Financial Wellness: The New Must-Have Employee Benefit
Marthin De Beer
If you had a choice, what’s better: Free snacks and massages, or a financial wellness program that can address the No. 1 concern of your employees — financial stress?
The Aha Moment In Waiting
The transformative nature of employee financial wellness is still not widely appreciated in corporate America. There hasn’t been a fundamental shift in thinking about the importance of helping employees achieve financial wellness. The aha moment has yet to happen regarding the potential of financial wellness to redefine the contract between employer and employee for the greater good.
As a result, comprehensive financial wellness is often viewed as a nice-to-have benefit, not a must-have. This is partly due to low adoption of first-generation financial wellness programs, which generally focused on education without much help in the areas of coaching or implementation.
For employees, though, financial wellness is a must-have. The desire for long-term financial wellness is one of the key reasons people show up for work each day. Financial wellness programs are also an antidote to the financial stress employees feel each day. A 2019 PwC study found that 59% of employees are more stressed out about their financial situation than any other single issue. Thirty-five percent of employees say financial stress impacts their ability to do their job.
For employers, it’s also a must-have, whether they recognize it or not. An employer-sponsored financial wellness program can improve both the top and bottom lines. When financial wellness is delivered and measured through an enterprise-wide program, the metrics speak for themselves. I believe a company with several thousand employees could save more than $1 million annually by having an effective financial wellness program in place.
The Big-Picture Approach
Instead of an add-on benefit, financial wellness should be the strategic framework in which workplace benefits are conceived and managed.
Over the years, employers have added health, retirement and other workplace benefits to respond to employee needs and marketplace pressures. This is admirable, but it is a piecemeal approach. It lacks a big-picture construct that organizes benefits programs in the larger context of financial security for your employees.
Why Financial Wellness Now
One reason financial wellness hasn’t moved center stage is the lagging perception about what it can accomplish. Until recently, financial wellness was a fuzzy concept that included financial education, contributions to a 401(k) plan and other benefit-related compensation.
The 401(k) benefit became the foundation in reaching an important life goal: retirement. But what about everything between now and retirement, such as buying a home, getting out of debt, sending kids to college, budgeting, etc.? Employees have to deal with these kinds of challenges daily, but they are left to figure them out for themselves.
Financial wellness programs facilitate a personalized journey for employees — to learn at their own pace and build confidence to navigate their path to financial security. Ultimately, these programs enable employees to convert hard work into financial well-being. More importantly, they enable employees to reach their most important life goals. What an opportunity for an employer to support their employees in this.
Viewed in these terms, financial wellness is not just another benefit. It’s the focal point of personal financial management and wealth creation for your employees.
A Strategic Framework
So where to begin?
A baseline understanding of your employee population is a useful starting point. What is the composition of your workforce by age, gender and geography? Based on that, what are their priorities? Do they include saving for a home? Or managing student loan debt or consumer debt (or both)? If the population skews older, how well are employees doing on saving for retirement or a child’s education, or assisting with elder care expenses for a parent?
This upfront work can be done through internal surveys and focus groups, and it lays the foundation for creating a strategic financial wellness framework. The most effective programs are enterprise-class solutions that address all of the key personal finance issues and seek to optimize an organization’s full suite of employee benefits: 401(k), Health Savings Accounts, equity compensation, bonus plans, deferred compensation plans and employee stock purchase plans, to name a few.
Once a comprehensive financial wellness program is implemented, employers have unlimited opportunity to help employees even further. Data collected from the actual experience of employees can help identify issues where your workforce is lacking.
Or, it could enable employers to identify shortcomings in their compensation and benefits program — and make adjustments to stay current with the market. Generating deep insights about your employee population can fix what may be broken and improve the overall value of the program.
A financial wellness program can power the success of your company, while building deeper employee engagement and loyalty. By understanding your employees’ specific needs, you can craft a strategy that produces great outcomes for your business and employees.
This article was originally published in Forbes on February 6, 2020.