Why 2018 Is the Year of Employee Financial Wellness Plans

Financial stress may be hurting your employees – and your company

If your company wellness program doesn’t include your employees’ financial health, it might be time to rethink that strategy.

Financial wellness programs are emerging as a leading workplace trend in 2018, as employers realize that not only do they increase employee satisfaction and help retain talent, but study after study shows that employees’ financial troubles can significantly decrease productivity and increase company healthcare costs.

More than 80 percent of employers included financial wellness programs in their benefits packages last year – up from 20 percent in 2015.

Consider these facts from PwC’s 2018 Employee Financial Wellness Survey:

• 54 percent of workers are stressed about their finances. And the younger the worker, the more likely they are to worry. 53 percent of Millennials say they are stressed about money, compared to 35 percent of Baby Boomers.
• 41 percent of workers say their financial stress level has increased over the past 12 months.
• For the first time, Baby Boomers ranked a need for income and healthcare benefits over a desire to keep working as their main reason for delaying their retirement past age 65.
• 53 percent of employees don’t believe they will be able to afford to retire when they want.
• 53 percent also don’t have any emergency savings.

The reason for employees’ financial stress varies, including student loans, credit card debt, and having to support an adult child or parent.

But no matter the reason, few workers can leave their stress at home. PwC reports that 43 percent of employees admit that they spend three hours or more at work each week dealing with or thinking about issues related to their personal finances.

Financial wellness is more than retirement savings

As evidence mounts that wealth impacts health, it’s no wonder that employers are searching for holistic wellness plans that combine physical, financial, and other programs.

That means expanding beyond retirement savings programs to include overall financial wellness plans –ones that provide training and tools to help workers overcome any personal finance challenges. That may include debt reduction, asset management, and saving for important needs like buying a home or financing a child’s education.

Teaching financial basics like personal budgets is another critical step, as well as learning to balance immediate debt with long-term investment needs.

Thanks to the popularity of the Internet, smartphones, and mobile apps, most programs are centered around a digital portal that gives employees instant and easy access to all tools and content. But wise companies also realize the greater influence of the personal touch – and combine their digital programs with group instruction and one-on-one access to financial advice and advisors.

Education about retirement savings plans is another critical component. Employees who struggle to create a household budget are unlikely to understand the complexities of risk, volatility, and diversification in 401(k) accounts. They need access to professionals who can educate them about investment strategies.

Financial wellness programs can help workers understand how much they will realistically need to retire and show them specific steps they can take to achieve their goals.

Most workers are unrealistic about how retirement ready they are – or are distracted from long-term planning by more immediate needs like credit card debt or caring for adult family members. PwC reports that nearly 30 percent of employees are currently not saving for retirement – and nearly 40 percent of those who have saved have set aside less than $50,000.

6 tips for getting employees to take charge of their financial wellness

Of course, convincing people to buy into a new program – however beneficial – isn’t always easy. These tips can help you get your employees engaged with your company’s financial wellness plan so that everyone can reap its rewards:

• Involve upper management. Engagement will spike if your CEO takes a leading role in the program and seems sincerely interested in people’s financial well-being. Other compelling advocates can include human resources representatives and other employees who have successfully used a financial wellness program.
• Understand your employees’ needs. Before you select a wellness program, start with an anonymous needs assessment that helps you understand what financial services will benefit your staff the most.
• Keep checking in. The best way to gauge the success of your plan is by asking your employees. While it’s vital that data collected in workplace financial wellness programs is kept private, periodically conducting anonymous financial wellness surveys of your staff can help you ensure that your program is on the right track.
• Mix “high-tech” with “high-touch.” Using technology to deliver financial education lets employees reap its benefits on their own schedule. But high-tech tools are unlikely to spur employees to get involved without a personal approach, such as in-person financial planning or money management experts available for phone consultations.
• Don’t fixate on a need to benchmark. It’s tough to prove the ROI of a financial wellness program. When you are making the investment, think about it more in terms of VOI – Value of Investment: reducing your employees’ stress and boosting morale so productivity is increased and healthcare costs plummet.
• Find the right financial advisor to work with.  While large financial service companies may offer education for your employees, make sure they provide holistic information.  Retirement plan providers may skew their talk to just retirement issues. Employees need broader advice. Many advisors will offer educational work for little or no fees.  And individual local advisors should have the ability to meet your employees on a one-on-one basis to help them in a personal and customized manner.

Some employers have expressed concern about getting involved with their employees’ finances – but studies prove that financial wellness is an important part of overall health. When employees’ financial wellness is in bad shape, it can have significant impact on a company.

A well-managed financial wellness program drives employee engagement, productivity, and success – and fosters loyalty and connection from workers who know their company cares about their well-being.

To learn more about how to make the most of your company’s compensation and benefits programs, contact Karp HR Solutions today for a free consultation.