Financial Wellness Programs: What Employers Need to Know
July 20, 2022
Since the beginning of the pandemic, financial stress of the American workforce has been on the rise. Continued uncertainty and new factors, like inflation, only add to this stress. To combat the financial stress of their employees, many employers offer financial wellness programs. But what are these programs, why are they important, and how do you successfully create one that suits the needs of your workforce? Meghan Hannon, CRPS®, Boulay Senior Retirement Plan Manager, provides the answers.
What are financial wellness programs?
Financial wellness refers to whether a person feels confident about their finances and their ability to manage their finances. Just like physical, mental, and emotional health, financial health is an aspect of overall wellness.
Financial wellness programs, developed and sponsored by employers, aim to improve the overall financial wellness of employees and help them develop a positive relationship with money. Just like healthcare benefits are meant to support employees’ physical wellness, financial wellness programs include initiatives such as retirement plans and education, budgeting tools and other initiatives to promote employees’ financial wellness.
To serve the unique and specific needs of each workforce, financial wellness programs should differ from company to company. However, most programs address common topics including budgeting and personal finance, student loans, retirement and emergency savings, and financial considerations in health insurance, healthcare, homeownership and more. The education and resources employers provide help workers improve their well-being by reducing their financial stressors and increasing retirement readiness.
The impact of financial stress on the workforce (and your bottom line)
With the decline of traditional pension plans and the increased use of defined contribution plans, the responsibility of saving for retirement has shifted from the employer to the employee. Now, workers must set aside part of their paycheck to save for retirement, in addition to their other financial obligations such as student loans, insurance and medical payments. This increased competition for the paycheck only adds to their overall financial stress.
Financial stress negatively impacts workers’ mental health, which affects their focus at work. According to John Hancock’s 2022 study of stress, finances and well-being[1], 40% of workers say they would be more productive if they didn’t worry about their personal finances at work. Further, 26% of workers said they spend three or more hours per month on their finances while at work. This lost productivity, increased absenteeism and distraction results in high costs to employers. Therefore, employers have a lot to gain from providing financial wellness resources that have the potential to reduce this stress and refocus their employees.
The study also showed that workers appreciate their employers’ efforts to promote financial wellness, leading to positive outcomes in recruitment, retention and engagement. Among the workers surveyed, 89% feel it’s important for their employers to offer a financial wellness program. In addition,
- 74% say financial wellness programs help reduce financial stress
- 57% say financial wellness programs increase their productivity
- 66% say financial wellness programs improve their company loyalty
These responses show that employees value feeling supported financially at work, and view financial wellness programs as an attractive employer benefit. Given the current labor shortage, as well as the high costs of employee turnover (recruiting, training, loss of institutional knowledge), employers should prioritize employee financial well-being if they hope to retain their workers and acquire new talent.
Creating a financial wellness program that’s right for your organization
There’s no one-size-fits-all solution for financial wellness. To support your employees in their financial well-being, you must understand who they are, their needs, and the challenges they face. Then, factor these elements into your financial wellness program to ensure relevancy and effectiveness.
Start by assessing your workforce. For example, is your employee population generally older or younger? Are wages on the high or low end of the scale? How financially literate is your general worker? What are the company’s retirement readiness scores? Understanding who your workforce is, as well as their current financial conditions, gives you a strong starting point to creating a program that serves their needs.
Once you understand your workforce, seek to uncover their financial challenges and needs. The best way to uncover these elements is to ask. Remember that personal finance can be a stressful and highly sensitive topic. Therefore, creating an anonymous survey (and communicating this anonymity to employees) is helpful in getting candid responses from employees, and a more accurate picture of their financial challenges and needs. Then, let your workers’ responses guide the topics included in your program. There are many topics to consider, including:
- Preparing for retirement income
- Free financial education services or online classes
- Claiming Social Security and Medicare
- Building an emergency savings account through payroll deduction
- Tuition reimbursement
- Money management
- Education savings tools, such as a 529 plan
- Budgeting or managing day-to-day finances
- Access to loans through payroll
Once you’ve determined the topics to address, identify the best way to communicate them to your workforce. For example, will you provide online resources, hold classes and group sessions, and/or provide one-on-one financial coaching? The more in-depth and personalized, the more effective the program is—but also the more resource-intensive. Finally, consider what incentives you’ll use to encourage participation, as well as how you’ll reach multiple demographics within your workforce (i.e., how will you serve the needs of both baby boomers and millennials?).
Before you implement your financial wellness program, determine the goals you hope to achieve. Doing so helps you track and demonstrate the success of your program. Many companies use value of the investment (VOI) measurements, rather than the traditional return on investment, to track engagement and success. VOI measurements may include:
- Workshop and webinar attendance
- Benefits and financial wellness website engagement
- Retirement plan participation and contribution rates
- Points earned in a wellness program
Helping you get there…
As an employer, it’s essential to prioritize your employees’ financial health—not only for their overall wellness, but also for the health of your bottom line. Retirement-focused employee education initiatives are part of a well-rounded financial wellness program. Boulay’s employer 401K plan advisors assist employers with participant education, to promote retirement readiness for their employees. To learn more about how we help you get there, contact a Boulay advisor today at 952.893.9320 or learnmore@boulaygroup.com.
[1] John Hancock Study of Stress, Finances and Well-Being (August-September 2021). https://retirement.johnhancock.com/us/en/financial-stress-survey
Investment Advisory Services offered through Boulay Financial Advisors, LLC a SEC Registered Investment Advisor. Certain Third Party Money Management offered through Valmark Advisers, Inc. a SEC Registered Investment Advisor. Securities offered through Valmark Securities, Inc. Member FINRA, SIPC
Boulay PLLP and Boulay Financial Advisors, LLC are separate entities from Valmark Securities, Inc. and Valmark Advisers, Inc. Prime Global is not affiliated with Valmark Securities, Inc. and Valmark Advisers, Inc.
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