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The ROI of Investing in Your Employees’ Financial Well-being

Ariana Alisjahbana

Calculate the total value and ROI of Financial Wellness for your employees and your company now.

Employer-sponsored financial wellness is quickly becoming a must-have benefit. According to PwC, 10% more employers offered financial wellness benefits to their employees in 2020 compared to 2019―one of the fastest-growing categories along with mental health and childcare benefits. The COVID-19 pandemic reinforced the need to support employees with benefits that matter to their overall well-being, including their physical, mental and financial well-being.

HR leaders looking to offer financial wellness benefits to their employees often seek information about the return on investment (ROI) and tangible value of such programs. Many HR leaders understand the qualitative value of offering financial wellness benefits to their employees, but communicating this need to the C-suite and driving alignment and buy-in often requires more concrete ROI data.

The ROI of financial wellness programs includes the ROI for employers and for employees. For employees this is about the value of making smart financial choices, such as the savings from switching to a Health Savings Account-enabled health plan or savings from tax deferrals. We cover these in a related blog post. The focus of today’s blog post is on the ROI of financial wellness programs for employers.

The ROI of Financial Wellness for Employers

We’ve created a free tool to quantify the potential value of BrightPlan’s Total Financial Wellness solution based on the unique characteristics of each company. Here are the components of a financial wellness program’s ROI for the employer:

On-time Retirement

Employees often don’t retire on time, even if they are financially ready, due to a lack of confidence in their financial plan or the complexity of such decisions. These employees cost employers money, from higher salaries and benefits to lower productivity and innovation. A Prudential study says that employees who delay retirement cost an average company around 1-1.5% of its total workforce costs. An effective financial wellness program helps your employees be more confident in their retirement plans, leading to more on-time retirement and lower costs associated with delayed retirement―contributing positively to the financial wellness program’s ROI and to overall employee engagement and productivity.

Turnover

Employees who understand and take advantage of the company’s benefits are less likely to leave for an incremental salary increase at another employer. Turnover is costly for employers, averaging 16-20% of annual salary for employees early to mid-career and more than 200% of annual salary for senior executives. Financial wellness programs motivate employees to stay longer at their jobs and lower turnover costs for the employer.

Absenteeism

Financial wellness programs help employees increase their financial literacy, enabling them to better manage their finances and lower their likelihood of taking days off due to financial stress. This reduction in absenteeism contributes positively to productivity and engagement.

Healthcare Savings

Employees who receive financial advice may be more likely to choose Health Savings Account (HSA)-enabled health plans for their tax advantages. These also cost less in premiums, leading to tangible cost savings for the employer.

Payroll Tax Savings

Financially knowledgeable employees utilize tax-advantaged accounts like HSAs and FSAs to pay for or save for medical expenses. Employers save on payroll taxes from employees who increase their contribution to these accounts.

With the BrightPlan Total Financial Wellness Value Calculator, we’ve taken a conservative approach to determining the ROI of financial wellness. The factors above do not cover all the tangible value of financial wellness, such as lower medical claims, higher productivity, and higher customer satisfaction because employees are less stressed. Yet even with this conservative approach, Total Financial Wellness pays for itself and provides a strong return on investment for the employer.

Ready to see how your company and employees can benefit from financial wellness? Calculate the total value and ROI of financial wellness for your company and your employees now.

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