An overview of why financial wellness is such an important benefit for employers to offer.
It’s Really A Win – Win, No Losers Here
“Financial wellness.” Employers have heard the term. Employees might be aware of the concept. But what does it really mean?
That’s exactly what I’m covering today. But before we dig into it, I’m going to explain to all the busy employers out there why this concept is so valuable (ie: why it’s a win – win).
- Increase Profit/(Profitability)
- Increase Productivity
- Reduce Expenses
- Attract New Talent
- Retain Existing Talent
- Healthier Workforce
- Achieve Key Life Goals
- Financial Stability/Security
- Better Health
- Reduce Stress
- Positive Relationship With Employer
Boom, so there it is.
- Do I want to increase revenue? ✓
- Do I want to retain/attract new talent? ✓
- Do I care about my employees? ✓
- Do I want them to be healthy? ✓
See? Win-win. Basically all that’s needed to understand why financial wellness is important.
What Are Financial Wellness Programs?
Alright, now that everyone understands why financial wellness plans are so important, let’s try and define what financial wellness is and is not.
The 2017 Workplace Financial Wellness report (here) by Charles Schwab defines financial wellness as:
“The concept of financial wellness eludes precise definition but can be understood to mean better financial outcomes and reduced financial stress as a result of taking ownership of one’s financial well-being.”
Taking it one step further, Chuck is saying people who take ownership (ie: get educated, stay disciplined, achieve goals, etc.) are going to be happier, more confident and more secure in their personal financial situation.
All this sounds good, right? Who wouldn’t want that? The question is how can a person get there?
The answer is financial wellness programs. And here is my (verbose) definition of financial wellness programs:
Financial wellness programs are the mix of tools (apps/software) but more importantly services an employer provides as part of the employee benefits package. The goal of this package is to educate and support employees on retirement planning but also on topics such as budgeting, debt management, risk management, trust/estate, etc.
According to Bank of America’s 2017 Workplace Benefits Report (here), “86% of all employees (92% of Millennials) surveyed would participate in a financial education plan sponsored by their employer.”
The savviest employers are offering financial wellness programs not only because the employees want them but also because of the benefits to the business and employees laid out at the beginning of this post.
Everyone Is Doing It
92% of employers are moderately likely – very likely to focus on the financial well-being of workers that expands beyond retirement decisions according to Aon Hewitt’s 2017 report (here): Hot Topics In Retirement & Financial Well-Being.
But how popular is financial wellness, really? The chart below from Google Trends shows the popularity of searching for the term “financial wellness” over the past five years.
Note: A value of 100 is the peak popularity for the term. A value of 50 means the term is half as popular. A score of 0 means there was not enough data for this term.
So basically, the chart is showing that over the past 5 years, financial wellness search results are at an all-time high and have roughly doubled on an absolute level.
On a drastically more subjective basis, here is my current list of financial wellness research reports from industry leaders. A simple Google search will lead to all of these. Check them out, lots of great information.
Bill Rogers (CEO) and SunTrust Bank captures the sentiment around financial wellness plans by saying, “financial wellness is the next benefit frontier for leading employers.”
Best Practices For Employers
“Alright Ben,” says Mr. Business Owner. “I’m convinced my company should be offering some sort of financial wellness plan, what are my next steps?”
Glad you asked, Mr. Business Owner. Here are some thoughts (in no particular order) about some important considerations when looking into financial wellness plans.
Obviously, this is extremely important. The employees need to use the program and actually get something valuable. Otherwise, what’s the point of providing the benefit? Here are some points to consider.
- Human vs. Software/AI – Does the program have real people a part of it or is it just software/AI? Is it personalized or generic?
- Topics Covered – Is the program just on 401(k) or is it comprehensive personal finance? After all, there’s so much more to an employees finances than their 401(k)
- Access – Does the program work for your employees and your business, meaning are they able to access it outside of their work hours? After all, work is for work.
- Flexibility – Everyone is in a different situation, does your program allow for flexibility amongst all financial situations?
- Accountability – People get busy, and let’s be honest, most people’s top priorities do NOT include personal finance. Does your program have a way to keep employees engaged and on track?
The design of your financial wellness plan is important as well, considerations below.
- Setup – How easy is this to setup up for your business? Does it plugin with existing offerings? Does it need to plug in with existing offerings
- Results – How is success measured? How engaged are employees? Are they progressing in their personal finance journey?
- Mandatory – Simple enough, is the program mandatory for employees? Or will you allow employees to participate based on their own decisions?
Cost is always, always important. But cost should always be evaluated through the lens of value. Is this valuable to my business and my employees?
If your business values any of the bullet points at the top of the post, looking into employee financial wellness is probably a good idea.
Perceive Financial Wellness Plans can potentially be a great benefit to your employees. If you’re curious about learning more, please email me directly or schedule an appointment.
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