Financial Wellness: The Single Greatest Benefit Employers Can Offer

Merely paying employees more money doesn’t always mean better financial health

The pace of change in the workplace as a result of the 2020 pandemic could have never been predicted. Recruiting and retention, as discussed in the first article in this series, have been presented with challenges and opportunities that will impact employer-provided benefits in unique ways. Pre-pandemic benefits changes were primarily based on technology and generational differences.

Benefits, the way we think of them today, were developed and introduced in the first half of the twentieth century, and for most of that century, they consisted of compensation, pension plans and, more recently, health insurance. Technology has had a big impact on how we work and collaborate with others. It improves our efficiency by allowing us to multiply our output. The flipside however, is the more sedentary life brought by technological advancement—people commute by train or car instead of walking, they work indoors at a desk rather than doing physical work outdoors, with robots performing most manufacturing tasks. Because of these fundamental changes in lifestyle, healthcare costs started to represent a fast-growing portion of a company’s total costs. This led to a big push for physical wellness in the past decade to help employees improve or maintain their overall health.

More recently, there has been a new shift in workplace benefits, with companies looking to provide a broader value proposition for health and wellness. This process has been accelerated by Covid-19, which is still bringing huge changes to every facet of America’s work life. At the onset of the pandemic, more than 15 million people lost their jobs in a few short weeks. Many millions more started working from home, while others were on the front lines of our war against an invisible virus, supporting essential services by caring for the sick, providing security to our neighborhoods and selling the food we needed to survive.

While no one knows exactly what a post-pandemic employment landscape will look like, there is an increasingly clear sense that employees will demand greater benefits and protections from their employers. What started as a plea for personal protective equipment soon turned into a demand for hazard pay, bonuses and paid sick leave.

Today’s employees want benefits that don’t stop at their office door, which itself might soon be a thing of the past. At the top of their wish lists are financial wellness and coaching programs that go deeper than budgeting and paying down debt. According to a recent financial wellness study from UBS, seven in 10 employees agree that companies are responsible for helping them achieve high levels of financial wellness.¹

Many Americans worry about their financial future, making ends meet and supporting mutigenerational families. Despite this, they are expected to go to work each day and perform their best under increasingly stressful circumstances.

Employees are mixed about how they feel about their current overall financial situation. About a third feel confident or good, a third feel OK and another third feel unsure or concerned.¹

 

It’s no wonder the US has a problem with burnout, with nearly one in four Americans saying they feel burnout at work, and that was before they put their health on the line to go to work every day.² Financial stress is impacting people of all ages, from younger generations delaying having a family because of heavy student loan debt and the older generations working through retirement or retiring much later than anticipated.

It is estimated that employees who are financially stressed lose up to 20 hours of productivity a month.³

Helping employees better manage their finances is arguably the single greatest benefit employers can offer—better than a gym membership that never gets used or unlimited time off policies that result in fewer vacations taken overall. Having a workforce that is in charge of its financial health has far-reaching benefits, not the least of which is a more engaged employee with the mental energy to tackle a business’s challenges.

For many people, financial wellness is much more than a savings goal or ideal rate of return on their investment. It is about how they feel about their money. Financial wellness must address employees’ relationship with money and the habits they can form or alter to enact positive changes.

A financial wellness program looking to create real change in employees’ overall financial lives should provide both digital and in-person guidance, to cater to the needs of a diverse workforce, as well as ways for employees to continuously stay engaged with the program so they can create long-lasting financial habits.

This is even more relevant for female employees, who are impacted by two major trends: increasing life expectancy and the rise of “gray” divorce. This means that, at some point in their lives, eight in 10 women will end up alone and solely responsible for their financial well-being; yet today, half of them leave financial decisions to the men in their lives.⁴

In addition to a specific curriculum around financial education and guidance, companies need to do more to help the overall financial well-being of their employees. Merely paying employees more money doesn’t always mean better financial health. To do this, companies can take a look at their overall compensation structure to understand whether it matches the needs of their current workforce, at all career levels.

Some relevant questions to ask:
 

Companies that adapt their compensation structure to enable employees to achieve financial well-being will be well-positioned to attract and retain top talent for years to come. With geographical borders in hiring disappearing, the talent pool for many employers has expanded to virtually the entire country, as stated in our first article in this series—COVID-19 disruption to talent acquisition and compensation.

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