HR professional: Paying it forward: Why employees are craving financial wellness benefits

From financial support through new payment models to retirement and student loan repayment, what financial benefits do employees crave, utilize, and respond to?

Transcription:

Paola Perelta (00:07):

To start. Well, hello, my name is Paola Paralta. I an associate editor with Employee Benefit News and today we are kicking off the first talk of this series until five, which is paying it forward, why employees are Craving Financial Wellness Benefits and I would love to introduce my lovely panel down at the end we have Robert Kelly, HR Benefits Consultant and North Carolina Offices of State of Human Resources. Right next to him we have Kristen Carlisle, General Manager at Betterment at Work. And then right next to me we have Natalie Blain, senior Innovation Manager at Commonwealth. And so I think we can just get this started with just a general talk of how have employers role in employee benefits changed and what are some of the things that have changed either because of the pandemic or even just over the course of the last few years. How has that relationship changed?

Kristen Carlisle (01:06):

I'm happy to start. So Betterman Network works with employers sort of in the SMB space, which is a space that is typically sort of underserved in the benefits market. And what we've seen is actually in the wake of the pandemic, a lot of employees are going to their employers now and saying, I need help. I need help in understanding my benefits, I need help in understanding how to take advantage of them, but also I need your help in having better access to benefits. So one of the things that kind of came up is people were really dipping into their emergency savings if they had it, but a majority of people actually didn't have it. So they were dipping into their 401k. And what this did was raise to employers like, Hey, we're offering benefits like a 401k and people are using them for emergencies. Do we need to start thinking about benefits that cover a wider need based on today? And also start to really diagnose, do we need to do this for the long term? And I think that that really brought a conversation to employers they weren't expecting.

Natalie Blain (02:02):

Kristen, I'm so glad that you mentioned that. Emergency savings, I think so many workers are really facing financial insecurity. Many of you may know the stack from the Federal Reserve saying that nearly 40% of Americans can't afford a $400 unexpected emergency or expense. And so the last two years of the pandemic unfortunately I think has really elucidated this fact. And then now you see with rising inflation everyone's keeping an eye on gas prices. Workers really need support from their employers and so they're going just like you said, they're going to their employers and saying, can you support me and help me in increasing my financial security?

Robert Kelley (02:42):

And we see the same change in place, a look into the employer for benefits and well specifically with the recent pandemic and the economic downturn, the financial benefits that all the panelists have mentioned. One of the things we focused on having a strong benefits package with the state of North Carolina was looking at the benefits and showing people the value of those benefits, how to access them. Access is a big thing. We already heard that word. And how they can best use it for them to save some money. We know there's a lot of stress overall and employee stress. One of the stats that I've seen is 65% of employees are stressed over finances. So if we can help with at least that part of the stress that can help with overall stress.

Paola Perelta (03:30):

And when we talk about financial benefit, financial wellness benefits, what kind of falls into that for maybe the people who don't know because financial wellness can cover so many different areas. And so to ballpark it, what are some of the things that employers should be thinking of covering when they're offering financial wellness benefits?

Kristen Carlisle (03:50):

So I think a lot of times a 401K or retirement benefit tends to be the cornerstone of a lot of how employers are thinking about financial benefits. But some of the studies that we've done have actually identified that a lot of people actually don't know how to take advantage of that. Around 23% of people take advantage of financial benefits. And that's in part because they don't know how or in part because it just doesn't speak to their need in the moment. People need money right now. They send money home, they need money to take care of expenses immediately. So the way we like to think about it is thinking about your today money, your tomorrow money and your future money and how to plan in a way that is not siloed. So how do you save for your long term alongside maybe your more immediate needs? Things like emergency savings, things like educational savings that goes into student loan debt management. But that also goes to pre-planning with tax advantage accounts like 529. Anything that sort of can really speak to how people can make decisions with their money. FSA HSA as well is really how we define sort of those financial benefits.

Robert Kelley (04:51):

And I would say with the state of North Carolina, very similar short and long term, we can all say, let's save so much in a 401k, let's do this, let's buy these benefits. But we'd like to once again focus on those benefits, especially with the pre-tax that you mentioned with the FSA. Let people know about the fsa, how to access and how it will work for them with those out-of-pocket medical, dental and vision expenses. Explain that to people. Stretch their dollars and their benefit dollars. And I mean we had quite a few companies here. We had Lively with the FSAs and HSAs here with us today. We had the student loans with the money line. So all these different benefits that can help people find savings that aren't already there, then they can go and as you said, there's emergency savings funds and other things maybe into the 401k.

