Reasons to Say Yes to a Financial Wellness Solution

Financial wellness is no longer a “nice to have” benefit--it is a crucial part of employee well-being, which is key to the employee experience.  According to Bank of America, 53% of employers today offer some form of a financial wellness solution to their employees, more than twice the number from just a few years ago. COVID-19 and the rise of remote work will further place financial wellness at the forefront of benefits that truly matter to employees. 

What is financial wellness? It is an employer-sponsored benefit that helps improve employees’ financial well-being. It includes many different solutions, from 401(k)s to access to experienced financial advisors who provide personalized advice. If you are interested in learning the different categories of financial wellness solutions, read this blog article. 

There are many benefits to incorporating financial wellness solutions into your benefits package. Here are the top four: 

1. Better Employee Retention

Every company experiences turnover and it can be expensive. The average organization sees 2% of its employees turnover every year, costing the employer between 16-20% of their annual salaries. Reducing turnover helps the bottom line and creates a more positive and productive work environment. 

Financial wellness solutions help employees better understand and take full advantage of the workplace benefits available to them. An employee who is deciding between accepting a new job offer or staying at their current company can make a more informed decision if they know how to correctly compare the benefits offered at both companies, instead of just relying on base salary comparisons. Proper guidance is critical for more complex benefits such as stock compensation, 401(k) and HSA matching, and deferred compensation.  Financial wellness solutions help employees take full advantage of these benefits, making it more likely that they will stay with the company longer term.

2. Increased Productivity

Money is the number one stressor for Americans, especially this year. On average, 30-46% of all employees take an additional 1.5 vacation days per year to deal with financial issues, not including employees who come to work but are distracted by financial worries. 

Financial wellness solutions can help employees increase their financial literacy and build better money habits. Debt paydown, budgeting, and goal-based saving and investing are the building blocks for a solid financial foundation. Financial wellness programs that offer these services can help tackle the root of employees’ financial worries and enable them to be more fully present at work.  

3. On Time Retirement

There are many studies about the lack of retirement readiness among everyday Americans. Our system of self-directed investing through 401(k) programs is often too complicated for the average person. Most employees contribute too little to their retirement accounts.  But some employees have the opposite problem--they have enough saved to retire comfortably yet continue to work because they didn’t fully understand how much is needed to retire. Without expert help, it’s easier for an employee to keep working. Delayed retirement can be costly for employers. Prudential estimated that one year of delayed retirement costs employers $50,000 per employee. 

A financial wellness solution can help with this challenge. For example, an employee closer to retirement age would receive personalized guidance on their retirement readiness. The employee would know when they could retire, given their assets and their unique situation, so they don’t spend more time working than they want to. For a younger employee, they could get guidance on how much to contribute to their retirement accounts to take advantage of compound interest while also fulfilling their other goals. 

4. Attract and Retain Top Talent

The previous three benefits focus on employees who already work at your organization. How about talent and prospective employees? Similar to existing employees, top talent value financial wellness as part of their benefits package. In our recent survey, knowledge workers ranked financial wellness as the second most important benefit after compensation and ahead of standard benefits like health care and paid time off.  Offering a financial wellness solution as part of your benefits package will send a strong signal to top talent that your organization cares about employee experience and well-being.

There are many benefits to incorporating financial wellness into your benefits package, as financial health is an essential component of overall employee well-being.  The top four benefits include retention, productivity, on-time retirement, and talent acquisition. Show your employees and top talent you care by providing a financial wellness solution as part of your employee benefits package.