Leading up to the start of the COVID-19 pandemic, a study from MassMutual spotlighted the significance of employers offering financial wellness programs to their workforce, noting that implementation of these programs was expected to nearly double over the next few years. The research found that 86% of employers recognized financial wellness programs as “important,” and 90% of respondents said the primary reason for providing such benefits was because employers “really care about their employees.”
However, while employers may recognize the importance of financial wellness programs and want to offer them, there still is a significant lag in adoption rates, which leads us to ask several questions:
Why hasn’t financial wellness moved from that “nice-to-have” employee benefit to a “must-have”? Why hasn’t there been that fundamental shift in thinking about how to help employees holistically?
Will COVID be that “aha” moment for financial wellness that spurs more employers to act on behalf of their employee’s needs and fundamentally redefine the contract between employer and employee?
Those are the questions I want to try and answer here. Recently, I was speaking with an industry colleague of mine, Jim Sampson (Retirement Plan Sponsor and Author with Hilb Group Retirement in Cranston, RI). He’s seen employers struggling to adopt financial wellness programs primarily because of cost and not knowing where to get started. “Financial wellness programs are a great concept, and everyone thinks it’s the right thing to do until someone has to pay for them,” says Jim. In the wake of COVID-19 businesses were forced to tighten their financial belt, which left no room for benefit dollars. Jim also explains, “You have the classic battle between HR and Finance where the HR team wants to implement a program that will provide tremendous value to its people and the Finance team doesn’t see the return on investment.”
The pandemic is serving as a wake-up call for both employers and employees. Employees need help more than ever and are increasingly looking to their employers for that assistance. It has been noted that stress related to money and financial concerns ranks higher for employees than stress related to health, relationships and work combined. With the effects of COVID-19 exacerbating those stressors, employers have never been better positioned to help their employees than they are right now. Quite frankly, COVID-19 has the opportunity to redefine the relationship between employer and employee. “It really gave folks a live example of the need for these programs,” says Jim. “The pandemic was the biggest ‘I told you so’ moment for financial wellness because it shined a bright light on how inadequately prepared many people are financially. Employees at companies that made a commitment to providing financial wellness had a much higher likelihood of having the basics in place” Jim adds.
When employers help their employees overcome their #1 stressor, they’ll be happier, healthier, more engaged and more productive. As competition for top-notch talent intensifies, employers can use financial wellness benefits to retain and attract high-quality employees. We’re rounding the corner of the COVID-19 pandemic and looking toward the future, so now it’s important to embrace the lessons we’ve learned. I believe financial wellness programs will be the most important new employee benefit in a generation and will become the strategic framework redefining workplace benefits.
So, what should employers look for in a financial wellness plan? Up until now employers have responded piecemeal to employee needs, offering the typical everyday health and/or retirement benefits, but not looking at how financial health fits into the bigger picture of an employee’s overall well-being. A true financial wellness solution is a holistic approach that can be viewed as the critical cornerstone bringing all other benefits to life.
Part of a good wellness program entails educating and empowering employees to truly understand all elements of their benefits package — including health benefits and wealth benefits — and how to maximize each offering. Employers spend so much time and money putting together benefits packages, but if employees don’t know how to take advantage of the offerings, it represents a big missed opportunity.
Fair pay and good benefits are critical to financial health and stability, but they are unlikely to translate into financial security unless employees have basic knowledge and skills around budgeting, debt management, savings and investing.
A thoughtful program focuses on the foundational principles of financial literacy that empower employees to make sound financial decisions. According to a 2020 study from Alight, most employers believe they should help workers across a wide spectrum of financial topics. The survey also found that workers seek assistance for a great breadth of financial topics. For example, 84% of respondents indicated that they want education about disability insurance, 50% sought information on obtaining identity protection service, 44% wanted help with establishing an emergency fund and 47% sought guidance on saving for their children’s education.
A baseline understanding of your employee population and demographics is a good starting point. What are their needs and concerns? How are they at managing consumer and student loan debt? How well are they doing on saving for retirement? This upfront work lays the foundation for creating a financial wellness program that makes sense for their organization.
COVID-19 and the financial stress related to the pandemic brought to light the need for robust financial wellness programs in the workplace. While it may have taken a global pandemic to make it obvious, now is the time for employers to truly understand how impactful this kind of benefit can be for their workers. If employers care about helping their employees add value to their lives for the long-term, there’s not better benefit to add than one that teaches them how to follow a budget, get out of debt, save for the future and retire with confidence. Employees are happier and healthier when they feel less financial stress and are in turn more engaged, more productive, more loyal and committed to the organization, which is a win-win on all accounts.
Fair pay and good benefits are critical to financial health and stability, but they are unlikely to translate into financial security unless employees have basic knowledge and skills around budgeting, debt management, savings and investing.
A thoughtful program focuses on the foundational principles of financial literacy that empower employees to make sound financial decisions. According to a 2020 study from Alight, most employers believe they should help workers across a wide spectrum of financial topics. The survey also found that workers seek assistance for a great breadth of financial topics. For example, 84% of respondents indicated that they want education about disability insurance, 50% sought information on obtaining identity protection service, 44% wanted help with establishing an emergency fund and 47% sought guidance on saving for their children’s education.
A baseline understanding of your employee population and demographics is a good starting point. What are their needs and concerns? How are they at managing consumer and student loan debt? How well are they doing on saving for retirement? This upfront work lays the foundation for creating a financial wellness program that makes sense for their organization.
COVID-19 and the financial stress related to the pandemic brought to light the need for robust financial wellness programs in the workplace. While it may have taken a global pandemic to make it obvious, now is the time for employers to truly understand how impactful this kind of benefit can be for their workers. If employers care about helping their employees add value to their lives for the long-term, there’s not better benefit to add than one that teaches them how to follow a budget, get out of debt, save for the future and retire with confidence. Employees are happier and healthier when they feel less financial stress and are in turn more engaged, more productive, more loyal and committed to the organization, which is a win-win on all accounts.