Natalie Blain (05:41):

Yeah, and only thing to add, I completely agree in terms of the broad range of benefits, but specifically with when we're working with consumers or end users, also looking at their feature types that are really important. So at Commonwealth we do lots of consumer research with our partners and we found particularly with workers are wondering lower or moderate wages that for them liquidity is super important but below or no fees. And so making sure that some of the benefits that are incorporated also includes some of the features that these consumers would want.

Paola Perelta (06:13):

And obviously a lot of the sentiment around financial wellness changed in an instant when the pandemic hit and a lot of people's financial status and their trust in their financial situation changed very quickly. But what are some long-term trends that are coming from that very quick transition, but what are some lasting effects that we're going to be seeing?

Kristen Carlisle (06:33):

So I spoke about the pandemic, sort of creating this rise, rising tide in immediacy and an immediate need and things like emergency savings. But that really has shifted the conversation. We are seeing newer generations coming into the workforce, dealing with things that other generations weren't dealing with. Student loan is a prime example. And now that is being considered at the federal level. I'm not just talking about student loan forgiveness but there's also a lot of imagining of how student loan management can sit alongside the 401K in the federal government right now saying how can we give tax incentive to employers to do that as two programs as one instead of having people try to manage these as separate entities. And what I think that's speaking to is that there's just a shifting need. Finances are far more complicated than they've ever been. And also the employee market has shifted quite a bit. We talked about some of the pain of the pandemic, but now more than ever, employees have a different type of leverage in the conversations they're having because people aren't also going back to the office at the same clip. So they're not looking for office benefits, they're not looking for free snacks, they're not looking for more time off. They're actually looking for support in ways that actually make a difference in their lives. How do I actually plan for the needs I have for me and my family?

Natalie Blain (07:54):

Yeah, no, I really like that you mentioned support because one thing that we hear from employees is the reason why they want their employers to really commit to these different benefits is this shows that their employee employers are not only saying this, but they're putting action and they are committed to improving their employees financial wellbeing. And so really showing that support, especially now whether there's kind of more, you hear about the great resignation, there's kind of more fluidity particularly with different types of workers, but the younger generation as well, really committing to these type of benefits shows to employees that their employers are there to support them.

Robert Kelley (08:31):

Great. And I agree with all of that. I mean we can take that into retain and recruit that's here now. It could be here to stay. We see it's such a big thing right now and with the employers showing that they care for employees. Employees when they look for jobs, we look at the salaries, all of us, but we know we also look at the benefits. Once I found was 75% of employees will leave a job for another employer that has been a financial benefits focus. And so employers have to ask these guys to saying focus in on the financial benefits and how people can access them is a big thing.

Paola Perelta (09:06):

And I'm curious because I think that for a long time the concept of financial wellness, the concept of talking about your money at work was super taboo and it was not something that was very accepted. And so how is this kind of also going to play into the destigmatization of talking about money at work?

Kristen Carlisle (09:23):

Yeah, I think it's actually, it's shifting, right? It's been shifting. People are pushing for pay transparency states now are publishing, they're compensation and they're forcing companies that do business in those states to publish compensation. This is happening at the government level, this is happening from bottoms up. And again, I think it speaks to a lot of that sort of being opaque about your compensation was really just I think more to protect the employer and employees understand that now. And I think the groundswell movement is, hey, not only do we wanna break down that and I wanna be more open and transparent about my needs, but I actually think it's on the employer to also create that opportunity to be transparent because you may be spending a lot of money and time on things that actually don't make a difference for your workforce. And so you could be implementing what you think are in incredible benefits and someone actually can't take advantage of 401k cuz they are dealing with crippling debt. And so how can you better understand what your employees are dealing with in a respectful way is something that I think is going to be a trend that we see across the employer landscape.

