Financial wellbeing programs that help employees better manage their finances, pay down debt, and plan for retirement have become commonplace among private US employers. Employees want this kind of help and employers are increasingly eager to offer it. Bank of America Merrill Lynch’s 2018 Workplace Benefits Report, however, finds that only one third of employees are actually participating in these programs, even though many more are struggling with financial fitness, Nick Otto reports at Employee Benefit News. One potential explanation for this low level of engagement is that the financial wellness benefits employers are offering are misaligned with employees’ own priorities:
Employers tend to focus on actions to manage immediate financial needs, such as budgeting and handling expenses, according to the study. Meanwhile, employees mostly prioritize long-term financial goals, such as tactics that help them save and invest for the future. The report finds workers are looking to their employers to help manage their financial lives, shining a light on what employees seek in an employer-sponsored financial wellness program.
Employees feel the best approach to improve financial wellness is getting a personal financial assessment, supported by specific actions to take. Additionally, employees would also like help measuring their progress, through tracking and measuring of accomplishments.
Another notable finding from the report is that few employees recognize the role of health care costs in their financial planning: 7 percent identified health care as a key component of financial wellness, even though more than half said they had skipped or postponed a medical need to save money. The connection between health care costs and financial wellbeing is particularly salient in the US; for instance, many experts have promoted the use of health savings accounts as long-term savings and investment vehicles, comparable to 401(k) plans for retirement.
Financial wellbeing programs have really taken off in the past three years. A survey from Fidelity Investments and the National Business Group on Health last year found that 84 percent of US companies were offering some form of financial security programs to their employees as part of their holistic wellbeing strategies, up from 76 percent the previous year. Another study released earlier this year by Prudential indicated that 83 percent of employers were offering these programs as of late 2017, compared to just 20 percent in 2015. Prudential also found that employers were offering a wider variety of financial wellbeing benefits, the most common of which are digital portals, tools and calculators to help employees measure their financial health, retirement planning assistance, and access to financial advice or advisors.
High-earning employees, employees of larger organizations, and those in certain skilled professions are more likely than others to enjoy financial planning benefits through their employer, according to research from the Bureau of Labor Statistics, which found that just one in five Americans had access to these benefits. As these benefits become more common, however, they may also become more universally accessible: One investment advice company, for example, is using technology to make financial advisory tools available to a wider range of workers at a lower cost. Recently, the KFC Foundation launched a personal finance coaching program for employees of both corporate-owned and franchised KFC restaurants, which offers them a financial wellness app along with a personal adviser.
Our research at CEB, now Gartner, has found that the most effective wellbeing programs are holistic, combining physical, emotional, and financial wellbeing. With all such programs, including financial wellbeing, it’s important to make sure that the benefits you are offering your employees respond to their real needs and that it’s easy for them to participate in your program. The most successful wellbeing programs, we’ve found, are clearly communicated, user-friendly, and directly related to employees’ needs and concerns. CEB Total Rewards Leadership Council members can access all our wellbeing research and tools here.