03 Jun 5 Reasons Workplace Financial Wellness Is Trending
From commuter benefits and 401(k) matches to student loan refinancing assistance, companies are increasingly investing in their employees’ financial wellness. Read on to see what’s behind this trend — and why we think it’s here to stay.
When you think of job perks, you might think of catered lunches, ping pong tables, or working from home. But benefits that support employees’ financial wellness are surging in popularity.
Close to 90% of mid- to large-sized companies offer financial wellness services of some variety, a significant boost from 74% just two years ago. We took a look at the major reasons for this shift:
1. Wellness is big…
Once somewhat of a luxury notion, the concept of wellness has spent the last few years shedding its upscale reputation. Today, wellness-inspired products can be found in every industry, from athleisure clothing to DNA-based travel recommendations. In the US, Google searches for “wellness” have tripled since 2004, and the “wellness” hashtag on Instagram includes nearly 30,000 posts. In 2016, The New Yorker reported that “self-care” had become a “collective social practice.”
The popularity of wellbeing goes far deeper than the surface. As consumers rethink their values and priorities, new brands are springing up to cater to their needs. Employers that offer wellness-based benefits are ensuring that they stay relevant in a rapidly changing world, particularly when it comes to hiring health-conscious millennials, who view benefits and office perks as a key differentiating factor.
2. …especially around money.
Given how top-of-mind financial woes are to a majority of Americans, it only makes sense that the wellness ideology would extend to spending plans, savings, investing and retirement planning. Nearly half of US employees worry about their finances, and this situation is becoming increasingly dire: 41% of employees actually felt more stressed about finances in 2018 than the previous year, according to a recent study by PwC. Another study, by Bank of America Merrill Lynch, found that 38% of employees actively feel “financially unwell.” Among millennials, this number climbed even higher to 44%, signifying that your grandpa might be right — things were in fact better in his day when there was no beer in the office but everyone got a pension.
Anyone who’s ever had to pay back student loans doesn’t have to ask why thinking about money can be stressful. Digging into the data illustrates that these fears are rooted in a variety of causes, from education costs (42% of millennials still have student loan debt, according to the Harvard University Institute of Politics) to poor credit health. Even high-earning employees aren’t immune to the woes of plastic. A staggering 37% have difficulty paying their monthly credit card balances, according to one OppLoans study conducted in 2018.
3. Employees may know their job duties, but they don’t know enough about money.
Many employees lack awareness about their own financial needs, preventing them from making sound planning decisions. When the PwC researchers asked employees to rate their top financial concerns, the most common answers included emergency savings, retirement readiness and being able to meet monthly expenses. One surprising area that didn’t make the list? The ability to pay for healthcare expenses — revealing that most employees are unaware of a major potential spend in their financial picture.
For couples entering retirement in particular, the Fidelity Retiree Health Care Cost Estimate predicts that out-of-pocket healthcare expenses could soar to hundreds of thousands of dollars. Medical bills can easily wipe out someone’s nest egg; anticipating such needs is crucial for ensuring a stress-free retirement.
4. “Financially well” employees are better for company ROI…and VOI.
Of course, investing in a financial wellness program isn’t free. And it can certainly seem like a lot for an HR leader to take on, in addition to their other duties.
However, these benefits literally pay off.
Research makes clear that financial wellness programs lead to a more productive, engaged workforce. Organizations that have implemented financial wellness programs cite benefits including greater employee satisfaction, reduced turnover and absenteeism, improved performance and productivity, and even lower healthcare claims. By investing in employees’ financial well-being, therefore, companies are ultimately investing in their own bottom lines.
Employees don’t leave their money worries at home. Nearly a fifth report that financial concerns have damaged their productivity at work, and even worse, 11% say these concerns have prevented them from coming into the office. Burned-out employees are bad for business: employees reporting low job satisfaction miss an average of nine days each year, according to one study by Fidelity.
5. Financial wellness benefits help employers attract — and retain — top talent.
A whopping 85% of millennials want a financial wellness benefit, making clear that among young people in particular, these job perks can make the difference in whether talented recruits ultimately choose your firm. Plus, because employees with financial wellness benefits are more satisfied and productive, these recruits will also be more likely to stay and contribute to the organization.
But wait…do these programs really drive positive financial behaviors? Or are they just a trend?
A handful of studies have covered the effectiveness of employer-sponsored financial wellness programs, and the results are more than encouraging. Over 90% of employees who used financial wellness programs say that these initiatives helped them rein in spending and get out of debt. Participants also cited greater confidence in their retirement preparedness, investment decisions and life insurance coverage, according to a recent Financial Finesse report. By investing in financial wellness, employers aren’t just tapping into a trend. They’re changing their employees’ lives for the better.
If you’re an HR professional interested in implementing a financial wellness program, check out our list of the 5 steps to get you started!