Tuesday, July 31, 2018

Financial Wellness: Understanding Financial Wellness Programs

The extent to which employers understand financial wellness begins to come into focus when assessing their responses to some basic questions. But with so many organizations struggling to understand what constitutes financial wellness, it’s clear that they need more information to assess the need for such a program.

Nearly 60% of the SBS survey respondents said their organization offers a financial wellness program, or plans to in 2018 or beyond. The remainder of those who were polled said their organization does not have such a program in place, nor do they plan to offer one. However, it’s worth noting that nearly 60% of respondents who do not have a financial wellness program believe their employees would be receptive to such a program.

Asked why they don’t offer a financial wellness program, half the respondents without a financial wellness program admitted that they didn’t really think about it, while just as many suggested they needed more resources to execute a program or needed to focus on other organization priorities (22.2% apiece). Additional responses included no perceived financial benefit to the organization and a desire not to get involved in an employee’s personal life (16.7% each).

There’s also evidence of program satisfaction. As many as 77.3% of organizations offering such a program have decided to continue it. Only a handful of respondents said they decided to discontinue their program, mostly because it required significant organization resources.

These findings reflect other key research on the topic from trusted industry sources. Consider, for example, the Plan Sponsor Council of America’s 60th Annual Survey of profit-sharing and 401(k) plan experience in 2016, which found that just 22.7% of companies offer a comprehensive financial wellness program to employees.

There is also cause for concern about the dearth of such programs. In its 2016 Employee Benefits Survey, the Society for Human Resource Management noted that 61% of HR professionals described their employees’ financial health as only “fair” and 17% believe they were “not at all financially literate.”

The consequences can be impactful for employers and employees alike. When assessing the adverse impact of personal financial concerns on employee behavior in their organization, several impressions emerged. SBS survey respondents perceived that about 46% of their workforce was stressed and about 41% thought they were distracted. In addition, about 24% noticed a connection to physical health and about 22% of employees took time off from work to address these personal issues.

Asked to rank their employees’ top financial concerns, employers indicated that managing monthly expenses was most important, followed by paying down loans or debt. Other areas included saving for retirement, emergency expenses, and education.

To read more, download our full report: Assessing the Merits and Challenges of Financial Wellness. To begin talking to a retirement plan advisor, please get in touch by email or by calling (855) 882-9177.