Natalie Blain (10:27):

And when we talk about equity, I think pay transparency and having these conversations are really important, especially for some historically under advantage groups. Really talking about what the pay is can really help in bridging the gap in equity in general. So I think having these conversations are really crucial when employers are saying they're dedicated to DE and I

Robert Kelley (10:48):

And I also looking at all this, we can have a menu of different things. We know this, different people have different needs throughout their life cycles. We mentioned the student loan, some people may need more caregiver benefits. So there's all these different things that can be looked at and we can give different things to different people. Doesn't have to be the same thing for everyone. So that's another thing that needs to be looked at and that falls into the equity, all these different things and people can pick and choose from the menu that the employer has. So the employers getting in the spotlight and people are talking about it.

Paola Perelta (11:24):

And I love that you brought up DE and I and that you brought up different forms of financial assistant, whether that falls into caregiving or student loans. And so taking into consideration how broad this conversation can be, what is something employers can do or what is something employers should know about if they really do want to offer financial wellness benefits, how can they go about it in a way that they're making sure that they're doing something holistic, equitable when they're doing that?

Kristen Carlisle (11:53):

I think it starts by talking to your employee base. And again, I think you can do that in a variety of different ways depending on your employee base and the size and the distribution, but really surveying them and asking them. And I think it's more than just saying what benefits do you want? People are always going to sort of say 401K cuz that's what they're used to and I think it is an important benefit and it's a cornerstone benefit, but asking what are you dealing with or what's top of mind? What is a stress right now that you're handling? And that helps you get to the answer of okay, how can I actually meet the needs of the broader employee base? And then I would really look to not only what's happening in the state level, in the federal level to see what tax advantages you could take advantage of as an employer, but also consider bringing in benefits like a financial advisor for your employees and having an advisor that can partner with you and provide more resource and planning that goes beyond just the tech and the solutions that you're bringing in place.

Natalie Blain (12:52):

Yeah, I think financial education is really important, but I would say that sometimes it's really not sufficient. There has to be paired with solutions and that's where employers can really play a pivotal role in creating or providing that opportunity for more solutions for employees. And so talked a little bit before about emergency savings and that's really an important, especially if you look at workers earning lower to moderate income, if they wanna get that path to building financial security and they're not really looking more towards longer term investing, bringing in a tool like that can really help and trying to build in that moment and meeting their employees needs at that morning and that moment. So just kind of thinking a little more holistically and not in terms of education which is really important, but creating that access for employees to be able to also use the tools that they need.

Robert Kelley (13:42):

I think the access is important. We want people, we want them to have the access but we want them to know where to go for resources. So with can they go to do this? Where can they go to get help? We have the state place credit union of North Carolina for the state place. So we're in the unique position as the state to have a credit union. People can go, they get all these different financial services if you're using a TPA or a carrier to do some financial wellness, one of the things that usually helps is people trust their employer. So partner with that TPA on communications and stuff and if the employer pushes out that information, they'll trust it more than just leaving it to the TPA that you have, you might be using for financial wellness and then people may go to it and access it and make sure the resources are there, they know where to go.

Paola Perelta (14:30):

And I'm curious about what you guys are hearing in your own spaces, whether it be from the clients you serve or the employers you serve, what has been working and maybe what are some pain points that still exist and what they can do to begin to overcome them?

Kristen Carlisle (14:47):

I think one of the biggest challenges we hear is still trying to understand how do I implement this, right? It's great to think about all the benefits for your employees, but you're also employers, you're running a business, how do you implement this in a way that it doesn't require a ton of overhead and you can make sure that there's adoption and I think talking to your employees about it is a huge part of that. But also just trying to find a solution that meets the needs of both you and your employees. Ease of administration is a big one. How can you make sure that you're picking tools that aren't going to take hours on end to administer every month or every year? How can you partner with the right individuals that can come in and help augment the support you can give? Because a lot of times if you're in the benefits space for your employer, you're maybe not the financial expert and you shouldn't be having the financial conversation. So how can you maybe find those partner resources to ensure that you're augmenting what you bring to the table and making it really available but also speaking to the public need.

Natalie Blain (15:44):

Yeah, I think implementation is really important. But another pain point is that once the program is they're really encouraging employees to use that. So driving take up and use of the program with the partners that we talk to, a lot of the focus is there so that, you know, we spend so much time in trying to create such a wonderful program, there's all these benefits, but if employees aren't using it then that's a huge problem. And so we work with research and trying to find ways with communication to drive take up and really kind of incentivize and encourage employees to use that program.

