Financial wellness is at the top of the benefits agenda this
year during open enrollment season, as companies and employees continue to
grapple with the impact of the COVID-19 pandemic.
Two new surveys of HR leaders at leading companies across
corporate America by Goldman Sachs Ayco Personal Financial Management make this
clear. The insights uncovered can help HR teams design and implement benefit
programs that address the wants and needs of employees in the current
environment.
Financial wellness benefits are on the rise according to the
nearly 250 HR executives we polled. More than half offer their employees a
financial wellness benefit, and close to two-thirds of those provide financial
planning to their entire workforce, not just executives.
Our bi-annual Executive Benefits Survey showed similar
results. Financial education benefits for all employees jumped 11% compared to
2019—one of the largest increases among
benefits offered by the 260 companies who responded.
Why are financial wellness benefits on the rise? Here’s what
we are seeing and hearing from HR leaders at the hundreds of companies we work
with and the 1 million+ employees across America who have access to our
financial wellness benefits.
Better attraction and retention
The U.S. economy set a record last July, with 10.9 million
jobs open. Another record followed in August – 4.3 million U.S. workers quit
their jobs.
With such extreme workplace churn, more companies are
recognizing how a bespoke, dedicated financial wellness benefit can help them
attract and retain top talent.
These programs address head on the financial anxiety that so
many employees experience, and that the pandemic accelerated. When financial
wellness benefits include compensation and benefit planning, they also help
employees better understand, appreciate and realize the total value of
everything their employer provides them. That can be a real difference-maker
when a recruiter comes calling.
Benefits generally make up 30% of an employee’s total
compensation, but it rarely registers as such. Basic benefits such as health
care and retirement accounts are often seen as table stakes, but different plan
designs and options vary widely in the monetary value they provide. Employees
often fall short in realizing the full value of their benefits, for example by
not maxing out their 401(k) or funding an HSA.
Companies that provide a comprehensive financial wellness
benefit make a powerful statement to their workforce by supporting employees
where it counts most: their wallets. We all work to live, not live to work.
Financial wellness benefits are valued by job-seekers and employees alike
because they maximize the value of their work so they can better live the life
they want. They help employees achieve their financial goals and help them get more
value from the benefits their company offers.
Technology as a gateway
Apps with gamification features are increasingly becoming
more common to support employees’ financial wellness. They’re simple to
introduce and use, and don’t require much administrative support. Often they’re
offered as “freemium” add-ons from providers of traditional benefits like a
401(k).
The true aim of a financial wellness benefit is to create a
financially well workforce. Digital resources are a great start, but they
require employees to go it alone on their financial wellness journey. Money decisions are inherently complex and
anxiety provoking. These “freemium” platforms can only do so much to unwrap the
complexities of the human experience, motivate individuals to take action and
provide the reassurance that comes from speaking with an experienced
professional.
In our experience, apps and other digital products have to
be balanced with human interaction to create lasting financial wellness
outcomes. Personal conversations and empathy, beyond what “freemium” solutions
can provide, are critical to success.
In its most evolved form, the financial wellness experience
is essentially bionic – technology that makes it easy to engage, discover
resources and find solutions, and a human connection to support a truly human
need.
Growing in scope and scale
As the need for financial wellness benefits grows, financial
wellness programs need to grow as well.
The pandemic has fundamentally altered a lot about the
workplace, including employees’ financial stress and the support they expect
from their employer. In the last year, Ayco has seen many employers add to
their financial wellness support to assist employees with crisis budgeting,
voluntary early retirement, and support for survivors who lost a loved one.
Employers can certainly provide more and better financial
benefits without significantly increasing a program’s scope. Possibilities
include advancing paychecks for immediate needs, spot loans that can be repaid
through payroll deductions, childcare subsidies, and relief funding for
employees facing severe hardships.
In the long run, however, achieving a financially well
workforce will require greater scale, more human interaction, and more
partnering with specialists.
A dedicated financial wellness provider can be especially
helpful in professionalizing their most sensitive dynamics. An outside partner
can provide an extra layer of privacy between employees and their company, and
a resource to help employees separate their anxiety over personal finances from
their performance on the job.
Broader adoption across employer types
Last year, a few months into the pandemic, 42% of companies
with more than 500 employees were providing financial wellness support,
according to the Employee Benefits Research Institute (EBRI). Only 25% of
companies with less than 50 employees offered such a program. However, this was
before the full impact of the pandemic changed how we work and live.
The need for financial wellness support is now broader than
ever because personal finances have become far more complicated. Employees have
dealt with sudden financial events like stimulus payments and child tax
credits, suspension of student loan payments, a chance to waive penalties for
early withdrawals from 401(k)s, and the ability to pause or reduce monthly
mortgage payments.
More mid-sized and small companies, along with startups and
entrepreneurs, either have already or will soon recognize that employees need
help managing their personal finances, and that a dedicated financial wellness
solution (not just a “freemium” offering) belongs in their benefit program.
It’s especially relevant for the younger employees, who
increasingly want their employers to offer more innovative compensation
packages and who are less experienced in personal financial management.
Our financial wellness mission
Whatever forms of hybrid work take shape after the pandemic,
companies will need to navigate a new paradigm in workplace psychology.
Employee expectations of employers have evolved with the
rise of stakeholder capitalism, and employees seeking a larger purpose in the
work they do.
Add to that the recent historic financial stress and its
continuing aftereffects. The results are apparent: Ongoing financial anxiety,
and a deep desire in the workforce for financial relief.
Seven in ten employees say they need their employers’ help
to be financially secure, and six in ten say they expect it, according to the
EBRI.
It’s time for all employers step up and do more to provide
truly comprehensive support for their employees’ financial wellness. We believe
companies best serve their stakeholders and the greater economy when their
employees’ financial lives are clear, understood and in their control.
Productivity increases, absenteeism drops, retention improves, and HR teams are
less taxed. Equally important, employers gain reputational advantage, clearly
demonstrating they invest in their people and are committed to a healthier
workplace.
Now and going forward, comprehensive financial wellness
support belongs center stage in corporate America’s benefits packages.
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