Financial wellness pays off for employers who invest in the benefit
Companies that have sponsored a financial wellness program since 2015 are seeing an increase in the financial health of employees who consistently take advantage of the program, according to Financial Finesse. They also are seeing a major return on their investment because employees who are in better financial health won’t delay their retirement.
“Repeat users are twice as likely to be on track for retirement,” Financial Finesse found. “Forty-three percent of repeat users are on track for retirement, compared to just 19% of employees who are engaging in the financial wellness benefit for the first time.”
Liz Davidson, founder and CEO of Financial Finesse, says that there has been a shift in employee mindsets over the past decade and they are now “excited to take control of their finances. They went from being a little upset about changes in their pension plans and the structure of their healthcare benefits to understanding this is on me. The employer is giving me opportunities through the benefits we have at my job to make sure I’m financially secure.”
More companies are using financial wellness programs as an ongoing benefit that is available to all employees on an unlimited basis, and it is done in a very personalized way, she says.
Technological advancements have made it easier to personalize financial information and that, coupled with workshops and one-on-one consultations, has made it easier for companies to reach a broader spectrum of people.
“The challenge is how do you build a program or benefit that is going to reach your entire workforce? The technology is going to help identify those vulnerabilities and identify those gaps,” says Greg Ward, director of the Financial Finesse Think Tank.
He points out that 85% of people are not going to do what needs to be done on their own. They need personal engagement.
The people who are costing employers the most are the ones who struggle with foundational issues like debt and cash management. They bring their financial stress with them to the workplace, Ward says.
“That’s why a lot of employers are interested in a financial wellness benefit, specifically for that stress,” he says. He adds that one-on-one interactions are more of an investment but they see the best results over time.
Financial Finesse offers a multi-tiered approach to financial wellness. It not only offers a financial wellness assessment but online tools, workshops and one-on-one interactions. It also has a call center staffed by certified financial planners.
Employers who use more than one method to reach their populations have a greater opportunity of success, she says, because not all populations learn the same way. Employers can tailor what they offer to the needs of their specific population.
Do or die ROI
Companies want to know that they are getting a return on their investment. Ward says that one way to gauge how well a program is doing is by looking at employee absenteeism, garnishments and participation in the company’s other perks like health savings accounts and flexible spending accounts. All of these things have an impact on an employer’s bottom line. A company that employs 10,000 people can save $500,000 a year by getting employees on a more sound financial footing, he says.
The estimated cost of delayed retirement is $50,000 per person, per year, Ward says.
“When we talk about health care costs, we know there is a ton of research and a body of work that shows the relationship between being stressed and physical wellness. When we recognize the relationship between stress and health care, anything done to reduce financial stress [can help],” he says.
“It is a lifestyle and a commitment,” says Davidson. “It requires being accountable and having ongoing interactions. If you are in that place where you need to improve your finances, you need to make and sustain changes.”
In its latest research, Financial Finesse found that for the second year in a row, more employees ran a retirement projection, resulting in an increase in the percentage of employees that say they are on track for retirement. The number of people who say they are not on track stayed the same.
“We would have expected an increase in both those that are on track and not on track, but this may be a sign that employers’ efforts to improve retirement preparedness are working,” the report found. “While any progress is good, nearly seven in 10 employees are still unsure or not on track for retirement.”