Robert Kelley (16:18):

And we hear from a lot of employees being so diverse, over 125,000 employees. A lot of people want to understand the benefits. Some of them are complicated. We're a state that has a big pension system. Our state also has the 401k as private companies do and the 4 57 to save and all these other benefits that we have and people trying to understand all that. So having something in place in the holistic wellness model, the financial wellness part, you know do want to have ways to get that information to people so they can better understand. And we keep talking about access and resources so people know where to go, what to do or when they wanna start that 401K or start that savings account.

Paola Perelta (17:02):

And I love that you previously mentioned the intersectionality between financial wellness and DEI and how it plays such a big part in that. And so if you want to expand on that point or just explain where does financial wellness means something so different for so many different demographics of people. And so how are ways that employers can really make sure and HR executives can really make sure that they are being mindful of their DEI goals when they're also looking at financial wellness?

Natalie Blain (17:29):

Yeah, I think there's really, as you say, crucial overlap. And one thing that you had mentioned earlier is speaking to employees. And so I think really kind of spending the time to do either qualitative or quantitative research but gathering the voice of your employees to understand what is happening in their lives can really start to drive the different solutions or the way that you try to approach the problem. I think sometimes when you take the top down approach you could be missing a lot of the issues that are happening in ways that can really impact the lives of different groups. So particularly with certain demographics if you know do specified research with that type of group to learn a little bit more about their lived experiences, I think that can go far and along in trying to help create the programs that can address their needs.

Kristen Carlisle (18:20):

I would tack onto that and say that if you have resource groups in your organization, employee resource groups, they're an excellent source to tap into for feedback around what's actually happening with the employee base. Because a lot of times it's an uncomfortable topic for some people no matter how many ways you approach it. But ERSGs in a lot of ways create a lot of bottoms up feedback that can be very useful and understanding why different people will need different things or if there's a hesitation towards something that you're providing in terms of a benefit or a misunderstanding or a way that you can augment it to be a little bit more productive for the employee base. So I wouldn't just make it lean on you or your people team, I would definitely think about how you can tap into other resources in the organization that are plugged into the day-to-day.

Robert Kelley (19:07):

Yeah and as you get feedback from employees roll something out, what we did was we got feedback from stakeholders, we tested out some of the things with our HR folks and our health benefit representatives the frontline people to the employees and you can tweak your program and take feedback from employees as another thing we did as we rolled it out to the employees after testing it with the HR groups. So that's another good way to get you get the feedback before but get feedback as it rolls out.

Natalie Blain (19:37):

And just one other thing I just add is as the organization you really wanna be open to the feedback that you hear sometimes you know may not know what employees have to say but you wanna just make sure that you're open to that type of feedback and at least be open to try to address that solution. Because for employees it could be demoralizing if they're providing feedback and they know that people in higher positions are going to be listening to the or at least receiving this feedback but they're then not acting on that, that could really could really impact the employee morale.

Paola Perelta (20:12):

And I think on our practice call one of you, I think it was you Robert, who says sometimes employees don't know what they don't know. That's right. And financial literacy is obviously something that has not steadily improved. And so what does that play into into this conversation and what employers should know when they're trying to make sure that they're doing the best that they can for their employee base. How has financial literacy kind of either stunted or helped the progress of this conversation?

Robert Kelley (20:42):

You really have to start off from a vantage where we know financial wellness is not taught school, as we said on a practice call, the financial literacy is there, there's different levels of it and some people may be more advanced than others but we know right now that financial literacy nationwide, it seems low. There's been about the 15th state that has put in where financial literacy, you have to take a class in high school or take a class or two to graduate. So does 15 states have done that. So it's being looked at slowly state by state on a national basis, but it is there. So you know can always start off slow if you have programs and if you want to branch out into different segments you can do that specialize for people, but we just know that it's low. As we mentioned

Kristen Carlisle (21:37):

I would pay attention to what your partners are offering, right? Technology has come so far in this arena in so many ways and I think even that shift in narrative around well put 11% away in your 401k, that doesn't make sense. I work in 401k, that doesn't make sense to me. And so I think it's really understanding how you can find tools that go about it towards a goal-based approach that's way easier for people to conceptualize. People really struggle with way in the future and so helping them sort of StepStone with the tools you use and with the providers that you're partnering with, they know these spaces really well and they probably have a lot of information to share. How can they enable you to be able to enable your employee base is a big part of it.

