Employee Financial Wellness Programs―A Strategic Imperative
It has been over a year now since the onset of the COVID-19 pandemic. More than 500,000 people have lost their lives in the United States alone, and millions have been impacted by lost jobs with health and economic repercussions that will last for years to come. For those fortunate enough to hold on to their jobs, there is a newfound appreciation for taking care of one's finances―which also benefits physical and mental health. For example, Americans paid off a record $83 billion in credit card debt in 2020 and increased their savings rate to levels never seen before. Having less debt and more cash for emergencies can significantly reduce stress and increase financial well-being.
As a part of this shift, employees are increasingly asking their employers to support them with their financial wellness. This blog explores why it's beneficial for employers to help their employees achieve this goal.
The Role of Employers in Employee Financial Wellness
Employee financial wellness programs refer to employer-sponsored benefits that improve employees’ financial well-being. These programs include more common benefits such as a 401(k) plan or group life insurance. They can also include less common benefits, such as employer contributions to student loan payments or paycheck advances. Employers may offer multiple solutions as part of their financial wellness offering. Leading employers go one step further and think about financial wellness holistically and as a core part of their overall wellness benefit strategy.
Employee demand for financial wellness programs has increased in recent years. In a survey BrightPlan conducted in October 2020, employees ranked financial wellness benefits higher in importance than healthcare or paid time off and only second to compensation. A July 2020 survey from John Hancock found that 75% of employees believe that employer-sponsored financial wellness programs would help relieve financial stress.
Employers are uniquely positioned to support their employees’ financial well-being as most of an employee’s financial life is tied closely to their employer as the primary source of income and benefits. Employers are stepping up. Bank of America reported that the number of companies offering workplace financial wellness programs doubled in recent years―from 24% in 2015 to 53% in 2019. The same survey found that 62% of employers feel extremely responsible for their employees’ financial wellness―up from 13% in 2013.
Financial Wellness―a Strategic Imperative
Why are employers increasingly offering financial wellness programs? According to a report by market intelligence firm IDC, financial wellness supports a robust employee experience, which in turn drives greater employee engagement, loyalty, and organizational resilience. For employers, that is a strategic imperative since it’s hard for financially stressed employees to do their best work, leading to lower productivity and engagement.
Another reason employers are increasingly investing in their employees’ financial well-being is the shift to remote work. HR leaders today are looking for creative ways to engage and support their distributed workforce. In an industry roundtable we hosted last year, HR leaders saw a clear shift away from physical office perks like catered lunches and ping pong tables to more holistic wellness benefits―including financial and mental wellness programs.
Financial wellness programs can give employees the support they need to build a solid foundation for their financial life and future. If you’d like more guidance on where to start, including the requirements for a solid financial wellness program, check out our Buyer’s Guide and accompanying webinar.
Employees are increasingly looking to their employers for support with their physical, mental and financial well-being. Offering financial wellness programs can help address all three, since money is the leading cause of stress for most Americans. Financial wellness also supports a robust employee experience, which drives greater employee engagement, loyalty, and organizational resilience. For employers, offering financial wellness programs is not only the right thing to do―it’s a strategic imperative.