Financial Wellness: Helping Employers with the Bigger Picture
Few things in life generate as much stress as financial worry. Employers have likely sought to address other causes of stress for their employees with health insurance, life insurance, disability insurance, wellness programs and other benefits.
Now, a growing number of businesses are acknowledging that helping their employees achieve financial wellness can deliver the same positive impacts as those established benefit offerings. Financial wellness helps employees gain the confidence and knowledge to successfully manage day-to-day finances and unplanned expenses, as well as plan and save for future milestones. Research from specialist provider Nudge Global found that the number of organizations now providing or implementing financial education programs was 40%, with a further 48% considering introducing a program.
Brokers are uniquely positioned to help their employer clients understand how a financial wellness strategy will achieve their talent management goals. Through expert guidance, you can connect employee needs with benefit strategies to drive conversations that will create mutually beneficial relationships.
The Advantage for Employers
It is rare to find an employer that doesn’t care about the wellbeing of its employees. For instance, an average of 55% of employers surveyed in MetLife’s 2017 U.S. Employee Benefit Trends Study told us that caring for their employees’ wellbeing was part of the job.
There’s also a business imperative. Research has found that lost productivity from employee financial worries hit profits by 4% on average — while 38% of employees said that they would move to a company that prioritized their financial wellness.
How Employers can Drive Financial Wellness in Three Steps
Of course, financial wellness is not solely dependent on the employer. The economic landscape and unique family situations play a huge part. At the lower-wage end of the spectrum, job security and the predictability of likely income levels often creates concern for financial wellbeing. For middle income employees, a range of other considerations creeps in — from financial security in the event of a crisis, to paying for a child’s education, to maximizing their choices in retirement.
The beauty of financial wellness programs is that the general principles can apply equally to employees in very different situations, even if the specific interventions diverge greatly. A financial wellness strategy shouldn’t be one size fits all. But any program can be broken into three steps.
1. It begins with education: Employers, as the principle source of income for families, can have a powerful role in improving employees’ financial knowledge and skills, while also driving business impact.
Effective financial wellness programs help employees develop skills based on their life stages — such as the early years of work, building a family, home-making and caring — to balance short-term needs against long-term goals. For example, financial wellness education can help employees understand the downsides of taking loans and hardship withdrawals — especially to meet non-urgent situations — from their retirement plans.
2. The next step is assessment: Assessment of employees’ financial aptitude and preparedness is also critical to a financial wellness program and its ongoing success. When employees have an accurate picture of their personal financial health, it’s more likely to drive them to take action.
For employers, an analysis of their workers’ financial wellness can be instrumental when designing — and building internal support for — an effective financial wellness program. Understanding employee age, gender, earnings, lifestyles and interests can inform the approach too. The insights gathered from the assessment will help determine which elements of a financial wellness program are most needed —which employee and retirement benefits to offer, and which delivery options are most likely to drive employees to action.
3. The final step is enablement: The critical third step is ensuring that financially aware employees can act to address their needs.
This is about employees taking ownership of their financial wellness. Employers can help here with the right mix of employee benefits. That means offering benefits tailored to them — like employee assistance programs, income protection products, life insurance, retirement benefits or some other tangible way of alleviating financial stress. Making those benefits customizable through voluntary or flexible benefits packages allows employees to tailor them to their specific needs.
Helping employers make the connection between benefits, educational resources and a healthier, more engaged and productive workforce will provide brokers with new opportunities to strengthen client relationships.