 College Blvd., 7th Floor, Overland Park, KS 66211. PCIA doing business as Qualified Plan Advisors ("QPA") and Prime Capital Wealth Management ("PCWM").