HR Leaders Need To Stop Dismissing This Employee Benefit Trend

Employee benefits trends can change significantly year to year. But "themes" can last for a decade or longer.

One of these lasting themes is employee financial wellness. Over the last decade, companies have become more aware of how personal finances affect their workforce. 

By 2018, 83 percent of employers offered some form of financial wellness benefits, with another 14 percent stating they would be adding financial wellness benefits within two years¹.

However, these studies only focus on whether a company has some sort of financial wellness benefit. They did not specify whether the benefit was single-focused (retirement) or holistic (helping employees improve their overall financial health through education, skill introduction, and behavior modification). 

Surveys show that employees want financial wellness benefits that meet many personal financial needs – ranging from basic budgeting to advanced investing. 

A 2019 PwC Survey² found that employees with access to such benefits use them to:

• Prepare for retirement: 47 percent
• Get spending under control: 29 percent
• Pay off debt: 29 percent
• Save more for major goals (purchases, home, education): 29 percent
• Better manage investments/asset allocation: 29 percent
• Better manage healthcare expenses/save for future healthcare expenses: 18 percent

Here are four current drivers that keep financial wellness a trending benefit and why employers should be paying attention.

Trend Driver #1: COVID-19

As we move beyond the COVID-19 pandemic, many of the benefits that were important prior to 2020 may not be a priority anymore. Many that were not on the radar have become extremely important now.

In terms of financial wellness, COVID only solidified the need.

One of the biggest sources of stress for Americans is money. In 2018, before the pandemic, a survey by Northwestern Mutual³ found that 44 percent of Americans were stressed by finances – a 2015 APA survey⁴ found that number to be 72 percent. 

Recent data from a survey by John Hancock found that the amount of stress Americans feel is up 58 percent since the start of the pandemic⁵. 

Whatever the actual number, employees feel stressed.

Three out of five employees say that it is more important than ever for employers to offer financial wellness benefits⁶. Over half also feel that having access to such benefits would reduce their financial stress.

Trend Driver #2: Technology 

As a result of the COVID pandemic, many workers have become accustomed to interacting online in their jobs and their personal lives.

It was not uncommon for Americans to participate in virtual team meetings for work, order groceries, play virtual interactive games with family and friends, take classes, and even participate in legal proceedings online. 

In today’s post-pandemic world, employees understand how easy it is to offer such things as:

• Interactive tools
• Webinars
• Virtual enrollment
• Live chats
• Apps that manage all benefits in one easy portal

For employers, this means that the days of half-day retirement seminars are a thing of the past. Instead, they can offer personalized financial wellness that is accessible with the push of a button.

Trend Driver #3: Student Loan Crisis

Though student loan repayment has been temporarily halted due to the pandemic, the student loan crisis has continued to grow.

As of the last quarter of 2020, student loan debt had blossomed to a record $1.7 trillion, with 45 million Americans carrying an average debt of $37,693. To make matters worse, almost five million student loan holders (11.1 percent) are more than 90 days delinquent⁷7.

Unfortunately, this is a problem for every age group⁸8. The average student loan balance per borrower by age looks like this:

• Less than 24: $14,800 for 7.8 million borrowers
• 25 to 34: $33,800 for 14.8 million borrowers
• 35 to 49: $42,400 for 14.2 million borrowers
• 50 to 61: $42,300 for 6.2 million borrowers
• 62+:$37,700 for 2.3 million borrowers

Because of this overwhelming debt, employees have trouble saving for retirement, retiring on time, buying a home, creating an emergency savings account, paying day-to-day expenses, and more.

Employees are now looking for innovative financial wellness programs such as student loan repayment assistance, loan consolidation, tuition reimbursement policies, and college savings plans.

Trend Driver #4: Wellness Includes Financial Wellness

Studies conclusively show that financial health, or the lack of financial health, directly influences physical health⁹?.

When employers consider wellness benefits, these benefits should continue to focus on things like smoking cessation and weight management, but they should also be more holistic – taking into account the financial well-being of individuals. 

Because physical health and financial health go hand-in-hand, employers should find a financial wellness program that can be easily integrated with current physical wellness plans.

Such integration can include single sign-on, platform customization, and cross-boundary content.

Learn more: How to Integrate Financial Wellness into an Employee Health and Wellness Program

Why Financial Wellness Matters

Financial wellness is a growing trend, but is it truly important that you offer this benefit to your employees? In a word, yes.

Offering financial wellness will increase your company’s bottom line by:

• Improving employee productivity – Productivity loss due to employee personal issues like finance is between 11 and 30 percent¹⁰¹°. 
• Reducing absenteeism and presenteeism – Ten percent of employees state that they miss work due to financial worries. Half of stressed workers, and one-third of non-stressed employees, spend three or more work hours each week dealing with financial issues¹¹¹¹.
• Reducing healthcare costs – Because financial stress is linked to healthcare costs, the ITA Group found that offering financial wellness reduces healthcare costs by 26 percent¹²¹².

Offering financial wellness will increase your employees’ satisfaction with their job and your company:

• Increased engagement at work – 80 percent of employees would be more motivated to participate more fully if they were offered financial wellness benefits¹³¹³.
• Increased company loyalty and employee retention – Theres a cost the comes with high employee turnover. Hiring new employees can cost companies as much as 50 to 200 percent of the employee’s salary¹⁴¹4. The 2021 PwC survey found that 72 percent of financially stressed employees and 57 percent of non-stressed employees would change jobs if the new employer cared more about their financial well-being¹⁵¹5.

With so much on the line, it makes sense to find a holistic financial wellness benefit for your employees that can help them achieve their financial goals and increase their overall financial well-being. 

1 - https://news.prudential.com/content/1209/files/prudentials_2018_financial_wellness_census.pdf

2 - https://www.pwc.com/us/en/industries/private-company-services/images/pwc-8th-annual-employee-financial-wellness-survey-2019-results.pdf

3 - https://news.northwesternmutual.com/planning-and-progress-2018

4 - https://stories.td.com/us/en/article/financial-and-physical-well-being-go-hand-in-hand-for-a-majority-of-americans-new-survey-finds

5 - https://www.apa.org/news/press/releases/2015/02/money-stress

6 - https://hrexecutive.com/employees-looking-for-help-as-pandemic-increases-financial-stress/

7 - https://www.sofi.com/blog/financial-wellness-benefits-survey-at-work

8 - https://www.newyorkfed.org/microeconomics/topics/student-debt

9 - https://www.cnbc.com/select/average-student-loan-debt-by-age/

10 - https://www.cigna.com/assets/docs/business/small-employers/862885_b_white_paper_v2.pdf

11 - https://www.pwc.com/us/en/industries/private-company-services/library/financial-well-being-retirement-survey.html

12 - https://www.itagroup.com/insights/workplace-wellness-programs

13 - https://www.prnewswire.com/news-releases/new-research-reveals-most-employees-get-generic-wellbeing-support-and-82-would-increase-participation-with-personalized-programs-300794083.html?tc=eml_cleartime

14 - SHRM.org

15 - https://www.pwc.com/us/en/services/consulting/workforce-of-the-future/library/employee-financial-wellness-survey.html