American workers are worried about their finances more than they were in the past. Financial woes used to be about whether they would outlive their retirement savings.
Today, financial concerns cover a scope of issues including not having enough emergency savings for unexpected expenses, working past retirement age, inability to meet monthly obligations or keep up with debt load, losing their home, and paying for college1.
According to an American Psychological Association report2, 70% of workers say that their most common cause of stress is financial stress.
Employers are taking heed and beginning to offer financial wellness programs to their employees because it makes financial sense for everyone involved.
In addition to engaging in unhealthy behaviors3 like drinking, smoking, overeating, and suffering from physical and mental health ailments4, stressed employees also do poorly on the job5:
- Finances have been a distraction at work – 43%
- Spend 3+ hours each week while at work on personal financial issues – 44%
- Find financial situation a distraction while at work – 44%
- Find productivity is impacted – 26%
- Miss work due to financial worries – 15%
One report6 shows that absenteeism caused by stress costs organizations $118 billion each year, while another report7 suggests that employers spend an average of $8,875 per employee per year for employees to take care of personal business on company time.
Essentially, when your employees suffer from financial stress, your company does as well.
Do Employees Care About Financial Wellness Programs?
The short answer is yes. Your employees want help solving their financial issues, and many want to see that help come from their employers.
In Metlife’s 16th Annual Benefit Trends Study8, 84% of employees say they want or need financial wellness programs.
According to Prudential’s 2nd American Worker’s Survey9, workers believe that companies should be helping them to achieve financial security.
- 80% of employees prefer to do business with companies that take action to address the financial needs of future generations
- 76% of employees say their employer should provide opportunities to help them be successful
- 82% want companies to offer free financial education courses, especially in the categories of retirement savings and planning, emergency savings funds, budgeting, student loan payoffs, and identity protection.
The 2018 PWC survey10 shows that 65% of employees whose company has a financial wellness program have used it to help them:
- Get their spending under control
- Prepare for retirement
- Pay off debt
- Save for major goals
- Better manage their investments
When asked “How has Enrich made an impact on your life or changed your financial habits?” employees have said the following:
I have learned that financial literacy is right up there with Reading -Writing - and Arithmetic. -Jacqueline C
It showed me how important financial literacy is to live the life you want for yourself. -Janell N
It has made me step back and rethink routine in regards to my finances. -Christopher S
I increased my 401k contributions and paid back a loan I took out. -Meagan B
It has motivated me to utilize the 401k as early as possible. -Joseph R
It has given me hope that it's not too late to make a difference in what I can accumulate prior to retirement. -Allissa D
Of course, how often they use the program and to what extent is up to you.
What You Offer and When
First, you need to determine what your employees need and when they need it.
The PWC survey11 suggests that Millennials, Gen-Xers, and Baby Boomers do not have the same financial needs.
Baby Boomers are more concerned with retirement, while Millennials and Gen-Xers worry more about emergency savings funds.
Additionally, when an employee seeks financial guidance varies:
- 42% - When an important financial decision is on the horizon like buying a house or making investments
- 21% - During a financial crisis
- 14% - Experiencing a life event like marriage, divorce, the birth of a child, etc
This means that the more flexible and individualized the program, the more likely your employees are to use it.
A great first step in creating your financial wellness program is to conduct a Needs Assessment Survey - for more information on how to do this, read “How to Survey Your Employees for Your Financial Wellness Program”.
Communicating Its Existence
Secondly, employees will not use a financial wellness initiative if they are unaware that it exists.
Unfortunately, although many companies now offer some sort of financial education to employees, a recent Bank of America survey12 found that nearly one-third of employees were unsure if their company did so.
Consistently promoting your financial wellness program will help employees know that it is available. Here are some key tips for communication:
- Incorporate content about the financial wellness program into current communications with employees. For instance, the weekly or monthly newsletter, as a tagline for inter-company emails, etc.
- Add your own messages to vendor-produced communications so that employees see it as needed information rather than advertising.
- Plan to communicate about the program continually. Programs that have been in place for five years or more are far more successful than younger programs according to the International Foundation of Employee Benefit Plans 2016 survey13.
Finally, you should consider adding incentives to employees to participate in your financial wellness program. An Enrich case study of a company with 52,000 employees found that contributing $250 to each employee’s HSA account for meeting financial wellness requirements had incredible effects:
- Increased sessions per month from 6,277 to 9,424
- Increased page views per month from 26,777 to 95,819
- Increased average time per session from 8 minutes 2 seconds to 14 minutes 18 seconds
Although the ultimate goal of a wellness program is to have employees seeking out healthy financial behaviors and adopting them, getting them to start can be difficult.
That’s because employees often lack internal motivation and need an incentive to get them started. Only when they see the benefits of their new financial behavior will they find internal motivation to continue.
In addition to offering money for something like their health savings plan, you might also consider:
- Money for enrollment into the program or meeting a certain number of requirements
- Bonuses or merit pay associated with participation
- Flex benefit credits
- Points for finishing certain tasks that are redeemed for prizes
- Drawings and raffles
For more details on how to develop an incentive program, read “Providing Incentives for Your Employee Financial Wellness Program”. When done correctly, adding financial wellness initiatives to your benefits package can provide your company with a return on investment of $3 for every dollar spent14.
A deep dive analysis shows that the ROI for financial wellness is substantially higher than 3:1.
Doesn’t it make sense to provide a benefit requested by your employees while creating such an amazing ROI? Remember, their financial wellness is ultimately their own.
>>For more information on how the Enrich Financial Wellness Program lowers financial stress and improves peace of mind, watch our demo video here.
1 - https://www.pwc.com/us/en/industries/private-company-services/library/financial-well-being-retirement-survey.html
2 - http://www.apa.org/news/press/releases/stress/2013/stress-report.pdf
3 - https://www.apa.org/news/press/releases/stress/2014/stress-report.pdf
4 - http://surveys.ap.org/data/SRBI/AP-AOL%20Health%20Poll%20Topline%20040808_FINAL_debt%20stress.pdf
5 - https://www.pwc.com/us/en/industries/private-company-services/library/financial-well-being-retirement-survey.html
6 - https://pfeef.org/wp-content/uploads/2016/09/Financial-Literacy-and-Workplace-Outcomes-Presenteeism-and-Absenteeism-3.pdf
7 - https://pfeef.org/wp-content/uploads/2016/09/Financial-Literacy-and-Workplace-Outcomes-Presenteeism-and-Absenteeism-3.pdf
8 - https://benefittrends.metlife.com/
9 - http://news.prudential.com/presskits/second-american-workers-survey-fact-sheet.htm
10 - https://www.pwc.com/us/en/industries/private-company-services/library/financial-well-being-retirement-survey.html
11 - https://www.pwc.com/us/en/industries/private-company-services/library/financial-well-being-retirement-survey.html
12 - https://www.bofaml.com/content/dam/boamlimages/documents/articles/B2_078/2016_wbr_brochure.pdf
13 - https://www.ifebp.org/bookstore/employee-benefits-survey-2016/Pages/employee-benefits-survey-2016.aspx
14 - http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.201.6991&rep=rep1&type=pdf