Know Your Money: Driving Results Through Financial Wellness

By Austin Baker

According to a recent Prudential report, 75% of employees say they see their employer as a trusted source of help, and approximately 60% say they are more committed and productive at work when their employer demonstrates a commitment to employees’ financial wellness. Over 50% of employers offer some sort of financial wellness program, and both employers and employees report a higher level of satisfaction with their benefit plans when a financial wellness program is offered. It turns out, offering financial wellness programs, along with health and wellness benefits, may help employees to be healthier overall.

Financial wellness benefits may be more popular than employers and benefit advisers think. In fact, it’s not inconceivable that employees will come to expect financial wellness benefits the same way they’ve come to expect health insurance and retirement savings accounts. Increasingly your employees are needing a broader set of tools and solutions that aren’t just focused on retirement savings, but also the day-to-day money challenges that get in the way of financial fitness.

The Need

A survey of 1,500 401(k) plan participants found that participants under the age of 40 are markedly more concerned about student loan debt. Those between the ages of 30 and 49 are most stressed about saving for retirement, while those 50 and older are most focused on health care expenses. Those with less than $100,000 in investable assets are more likely to cite lack of emergency savings and credit card debt as a financial concern compared to their more affluent peers. Women say their top stressor is retirement savings, and men say it is health care expenses.

Detriments

Money stresses, as many benefit managers know, can lead to health problems and a lack of productivity in the workforce. According to the Prudential report, 40% of workers had health issues or lost sleep due to financial stress, leading to an average annual increase in healthcare costs of $400 per employee. Three in ten employees say financial stress impacts their job performance and the average employee spent 3.6 hours per week managing personal finance issues at work.

All this creates a deep need for guidance and assistance in coping with financial stress and managing their affairs to minimize the stress. The two times consumers most want financial help or guidance are:

• When facing a major financial decision, such as buying a home or determining how to save or invest.
• Dealing with a financial crisis, such as debt problems, unexpected expenses, loss of income or employment, and lack of financial liquidity.

Financial Wellness As Emerging Benefit Options

Many companies have begun seeing success from offering financial wellness benefits, which educate their employees and use behavioral science to nudge them towards better financial habits. These benefits, which include programs like personalized financial advising and low-cost, easy-to-use 401(k)s, go a long way towards alleviating financial stress and setting employees up for a brighter financial future. Financial wellness programs help decrease healthcare costs , decrease absenteeism, and increase worker productivity and morale.

The first step is to figure out how you can leverage the resources you already have — especially in the healthcare and retirement savings areas — into more comprehensive well-being programs. Then, employers can identify the needs of the workforce and determine how to augment and add programs for more targeted financial wellness benefits.

Studies noted correlations for success of these programs was directly in line with the employees’ desire to deal with human advisors, but with an important caveat – “access to unbiased counselors.” 27% of the sample has that preference. This was the top answer among Gen Xers (30%) and Baby Boomers (28%), though the leading choice among Millennials (37%) is a student loan repayment benefit. Millennials are concerned that unless a counselor is unaffiliated, their “advice” may just be the entrée to refinancing student debt.

The Benefits of Financial Wellness Programs

Attract & Retain Employees – 

According to a study by MetLife, when financial planning programs are offered, 51% of employees are more likely to accept a job with a new employer, while 53% would be more loyal to their current employer.

Improved Engagement –

According to the Financial Fitness Group, for every 100 employees, your company loses 22.5 workdays per year due to financial distress.

Lowered healthcare premiums –

Financial stress increases heart rate and blood pressure, it also can suppress memory, concentration and metabolism.  This, in turn, can increase the risk of heart disease, stroke, digestive problems, weight gain, and more. Studies have uncovered companies saving as much as 21.57% on healthcare costs for heavy users of financial wellness programs.

Retirement Planning

By putting employees in a position to participate in retirement programs such as a 401(k), your company stands to significantly reduce costs. In fact, according to one model, having employees retire in a timely manner can save you $596 per employee in the first year, and more in successive years.

Conclusion

Financial stress is a major problem in today’s society. Not only does it significantly hamper your employees’ happiness, but it’s also hurting your company’s bottom line. Which is to say, your employees and your company are in this together. Financial wellness is more than educating plan participants. It is taking financial education to the next level to help plan participants fully meet current and ongoing financial obligations, feel secure in their financial future, and be able to make choices that allow enjoyment of life.