Financial wellness benefits should be helping employees improve their financial health, but impractical and ineffective benefit offerings are actually hurting their chances at stability.
Employers spend trillions annually on wages and benefits, according to a report from data insights platform Financial Health Network (FHN), yet 70% of workers remain financially unhealthy. Benefit leaders will need to rethink their financial wellness strategies in order to "move the needle," says Matt Bahl, vice president and workplace market lead at FHN.
"We have a lot of aspirational solutions in the market that simply don't do the things that they're claiming to do," Bahl says. "This diverts resources towards solutions that may sound good but that are ultimately not helping employees and not benefiting businesses."
Read more: Employees feel bleak about their financial futures, despite robust benefits
The biggest misstep, according to Bahl, is relying on products that treat the symptoms of financial instability rather than the cause. For example, organizations will often provide services such as budgeting apps or early access to wages for employees struggling to make ends meet in between paychecks. The demographic leaders target with those solutions tend to already have lower levels of financial health to begin with, and while they may help address immediate challenges, they don't actually help people climb the financial health ladder.
In fact, according to the Financial Health Network's financial health score, popular benefits such as tuition reimbursement and student loan repayment don't boost employees' scores at all, and earned wage access benefits are actively lowering their scores. By ignoring these signs and not adding more comprehensive benefits, organizations may end up being the reason employees' stay in bad financial health long term.
"In many ways the workplace is ground zero for financial health because it's where most people get access to the inputs of their financial life," Bahl says. "The overwhelming majority of people in the country get access to things like wages, health insurance and retirement benefits through work, which helps them build their financial resilience."
Invest in financial health benefits that work
Organizations don't have to get rid of all of their existing financial benefits or increase their spending; instead, they should be surveying their workforce and using internal benchmark data to reinvest their budget in the right benefits. For example, benefits that have proven to raise employees' financial health scores include childcare subsidies, emergency savings accounts, financial coaching and home-buying assistance programs. Relocating those funds will not only make financial strategies more effective and keep costs low, but they could simultaneously address other pain points like employee engagement and workforce loyalty.
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"There is clear evidence that a financially healthy workforce reduces costs related to turnover," Bahl says. "By investing in their people, who are the ones helping drive an organization's value, they're actually investing directly in their business."
The financial health space is still evolving, according to Bahl, and while the proliferation of new and progressive benefits has driven positive change, it's up to benefit leaders to lead the charge towards a healthier, more comprehensive outlook on financial wellness benefit and support.
"We have to move away from siloed solutions and towards a more total rewards perspective," Bahl says. "Organizations need better insights on what's working overall so that they're investing in solutions that are the most likely to improve outcomes for everyone."
