Establishing a Financial Wellness Program for Your Employees

With defined benefit plans waning and more and more Americans bearing the burden of funding their own retirement, solid financial education has never been so valuable.

In fact, roughly 64% of Americans surveyed by the American Psychological Association’s 2015 Stress in America survey cited money as their top stressor, highlighting the far-reaching effects of money troubles. Clearly, something needs to be done about this problem, but, as an employer, it can be hard to balance helping employees stay financially stable and helping your business do the same. Offering a financial wellness program through your company can provide a financial middle ground for employers and employees, providing an advantage for both. Through a financial wellness program, employees are able to maximize the use of company benefit plans and become more financially literate, and employers are able to benefit from a workforce that is less stressed about personal financial issues.

Why Use a Financial Wellness Program?: The Effects of Employees’ Finances on the Workplace

It can be difficult to see the at-a-glance value of funding an additional employee benefit such as an employee wellness program; however, many employers are unaware of the toll that employees’ financial issues take on their company. The fact is that financial stress does more than just produce cranky employees; it can be losing you serious money. Stress can be distracting, leading to lower employee productivity. In fact, a 2012 study published in Population Health Management found that 40 percent of employees surveyed reported an inability to concentrate on work at “optimal” levels due to personal financial issues. Another study found that those with greater financial distress are less satisfied with pay, regardless of how much or little they make. Beyond just decreasing at-work productivity, financial stress also affects whether employees even show up. Fifty-eight percent of employers surveyed by MetLife agreed that “financial illness” contributed to employee absences at their companies, resulting in a complete loss of productivity for that employee on those days.

Financial stress can even lead to physical issues; employees who are financially stressed tend to have annual health care expenses that are about $300 more than employees without financial stress due to anxiety, insomnia, headaches and depression, according to PlanAdviser Magazine. Financial Finesse, a financial education advisor, finds that 60 percent of illness is caused by financial stress, which can lead to higher health care costs for your company.

In addition to stress, without a financial wellness program, many workers face below adequate financial literacy. According to the 2016 Consumer Financial Literacy Survey, 46 percent of adults gave themselves a grade of C, D or F on their knowledge of personal finance. A low level of financial knowledge can mean that employees struggle with budgeting, debt, credit and insufficient savings. While they are earning money and have access to company benefits, they may not be properly allocating that money for a maximum return. Beyond just hurting their retirement nest egg, dissatisfaction with their overall financial picture can also make employees desperate for a raise, or worse, cause them to look for a job that will pay them more. A higher rate of employee turnover due to pay dissatisfaction ultimately leads to higher costs for the employer through lost knowledge and productivity, as well as training and interviewing costs.

Financial unpreparedness can also mean that some employees can’t afford to retire at retirement age. This delay creates an older workforce, which can mean higher insurance premiums and limited advancement opportunities for younger employees, leading to higher turnover among young talent. Increased financial savvy also tends to increase savings and deferral rates in retirement plans, which increases the value of your company plan and helps decrease how much you pay in payroll taxes.

A financial wellness program can help employees improve their overall financial picture and become more aware of the money they already have and the places they can find savings within their own finances, bringing financial benefits to both employee and employer. The Personal Finance Employee Education Foundation argues that the return on investment for employers who offer employees access to “quality financial programs” is 3:1 or even more; so, theoretically, if the employer invested $100 in a financial wellness program, their return would be $300. They also suggest that employers can save up to $2,000 per year through increased productivity, reduced health care costs and better choices among employee benefits for each employee whose financial health and literacy is improved.

What is a Company Financial Wellness Program?

After learning about some of the problems that a financial wellness can help solve, it’s important to also understand how a financial wellness program works. A financial wellness program is not the same as each employee having a financial advisor—instead, you would set a bulk rate fee with a financial advisor or advisory firm and then employees could either have free access to these programs or would be charged based on the features they use. Employees may meet with several advisors at the firm rather than just one, and fees and features will vary based on the program; for example, employees may have access to general education for free but would pay a monthly or annual rate for something more specific, such as individual debt management.

A financial wellness program may offer in-person advice as well as advice via telephone and online sessions, and this may include financial planning workshops covering a broad range of topics or smaller, niche conversations on topics like budgeting. Wellness programs may also link to your company’s plans and offer supplementary material, such as a retirement readiness assessment. By addressing some main sources of financial stress—debt, retirement funds and inability to understand financial concepts—employers can help increase the amount of financial satisfaction and knowledge their employees bring to work each day. Offering these types of benefits has helped the Meredith Corporation, a large media conglomerate, decrease employees with financial stress from 22 percent to 8 percent in just four years, as well as allowing them to have 60 percent of employees increase their recurring allocations to an emergency savings fund.

The specifics of a financial wellness program, including how often representatives make in-person visits to your company and what services your employees receive, is up to you. Ultimately, a financial wellness program can be whatever you want it to be, as you are in the best position to know what your employees need and can construct a wellness program around that knowledge.

Tips for Implementing a Financial Wellness Program

To reap the full benefits of a financial wellness program, employers should consider the following strategies during implementation:

Include everyone. Including only top executives sends a bad message to lower-level employees about their value within the company. More importantly, lower-level employees are likely to benefit the most from this type of program, as many don’t have the investment or income earnings to afford their own financial advisor and would suffer more from even a small financial misstep. On the other hand, excluding executives can send the message that the program isn’t beneficial or important. Including all employees ensures higher participation rates and higher overall satisfaction.

Communication can be as important as the program itself. Without communication efforts to promote the program, it will be hard for employees to recognize its benefit and to participate. Use multiple communication channels to get the word out about this new company benefit, and help encourage financial fitness for both your business and your employees.

Offer an incentive. Many companies offer incentives, such as being entered in a raffle, to further encourage participation in these types of programs. The cost of these incentives may be low, but provide a high ROI in participation.

Emphasize the long term. During communication efforts and once you’ve established your financial wellness program, make sure employees know that a wellness program is a process, not a one-time event. A wellness program helps employees establish healthier financial habits; it is not an instant cure-all for financial woes.

Measure your results. Use tangible results such as retirement plan enrollment, employee sick days or employee productivity to measure how well your program is functioning. Seeing the ROI of your efforts can help you feel a greater sense of accomplishment from offering this type of employee benefit.

Securities and investment advisory services are offered solely through Ameritas Investment Corp. (AIC). Member FINRA/SIPC. AIC and The Summit Group of Virginia LLP are not affiliated. Additional products and services may be available through Summit Group of Virginia LLP that are not offered through AIC.
This article was written by Advicent Solutions, an entity unrelated to Summit Group of Virginia LLP & AIC. The information contained in this article is not intended to be tax, investment, or legal advice, and it may not be relied on for the purpose of avoiding any tax penalties. Summit Group of Virginia LLP & AIC do not provide tax or legal advice. You are encouraged to consult with your tax advisor or attorney regarding specific tax issues. © 2014, 2016 Advicent Solutions. All rights reserved.


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