What “Financial Wellness” Features Can Do For Your Plan
Financial Wellness Programs Have Become a Workplace Reality
Today’s corporate environment is full of buzzwords that seem to come and go like the tide. Because of this, retirement plan sponsors will likely have heard the term “Financial Wellness” makings its rounds in recent years. Though the term may sound like a trendy add-on feature, financial wellness programs are quickly becoming a vital component of holistic retirement plan design for sponsors, and firms are rapidly integrating these programs into their plans.
A recent story in The Wall Street Journal indicated that 59% of employers said they were very likely to focus on improving the financial well-being of workers in ways that extend beyond retirement decisions. Compare that to just 30% of employers in 2014. This dramatic increase in enthusiasm for financial wellness features would not be occurring if the programs didn’t yield tangible results, and so this phenomenon should not be seen as another corporate fad. Rather, businesses are shifting their retirement plan features to better equip their employees – young and old – with the financial knowledge they need to be successful today.
Financial Stress Kills Productivity
The focus of employee benefits plans has traditionally been to prepare workers for their retirement, typically through retirement savings vehicles like the 401(k) plan. However, with costs rising for everything from healthcare to college tuition, some workers struggle to save adequately for their retirement, and employers are taking notice. A recent survey found that 56% of employees report feeling stressed about their financial situation, with 50% declaring that their personal finances cause stress and decreased productivity in the workplace. The number is more worrying among younger, millennial workers – 64% of that generation indicated that their finances cause them stress. It’s in this area – personal financial stress – that financial wellness was designed to make the biggest impact. By giving employees additional resources to work through their personal financial situations, they frequently feel more empowered to make smart saving decisions, improving productivity and reducing liability to companies.
Financial Wellness Features are Tailored to Meet the Needs of the Modern Worker
One great feature of financial wellness programs is that they are frequently tailored to the needs of the workers who utilize them – most offer a mix of large presentations and one-on-one consultations, in topics such as debt reduction, budgeting, and financial planning. Depending on the needs of plan participants, this means employers can offer a number of options, at a variety of fee levels, that provide employees with the educational resources they need to tackle financial stressors on their own. Financial wellness programs cover a wide variety of topics depending on the plan, but here are some services they typically offer:
- Investment Advice and Asset Allocation – for participants looking to learn more about how their 401(k) contributions are invested, or how they can invest more smartly over time, advisors can offer education on the options available in their investment portfolio
- Group Meetings and Presentations – large-scale presentations and meetings can explore the basics of financial planning, retirement planning, and personal budgeting in a time-efficient manner.
- One-on-one Counseling – financial planning sessions can be offered to get individual participants started with budgeting, credit counseling, and debt reduction.
Financial Wellness Can Improve Actual Wellness
The value of implementing financial wellness features into your employee benefits package extend beyond mere financial awareness – it can help the overall well-being of your workforce. One study found that 22% of adults experience extreme financial stress, and that those adults experiencing the most stress also engage in unhealthy behaviors to manage that stress. Programs that encourage participants to reduce debt and save more for retirement are ultimately reducing this stress, and thereby reducing the health risks associated with perpetually anxious workers.
Financial Wellness as a Recruiting Tool
Additionally, as millennials already hold the largest generational share of the American workforce, they still have many years remaining in their working lives. Investments made in their personal financial wellness not only offer an option to mitigate long-term health risks, but also an opportunity to retain them as happy employees for many years to come. As these programs continue to grow in popularity, they will also grow as a core benefit offering that may entice younger generations who currently are displaying the highest amounts of financial anxiety.
Source: Pew Research Center
When it comes to financial wellness, we do not feel that responding to the needs of your workforce is a fad. If your company’s retirement benefits plan is not reacting to the real financial anxieties of your employees today, then you risk losing valuable talent to other companies that are responding to previously unmet needs. If you haven’t already, consider adding financial wellness features to your retirement plan in order to increase the overall well-being of your entire workforce. After all, financial wellbeing should be viewed as a component of overall employee wellbeing.