The “hot” employee benefit for 2017 is financial wellness programs, according to surveys of the nation’s employers. These programs can focus on a variety of areas, including debt management, budgeting, financial planning, etc.
A much-quoted survey by human resources consultant Aon Hewitt revealed 55 percent of companies already offer their employees some help in at least one of these areas, with 38 percent covering three. In 2017, the percentages are expected to climb to 77 percent and 52 percent, respectively.
A recent Bank of America Merrill Lynch report indicated more than 90 percent of large employers plan on implementing or expanding some type of financial wellness program this year. If you asked employers just a few years ago if their workers were interested in participating in financial wellness programs, they probably would have said no.
But today, the demand for these programs has spiked. And like other employee benefits, financial wellness programs are increasingly being used as tools to recruit and retain employees and increase employee productivity. Financial well-being has been linked to higher worker productivity, reduced absenteeism and reduced health care costs.
In a 2014 Society of Human Resource Management survey, 41 percent of HR professionals said the lack of money to cover personal expenses affected their employees. Whether the worker is an aging baby boomer, whose retirement savings were lost in the Great Recession, or a millennial, who left college burdened by student debt and is living from paycheck to paycheck, financial worries are stressful and distracting.
Helping workers conquer this stress likely will improve their productivity. Workforces are diverse. Employees come in all shapes and sizes. Millennials, people 18 to 34 years of age, have overtaken retiring baby boomers as the largest generation of employees in the workforce today.
Their interests and needs often differ from those of their older co-workers. And the way they communicate and expect information to be delivered tends to favor “electronic,” rather than “paper.”
As a result, a workplace financial wellness program cannot be “one size fits all.”
But there are some basic features:
Education. Programs should focus on educating workers, not promoting specific investment products. Programs should focus on the employees’ needs and financial wellness, not on the vendors.
Needs. Tailor programs to employees’ needs and interests. The most popular topics covered include budgeting, debt reduction, health care (particularly as it applies to Health Savings Accounts) and home purchasing.
Measurements. Employers and employees should see results. Ask participants to complete an initial self-assessment. Follow up a year later with another self-assessment to determine if goals have been met and if employee financial wellness has improved.
Incentives. Offer employees incentives to fill out the initial self-assessment and to attend an introductory workshop. An incentive may be movie or lunch gift cards, an additional contribution to the company’s retirement or health savings account, an afternoon off work with pay, etc.
Structures. After the initial assessment, a typical program begins with an introductory workshop that covers such topics as changes to tax deferred savings accounts. Future sessions should address topics identified in employee assessments.
Delivery. While millennials desire information to be provided electronically — through email, “calculator” apps, webinars, etc. — that does not replace the need for face-to-face workshops and personal counseling. A program should include electronic and personal contact.
Benefits. Critical to every program is the need to educate workers on the benefits and structure of their employer-provided tax-deferred savings plan, most commonly the 401(k) plan. Explain the need for workers to at least contribute enough to match the employer’s contribution to their plans. Explain the negative impact withdrawals will have on retirement security.
A company can have a significant impact on its employees’ well-being by offering an unbiased financial wellness program that is professionally delivered. It is not a matter of just providing information and teaching skills. It’s a matter of improving workers’ financial behavior.