In recent years, financial wellness has become a major topic of discussion for employee benefits decision makers. As a result, employers are wondering how to address financial wellness in their benefits strategies in a way that’s best for their employees… and their bottom lines. Employers do have the power to positively impact the financial wellness of their employees, but there are some misconceptions that might be preventing employers from viewing this as a priority.
According to a survey of more than 10,000 US employees across 26 industry sectors, 48% of employees are financially stressed. These employees are 8 times more likely to have sleepless nights, 6 times more likely not to finish daily tasks, 4 times more likely to have troubled relationships with work colleagues, and 2 times more likely to be looking for a new job.
All of this together costs employers 11-14% of their total payroll expense, or almost $500 billion annually for corporate America as a whole.
Despite the compelling reasons for employers to adopt financial wellness benefits, there are a few myths that have been holding benefits managers back when it comes to implementing these programs.
Myth 1: Financial education = financial wellness
Despite what many people think, providing financial education does not automatically result in financial wellness. Financial education provides the knowledge and tools to understand finances (i.e., calculating APRs, budgeting, planning, etc.) but financial wellness can change spending, borrowing, and savings habits.
For example, some people prefer to save rather than spend. They often experience stress and anxiety when they’re unable to save, whereas some people are less worried about saving as long as they have enough to get by.
Financial education and financial wellness solutions both have a role to play within your benefits strategy, but they are not the same.
Financial education can take years to change an individual’s habits, so focusing on education alone may have a low impact on wellness in the short-term. This is because behaviors take time to change and require a lot of motivation, and some behaviors may be hard to change with education alone because they’re just too ingrained.
Sometimes you need a catalyst for change versus just reminders of something you already know. Luckily, employers can offer their employees financial wellness products that actually have the power to change employees’ habits.
Myth 2: It’s the employee’s problem, not the employer’s
According to the 2019 Edelman Trust Barometer Global Report, Americans believe employers are more trustworthy sources of information than government and media. A strong majority of employees (68%) feel that their employers care about them and their wellness, and 79% trust their employers when it comes to issues around personal finance.
Most employers already offer common financial planning and wellness benefits such as a 401(k) plan and health insurance. Many employers also provide guidance to help employees arrange the most beneficial programs for them, and are able to reduce or eliminate certain costs or fees on employees’ behalf thanks to economies of scale.
Today’s leading employers have realized that they can help their employees in this area and are providing benefits such as financial education, student loan assistance programs, home buying assistance programs, low cost loans, etc.