The 2022 Freedom Financial Report1 looks at ways employers can help their employees manage their debt.
Doing so will improve your employees' financial wellness and bring returns to your bottom line.
This study, and others, have found that financially healthy employees perform better at work, are more satisfied with their employment, and are more likely to stay with their current employer.
Who doesn't want more productive and loyal employees?
Of course, the question then becomes what to offer in terms of financial benefits that will help employees prosper.
The report focuses on 13 debt-related benefits to help focus an employer's efforts and resources. It also uncovered that 20% of respondents did not have access to any of the benefits listed.
Additionally, those with higher debt and lower incomes were less likely to report having access to these benefits.
Let's take a look at each of these debt-management benefits and how the Enrich Employee Financial Wellness platform addresses each one.
#1: Free Access to Financial Planning App or Website
The study found that only 38% of respondents said they had access to this benefit, which includes companies that only offered this benefit by providing budgeting and savings tools and calculators.
A holistic financial planning program is a whole lot more.
Enrich understands that most employees prefer to begin their financial planning online. They want to find general information and have basic questions answered before reaching out to a financial planner.
There is also a cohort of employees who do not plan to ever speak to a professional, preferring to learn and plan on their own.
That's why having 24/7 online access to financial planning education and tools is so important.
Enrich is a holistic program that offers:
- Interactive courses
- Multimedia presentations
#2: Free Financial Education Resources
37% of respondents had access to free financial education resources. However, the study did not delve into the types of resources provided.
The offerings at Enrich are more than static articles and videos. Instead, we offer interactive resources to help employees understand the lessons.
Employees need to be able to apply the information they learn to their own situations.
For example, by using the How Much Do Your Daily Expenses Cost Over Time calculator, employees can learn that by changing one simple habit – like making their coffee at home rather than buying one on the way to work – can save them $10,150 over ten years.
Then, they can turn to the Investment Allocation tool and determine how much money they could have at the end of 10 years by investing.
See how a simple change can make a big difference in savings or retirement can help employees choose better financial practices.
#3 and #4: Free Personalized Coaching Sessions with a Financial Professional and Free Credit Counseling Sessions
About 30% of respondents had access to free coaching and counseling through their employer.
A study by the Consumer Financial Protection Bureau2 found that participating in financial coaching or credit counseling resulted in healthier financial behaviors such as:
- Paying bills on time
- Increasing savings
- Reducing debt
- Increasing credit scores
The study also found that working with a financial coach helped people feel more confident and have less financial stress.
Of course, how the coaching is offered can make a difference. Enrich understands that some employees prefer to talk with someone by phone while others prefer an online live chat solution.
Plus, the team at Enrich is trained as both coaches and counselors to help people in a variety of financial situations.
Regardless of how an employee interacts with a counselor or coach, they always want a solution that allows them to develop a relationship with a coach – rather than just getting the next available person.
Having a coach that knows them and understands their issues helps them feel accountable and more likely to make the needed changes.
#5 and #6: Employer Contributions to an Emergency Savings Account and Access to an Emergency Savings Account
The study shows that 28% of those surveyed had these benefits.
Having an emergency fund is a critical component to financial wellness, but a survey by MagnifyMoney3 found that 20% of Americans saved no money in 2021.
Currently, 26%4 of defined contribution plan sponsors allow after-tax contributions to go toward building an emergency fund, with another 60% of sponsors considering adding this option.
At Enrich, we offer planning tools to help employees understand how much money they should have in emergency savings and how much they need to put in each month based on a target date they have set.
Additionally, if an employer offers an emergency fund benefit, Enrich will integrate that information into the platform to help employees be aware and take advantage of the offered benefit.
#7, #8, #10, and #13: Emergency Grant Fund, Low-Cost Personal Loans, Access to Wages in Advance of Payday, and Access to Debt Consolidation Loan
Some employers offer these benefits (27%, 26%, 24%, and 22% respectively) to help employees who find themselves in a financial crisis.
Although these alternatives are better than an employee choosing a high-interest payday loan, access to easy money could be a problem without intervention.
Professionals at Enrich believe that offering such programs should be done in tandem with financial counseling. The need to use this benefit can be an early indicator of financial problems such as lack of budgeting, no emergency savings, inadequate insurance, or too much debt.
When paired with counseling, grants, low-cost loans, advanced wages, and debt consolidation can help employees get back on their feet by targeting the source of the problem and finding suitable long-term solutions.
As with other financial benefits, Enrich will integrate them into their platform when offered by an employer.
#9: Employer Contributions Toward Student Loan Repayment
Currently, just 26% of employees state that their employer offers this benefit.
However, this is a trending benefit and will likely gain traction as tax laws change.
Lobbyists are working to make contributions toward student loan repayment and untaxed benefit like contributions to a retirement savings plan. More employers will likely offer this benefit to their employees if this happens.
Enrich partners with SoFi to offer this benefit integrated into the Enrich Financial Wellness platform. Additionally, Enrich can integrate other vendors employers use into the program, offering them seamlessly within the platform.
#11: Access to Mortgage Loan Support
Currently, 23% of employers offer access to mortgage loan support. Approximately two-thirds5 of Americans own a home.
However, many Americans struggle to purchase a home or make payments once they have gotten a mortgage. According to the data, 11.6% of mortgage loans are denied6 and 5% of loans are past due7.
The Enrich program can help employees understand the home buying process and their mortgage by offering:
- Buying a home and understanding mortgages course
- Banking beyond checking and savings course
- Getting out of debt course
- Comparing mortgage terms calculator
- Mortgage refinance calculator
- Multimedia content
#12: Access to Student Loan Solutions That Offer Evaluation Tools and Options for Refinancing
Only 22% of employers offer this benefit to their employees despite the large number of employees needing help with student loans.
Keep in mind that most student loans are on a 10-year repayment plan, and many people refinance these loans for up to 30-years.
The most recent statistics show that 46% of student loan debt is held by those over 408. Not only are older Americans dealing with their own debt, but they may also have taken out loans for children and grandchildren.
Enrich understands the complexity of student loan education.
- The acronyms are confusing
- Different loans have different terms
- The government often makes changes to federal loans making old information obsolete
- Refinancing a loan could cause a public employee to lose their loan forgiveness status
- And more
To combat this, not only does Enrich offer interactive courses and tools, but we have financial coaches who are well-versed in the changes and understand that each person's situation is unique. Additionally, Enrich partners with SoFi to give employers the option to add student loan refinancing.
If you are looking to offer your employees debt-related support, Enrich provides these benefits and can tailor them to meet the needs of your workforce.
1 - https://fhn-finhealthnetwork-assets.s3.amazonaws.com/uploads/2022/02/Employee-Debt-Report-2022.pdf
2 - https://files.consumerfinance.gov/f/documents/102016_cfpb_Financial_Coaching_Strategy_to_Improve_Financial_Well-Being.pdf
3 - https://www.magnifymoney.com/blog/news/consumer-savings-index/
4 - https://www.wtwco.com/en-US/Insights/2020/12/planning-for-tomorrow-today-2020-defined-contribution-plan-sponsor-survey
5 - https://www.census.gov/housing/hvs/files/currenthvspress.pdf
6 - https://ffiec.cfpb.gov/data-publication/national-aggregate-reports/2017/4-2
7 - https://www.huduser.gov/portal/sites/default/files/pdf/NationalSummary-2Q21.pdf
8 - https://educationdata.org/student-loan-debt-by-age