Financial Wellness Programs Need Employer Support
Financial wellness programs in the workplace are on the rise. More than 80% of employers now offer financial wellness programs, compared to only 20% two years ago, according to data from Prudential reported by Employee Benefit News (EBN). That said, the challenge for employers is in connecting with employees once a financial wellness program has been put in place. Only a third of employees use the financial wellness programs’ benefits offered by their employers, finds the 2018 Workplace Benefits Report from Bank of America Merrill Lynch, also cited by EBN.
Employers recognize the benefits of offering financial wellness programs: it helps attract and retain talent, reduces financial stress and related absenteeism, lowers healthcare costs (happier employees are more likely to be healthier), and it boosts retirement preparedness in the form of improved savings habits and more workers retiring on time. However, employees are slower to catch on to all the ways financial wellness programs can help to improve fiscal fitness. As such, for employers who already offer or who are thinking about offering financial wellness programs, EBN proposes four areas on which to focus:
- Using tools to increase employee engagement: Employees want more personalized and direct guidance from financial wellness programs. The offerings shouldn’t be one-size-fits-all. Financial challenges differ by generation: younger employees may be struggling to pay off student loan debt, while mid-life employees may be trying to figure out how to afford college tuition, and older workers may need to catch up on their retirement savings. Each needs information and tools tailored directly to their financial situation while taking into consideration their stage of life.
In addition, gamification — creating a sense of competition, either with an employee’s peers or among themselves, to achieve a goal — can help foster engagement through financial wellness programs. Additionally, gamification can create a sense of accountability among participants in financial wellness programs, especially if the organization offers incentives for achieving their goals (more on that below). That said, as EBN points out, educational resources are a vital part of financial wellness programs, however, more adaptive benefits are key to boosting their effectiveness.
- Review performance of existing benefits: Traditional retirement benefits may not be the answer for every generation that makes up your workforce, notes EBN. For example, a traditional 401k may not have the universal appeal it once did. Some employees may be struggling with financial situations that need to be rectified before they feel comfortable saving for retirement. And increasingly, younger generations are loudly and proudly advocating for their needs. What appealed to Baby Boomers and Gen X employees may not fit Millennials and Gen Z workers. Thus, employers should review their benefits with a careful eye and an open mind. Employers should also consider any adjustments that may be needed considering their workforce demographics.
- Create a budget for incentives: Rewards are tremendously motivational. So beyond offering a financial wellness program, employers should consider budgeting to provide financial incentives for employees who act toward or reach their goals. As EBN points out, financial wellness programs not only require employee buy-in to be successful, they also need ongoing investment from employers.
- Follow up: Employers need to engage employees with their financial wellness program all year round — not only during open enrollment. Again, from EBN: Employers can make a noteworthy impact on employees’ financial security and happiness by consistently engaging them with their financial wellness programs and available resources.
To reiterate, the benefits of financial wellness programs are clear, and they have helped many employees learn to better manage their money, reduce finance-related stressors, and build savings for retirement. However, it isn’t enough to simply offer financial wellness programs in the workplace. Employers must ensure the success of their financial wellness programs by creating consistent excitement and enthusiasm for these benefits, along with fostering employee engagement on an ongoing basis.