- Research suggests that financial wellness has declined during the pandemic, which is prompting employers to offer holistic financial wellness programs for their workers.
- Why? Because employers recognize that financial wellness has a direct impact on their employees’ overall happiness and productivity.
- As a result, financial wellness programs in the workplace have expanded beyond retirement planning, and now address a wider range of financial topics, from healthcare costs to debt management.
Bank of America recently published the results of its 2020 Workplace Benefits Report. This year marks the organization’s 10th year of examining trends in workplace benefits and wellness.
The report found that there has been a significant shift in employer attitudes towards employees’ financial wellbeing. According to Bank of America, “62% of employers feel extreme responsibility for their employees’ financial wellness, up from 13% in 2013.”
One main driver behind this shift in attitude is that 83% of employers believe that financial wellness tools lead to greater productivity.
Suggested Reading: Is It Possible to Achieve Financial Stability through Workplace Wellness Programs?
Bank of America’s data “shows us that employees’ senses of financial wellness and company health are interconnected. Employee financial wellness has a direct impact on overall happiness and productivity. And employers who include financial wellness as part of their benefits program have more focused and motivated employees.”
This has led to an increased number of companies offering financial wellness programs to employees.
Unfortunately, despite this shift in attitude from organizations, where they feel increasingly responsible in helping their employees feel financially well, only 49% of employees say they are feeling financially well today, down from 61% just two years ago.
Financial Wellness: From ‘Nice to Have’ to Integral Part of Wellbeing
According to Bank of America, “the majority of employers understand that helping their employees on the path toward financial wellness is not a “nice to have,” but an integral part of how they attract and retain talent as well as ensure a happy and productive workplace.”
As a result, financial wellness programs in the workplace have expanded beyond retirement planning. Bank of America found that financial wellness programs now address a wider range of financial topics, from healthcare costs to debt management.
This is a great step forward, especially considering that employees are interested in having access to education and support “that will help them not just save for retirement, but also help with everyday financial decisions — from making retirement savings last to managing healthcare costs, managing debt more effectively, using budgeting and saving techniques and balancing competing financial goals.”
The Value for Companies
While financial wellness programs offer benefits for employees, they also offer tangible benefits for organizations.
Bank of America found that 8 in 10 employers across companies large and small indicate they believe that employee financial wellness helps deliver:
- More loyal employees
- Greater employee productivity
- More satisfied employees
- More engaged employees.
The Current State of Financial Wellness
While Bank of America reports a sustained increase in the offering of financial wellness programs, “employee financial wellness has declined.”
Because the coronavirus pandemic has created new challenges for financial wellness, holistic financial wellness programs are now more important than ever.
“The goal of any financial wellness program is to promote good habits and positive financial decision-making to help employees navigate changing market environments and better manage their evolving goals.”
Due to the varying needs of employees, financial wellness programs should accommodate the fact that different employees need different levels of support.
Bank of America found that:
- Younger generations tend to be more focused on short- to medium-term goals, like paying off credit cards or making a home purchase.
- Older employees tend to be more focused on long-term goals like retirement.
- When looking at their goals, women tend to differ significantly from men, with a focus on more short-term needs at the expense of their long-term goals.
- Less than four in 10 employees would say that they have made significant progress towards those goals.
- Employees feel they have made the most progress towards saving for retirement, while short-term goals like debt management and purchasing a first home rank near the bottom of the list.
- The top reason why employees have not made more progress towards their financial goals is because they feel they don’t have any spare money left after their monthly expenses.
- Nearly six in 10 employees say they do not have a high level of control over their debt.
- Nearly four in 10 say debt affects their ability to achieve their financial goals.
- Fewer than one in five employees say they are completely debt-free.
Areas of Opportunity for Financial Wellness Programs
“Given the prevalence of employees having to balance debt management with current expenses and planning for the future, financial wellness is inexorably linked to debt management.”
While debt management should be an area of focus, employees are generally searching for support on a range of financial topics.
Of importance to companies is the fact that employees “show a willingness to take advantage of education, advice and financial services if offered in the workplace.” More importantly, “employees show a willingness to accept help on a wide range of topics from a third party if provided through their workplace.”
Companies hoping to engage their employees would do well to provide access to tools and resources, as employees cite lack of guidance as a primary roadblock to achieving financial goals.