Natalie Blain (22:25):

I agree with what both of you said. I think I'm going to take a little bit of a different approach. Financial literacy is very important and I think it should be continued, but as I said earlier, I think access is really important and addressing systemic racism, systemic barriers, systemic discrimination because you can teach people as much as you want but if they're going to a place and then they don't have access to a certain tool, that's not going to really help them in meeting their need. So I think as long as financial literacy is paired with actual changes to regulations or changes to any kind of discriminatory barriers that are there that's great, but if it's not then it's not going to really meet the actual problem that's there.

Paola Perelta (23:07):

And I wanna circle back to something you said earlier, Kristen, that it's obviously your employer should not be your primary source of financial information but I think that a lot of people are turning to their employer even with just questions on how to navigate certain financial things that maybe even more simple than a 401k. Even just asking your employer what is a 401k, especially with younger generations. And so how can employers touch make sure that they are facilitating that conversation but what are some things that they can do to point employees into the right direction so that conversation is flowing but it's not falling solely on the employer.

Kristen Carlisle (23:44):

I mean I work in a financial benefits organization and our employees come to me and they're like What do I do with this? I have this debt, how do I deal with it? I'm like whoa, whoa, whoa. I'm not a CFP so we should take a step back here. It happens all the time. And I think the important thing is actually, well first again it comes down to the tools you choose. You talked about access, understanding your employee base and what they're dealing with. We have an organization that works with us where predominantly everyone is on the road and not in front of a laptop. So mobile access was incredibly important to them and that might not be the same case for another employer where their employee base is predominantly on a laptop. So you have to really understand how your employees move throughout the day and the tools you pick for them speak to that need. But also, again, technology only takes you so far. Education, self-education only takes you so far. What we've also been hearing in some of the studies we've done is people are just looking for a place to go talk to somebody. And so there are great resources that you can think about to bring in terms of CFP access that you can augment that help people both get access to that benefit because a lot of times it is not accessible on an individual basis. So, as an employer you have buying power in that arena but also encouraging people to take advantage of that and be open to that process And meeting CFPs on organizations that will speak to your employee base and where they are. There are a lot of different types of CFPs out, there are a lot of different organizations that partner you based on your specific re requests and what you might be dealing with. So I think that can be a really nice thing to augment any of the tools or education you're bringing in.

Paola Perelta (25:24):

Anyone else? That's perfect And obviously we've been talking a lot about what's happening right now but we have an entire generation of workers that are coming up and climbing the ranks and what was working for is working for millennials now and what was working for Gen X and what worked for baby boomers is not necessarily the same as what will work for Gen Z. And if employers want to attract and retain Gen Z, they're going to have to change a lot of their practices cuz the one size fits all approach just does not work anymore. And so what are some things that employers should have on the forefront when it comes to recruiting younger talent and make sure that not only are they recruiting them with these things but also retaining them in their ranks.

Robert Kelley (26:05):

I would say that one thing an employee might have to do as it's all happening so fast in real time is benchmarking, getting out into the market, see what is going on and use some of these companies as a resource. We're blessed enough to have the credit union and you may have different resources to see trends out there in the financial world. It it's going to be very fast, like you said, it's going to be so fast as all these different ones come up, the student loan crept up on everyone and that's all we hear about but the next thing's going to creep up on us. So just knowing that you're going to have to update and change and keep aware of the trends.

Natalie Blain (26:50):

Yeah, we were actually just talking about this before the session about and I think one thing I'm going to move a little bit from benefits, but I think company culture's really important as well. And so younger generation is not going to tolerate a lot of the things that I think older generations. So just really looking into company culture and also flexibility. I think from the pandemic a big thing that we've learned is just remote culture and just people having the flexibility of choosing when they can go in and outside the office. So just being a little bit more open and flexible in terms of what a traditional work environment or working day would look would be really important to the next generation that's coming.

Kristen Carlisle (27:35):

And I think just paying attention to what they're dealing with from a financial standpoint, it doesn't negate the need to talk to people and make sure that you have representation in who you're talking to. But I mean the amount of student loans that a Gen Z is dealing with versus boomers who the concept of student loans really didn't exist, that's staggering. And so their financial decisions are going to be widely different and I think paying attention to that is important.

