Workers with the most financial challenges, or those in good financial shape, reported seeing the biggest improvements from working with a financial coach, according to Financial Finesse’s “Financial Wellbeing in the American Workplace” survey released Wednesday.
In the category of people in financial difficulty, 5.2% of respondents said they were in a “crisis situation,” reflected in a financial health score below 3, according to the Financial Finesse survey. The 2023 figure represents a one percentage point increase from the previous year’s 4.2%. Of those in financial crisis, only 36% were able to meet their basic needs and 28% knew their credit score. Only 21% said they were able to set up beneficiaries for their retirement accounts and 18% had health insurance.
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“Optimizers,” or those with a financial wellness score of 8 or above, made up just 4.1% of respondents in 2023, down from 2.4% in 2022. Among this group, 25% had implemented disability insurance, 23% performed an investment fee analysis, 22% ensured their investments were properly allocated, and 21% had implemented medical directives.
Ultimately, financial coaching has been beneficial for both those looking to optimize and those experiencing financial difficulties.
- After working with a financial coach, more than half (52%) of employees who previously reported high or overwhelming levels of financial stress now report little to no financial stress.
- The number of people with a financial score above 5, meaning they are in the planning or optimizing stage, increased by 53% in 2023 after engaging with a financial coach.
Financial Finesse says this means employees can focus on their long-term financial goals, rather than working to meet short-term financial demands.
Financial Finesse’s “Think Tank Research: Best Practices,” also released Wednesday, suggests addressing employee financial stress by leveraging “decision moments” where employers can highlight access to financial coaching as employees are thinking about their finances.
“This includes open enrollment, when annual bonuses are paid, during stock purchase periods, when applying for retirement plan loans or withdrawals, or when facing major life events (e.g., marriage, birth, etc.),” the study states.
Overall, initial financial wellness scores for individuals who first participated in their employer’s financial wellness program declined only slightly in 2023 compared to 2022. Fewer than half are considered financially resilient, despite the majority of American workers living on or below their means, and only about a third feel they are on track for retirement as rising costs of living make it difficult to save for emergencies.
|
Financial Wellness Score |
Living beyond your income |
No high-interest debt |
Emergency funds for at least 3 months |
On track to retirement |
|
|
2022 |
4.65 |
57% |
50% |
43% |
32% |
|
2023 |
4.61 |
57% |
48% |
42% |
35% |
The “Financial Wellness in the American Workplace” study is based on an analysis of 52,553 employees who interacted with Aimee, Financial Finesse’s AI-enabled virtual financial coach, between January 1, 2022 and December 31, 2023. Financial wellness scores are measured by a series of questions from Aimee, who assigns a score from 1 to 10, with 1 indicating no financial wellness at all and 10 indicating optimal financial wellness. “Think Tank Research: Best Practices” is based on the findings of “Financial Wellness in the American Workplace.”
