Empowering Vulnerable Employees With Financial Wellness: Earning Their Buy-In

How employers can foster engagement and reduce financial stress for workers in need

Between the uncertainty of the upcoming elections, economic volatility, and inflation, there is no question that Americans are stressed about their finances right now. While these factors remain largely out of the control of employers, benefits can serve as a lifeline for employees looking for guidance and support in navigating challenging financial situations. However, for these benefits to be effective, they must meet the needs of a diverse pool of employees, each with their unique financial circumstances. 

The share of employees reporting unmanageable levels of financial stress grew 16% last year, and people of color are especially feeling the brunt of this economic strain. Viewed as a group, they are more likely to live paycheck to paycheck, have less emergency savings, have more student loans, and experience higher rates of debt.

This is where financial wellness benefits come in. They are a proven tool to decrease financial stress and help employees who are struggling to get into a position where they can plan for the future instead of being paralyzed by day-to-day financial concerns. Financial coaching, in particular, can play an especially meaningful role in encouraging this switch. In fact, after working with a coach, more than half of workers who initially reported high financial stress levels go on to report only some or no financial stress.  

The effectiveness of financial wellness tools to address workers’ financial needs and concerns is no secret. A recent report found that 80% of benefits leaders believe offering financial benefits is more important now than it was a year ago, as 40% say employees are more stressed about finances due to factors like rising costs and the election. Live financial coaching has also been found to have the greatest positive impact on the financial state of employees of color.

Offering financial coaching as an employer-sponsored benefit is just the first step towards helping employees – especially people of color – alleviate their financial stress. The thoughtful and strategic implementation of financial wellness benefits, along with ongoing efforts by HR and benefits leaders, as well as their providers, to engage the employees who need these benefits most, is essential for maximizing impact.

HR and benefits leaders don’t need to reinvent the wheel when engaging employees who would benefit. Employee resource groups (ERG) – a key component of many existing diversity, equity, and inclusion (DEI) programs – offer an inroad to introduce employees to financial wellness benefits in a way most relevant to the specific needs of the group’s participants.

We know that creating custom programming with financial wellness benefits designed around the most pressing needs of ERG participants works. One study found that ERG programming resulted in a 25% decrease in the number of employees reporting high or overwhelming financial stress and a 23% increase in the number of employees who meet all the criteria to be considered financially resilient (which entails having a fully funded emergency fund, no high interest rate credit card debt and spending less than they earn), with those number of employees reporting they are prepared for retirement based on a running a retirement projection doubling.

In a time where many companies are rethinking how they approach DEI, and some are moving away entirely, HR and benefits leaders should consider how their entire benefits suite is working towards improving the work experiences of employees of color. Financial wellness benefits have the potential to be life-changing for all employees and offer a positive return on investment for employers. However, this impact is only realized when employees actively engage with these programs.

Laura Stamps is a Senior Consultant and the Head of DEI at Financial Finesse.