Paola Perelta (28:02):

And before go into what the biggest takeaways of this conversation are, I did wanna open up the floor to anybody who may have questions for our panelists cuz I know this is a very broad topic and we didn't have a lot of time so I wanted to make sure that we covered everything in case anyone had any questions.

(Audience Member 1) (28:20):

So you guys covered a lot of great information. Thank you so much. And I love that you ing down not only different generations but you've been breaking down by different marginalized categories as well. One of the things that I've found is that when you have certain generations kind of make a company is making financial literacy decisions for other employee bases, they often lack the frame of reference of why each generation has different financial needs. Do you have any suggestions for helping other generations understand other generations financial needs? So for example, a boomer compared to a millennial or boomer thinking about retirement and a millennials thinking about debt, right generation see each other's perspectives.

Robert Kelley (29:07):

I'll just jump in and say life cycles are not all of it, but definitely a part of it from student loans to caretaker, there'll be some overall things that you can do before you have to do a deep dive and get into some of those other things.

Natalie Blain (29:22):

At Commonwealth we do research with some of our partners and I know sometimes that can be a little bit hard, but why I like to do that, especially if we do interviews or surveys, the data that we get through, we look at the breakdown in age demographics and so there's a lot of insights that we can see in terms of what are priorities, what are concerns or stressors. And I think elucidating that by age demographics and kind of showing that to a different generation can show, can really clearly show these are the concerns of this generation right now and maybe open a conversation as to why maybe student debt is really important for millennials versus baby boomers and kind of get that conversation going.

Kristen Carlisle (30:02):

So we actually worked with an employer who was like, I don't think that student loan makes sense. I don't have a lot of young people at my company and all that. And we were sort of like, well do you have people who have children at your company? And they're like, yeah. And we're like, do you think that their children might be dealing with student debt? And they're like, oh yeah, right. So right. Just, you might not just be the only one. You might be taking care of someone who's dealing with debt, you might wanna save for someone else's education. You might be paying someone's medical bills. And so even if it doesn't directly impact you, and it's not just understanding that generation, but what else are they dealing with or surrounding them? And so in talking to your employee base, I think that's where you can do things like blind surveys and cutting the data I think by age and what they're dealing with does help bring some of those themes forward. And then you can bring some of the, there's so much research out there right now about this topic in particular because it's, it's just everywhere. So I think you can bring some of that research forward too. And this is where as employers talking to the resource groups in your company and talking to the different or different people at different levels to understand the pockets of energy that are happening, help frame some of that conversation.

Paola Perelta (31:13):

And we are at time, but I would love to just get a final takeaway from you guys. If you guys had obviously a room full of HR executives and employers, what is one thing you guys would tell them to take away from this conversation and to really start putting into action today? If they can.

Natalie Blain (31:27):

I would say speak to your employees for lack of a better term, do research, but just kind of collect their thoughts and their ideas because it's really important in whatever you're designing, that you have their voice. If you're thinking in terms of implementation, use kind of long-term planning, just get their voice and make sure it's centered in whatever you're doing.

Kristen Carlisle (31:47):

Natalie totally took mine so then I will do another one and say that I think what you actually should do is RFP vendors do research, start to understand what's out there. There's a ton of movement in this space right now. People are coming out with new technology, they're coming out with new solutions, learn about it, spend some time, dedicate some time to just research what's happening in the different demographics, but also really just go out there and talk to vendors, different benefits vendors, ask what they offer, ask them how they offer it, ask them what their plan is to change in the next 5 to 10 years as well. Cuz that's going to give you some indication they're steeped in it, day in, day out. It'll help you start to suss out where the energy is in the space.

Robert Kelley (32:28):

And this is definitely a great plan. You get that information, but don't be afraid to start one. And when you start one, you can always change it. You wanna be prepared, you will the research check in as these both said, but go ahead and do it. Get feedback from people. And as we always know when you get feedback, people used to expect some sort of change but it can meta off cuz ours has changed a little bit over time. So don't be afraid of change.

Paola Perelta (32:54):

Well thank you to everyone who join us and thank you to our panelist.

Robert Kelley (32:56):

Thank you.