By Mark Olsen, Managing Director at PlanPILOT
Financial wellness for employees hasn’t traditionally been a concern for employers in the past, but more employees today cite “finances” as a major stress point, potentially leading to lower productivity, lack of focus on their job, and lower motivation. With high housing costs, a potentially slowing economy, the prospect of losing jobs to automation, and continual high living costs in some areas, employers would be wise to address this issue in their company benefits program.
PlanPILOT discussed this in our February blog article. We pointed out greater demand by employees for such features and how employers should utilize services, such as those we provide to make financial wellness a priority within benefit programs. In fact, a recent survey revealed that over 60% of Gen-Z and Millennial workers believe it’s their employer’s responsibility to help employees maintain and improve their financial wellness.
What Is Financial Wellness?
In simple terms, for most employees, financial wellness generally meets the following common criteria:
- Having an understanding and control over day-day and month-month finances
- Being able to absorb a financial emergency expense without increasing credit card debt
- Having a sense of future financial goals and how these could be met
- Lifestyle expenses not exceeding after-tax income
- Keeping debt under control and implementing regular contributions to savings
While none of the above should be all that surprising, the crux of the problem centers around the idea that while there is certainly ample online information available to employees to help them tackle their financial problems, having the understanding and tools to implement solutions to these issues is lacking. For example, the survey mentioned above also reveals that less than 25% of respondents had a budget in place, less than 28% worked with an advisor, and less than 16% had a written plan with an advisor. It’s clear that consumers need more assistance with their finances, and employers are in a good position to provide help via well-designed employee benefit plans.
Keys to Implementing Financial Wellness Programs
Financial stress can be detrimental to overall employee morale, focus, and job security. If an employee spends part of their workday thinking about money problems, their productivity suffers, they may be unmotivated, and this negative attitude can spread through the workforce. Employees who feel unsupported by their employer may be more likely to leave too.
To provide this type of support (in higher demand today), plan sponsors should consider the following:
- Think about the needs of all employees: Your workforce may be diverse in age differences and financial needs (student loans versus saving for a house versus nearing retirement). Confirm your program addresses these differences.
- Use the resources at your disposal: Include input from HR professionals, benefits consultants, plan recordkeepers, your tax professionals, and others.
- Don’t feel your plan has to “do it all”: Utilize available online resources or subscription programs to fill in gaps which your company cannot cover.
- Implement communication and training programs: Employees may be reluctant to use financial wellness features if they don’t know about them or are unsure how to use what is provided. Include frequent notifications, workshops, and training programs to encourage participation.
- Watch the numbers: Financial wellness programs shouldn’t be “provide and forget” initiatives. Include periodic monitoring, surveys, and reviews by management to verify these programs are meeting and improving participation metrics and employee satisfaction.
Include Impactful Features Based on Current Real-Time Issues
Your financial wellness program stands a greater chance of attracting participation and achieving your goals of higher employee morale and productivity if the program addresses the acute financial issues many are facing today. Here are several we at PlanPILOT recommend:
- General financial literacy: Learn how to set and stick to a budget, pay down credit card balances, finance a home purchase. Concepts such as compounding interest, basic investment methods, how interest rates affect your finances, etc., are all worthwhile topics.
- Retirement planning: Why contributing to a retirement plan matters, maximizing the employer match, what may be needed to sustain a retirement, and the basics of Social Security and Medicare are all discussed in the media today. Include topics of automatic enrollment, default investment options, and contribution maximums.
- Debt counseling: American household debt is at record highs. Include programs that include debt counseling and opportunities to meet with professional debt counselors to help affected workers manage and get out of debilitating debt situations.
- Student loan assistance: Student loan debt continues to plague college graduates, despite federal assistance and forgiveness programs (which appear to be disappearing with the current Administration). Providing counseling and resources to help with consolidation and servicing that could help employees manage their considerable student loan debt burden could be a welcome and popular benefit.
- Incentivize financial wellness: Rewarding employees for taking advantage of these initiatives (attending workshops, meeting with counselors or vendors) could encourage participation. Incentives could be as simple as providing lunch or earning PTO credits.
Overall, considering and addressing financial wellness in your benefit program demonstrates your awareness of today’s family financial challenges and a commitment to helping your employees meet these challenges. With a proactive approach and working with skilled and experienced professionals in design and implementation, you can have the type of benefit program that attracts and retains top talent in your industry.
How Much “Wellness” Does Your Plan Provide?
PlanPILOT is uniquely positioned to help employers customize and design benefit plans that meet your needs and objectives. Our mission is to deliver comprehensive advisory services that help plan sponsors meet and exceed their fiduciary responsibilities by providing the proper risk management solutions and independent advice they need.
Are you ready to upgrade to a new standard for your benefit planning? Reach out to me at (312) 973-4913 or send an email to mark.olsen@PlanPILOT.com to learn more about how we can customize our services and your plan to fit your unique needs.
About Mark
Mark Olsen is the managing director at PlanPILOT, an independent retirement plan consulting firm headquartered in Chicago. PlanPILOT delivers comprehensive retirement plan advisory services to 401(k), 403(b), and 457 plan sponsors. His specialties include plan governance, investment searches, investment monitoring, and plan oversight. Mark is recognized as a leader in the industry and speaks at national conferences, including those organized by Pensions & Investments, and CUPA-HR.