40% of Employers Now Offer Financial Wellness Programs, Alliant Finds

The most common focus of most financial wellness programs is retirement planning.

Financial wellness programs are gaining traction among employers and are sorely needed, Alliant Credit Union says in a new white paper titled, “Financial Wellness in the Workplace 2015.” The paper is based on a survey of 408 human resources (HR) executives at companies with more than 1,000 employees, conducted in January, 2015, as well as a survey of 1,007 workers between the ages of 18 and 64, conducted in September, 2014. In addition, it spells out best practices for establishing a financial wellness program.

Forty percent of companies now offer financial wellness programs, Alliant found. The reason why they are embracing these programs, Alliance says, is “businesses realize that helping their employees achieve and maintain financial well-being is a win-win for their people and their organizations. Financial stress has a significant impact on both the physical well-being of employees and their workplace productivity. This realization has led many HR executives to regard a financial wellness program as not only compassionate for employees, but as a sound investment for the company.”

The most common component of a financial wellness program is retirement planning, cited by 65% of HR executives. This is followed by medical and health care cost-planning programs (52%), confidential employee self-assessment of their finances (44%), tracking tools for goal attainment (41%), investment planning programs (38%), customized financial education (35%), incentives or rewards for participation (34%), fraud protection advice (27%), saving for college programs (26%), managing debt programs (23%) and education on day-to-day budgeting (22%).

These programs are greatly needed by workers, Alliant says, as 20% of Americans today smoke, 30% are obese—but 70% are seriously concerned about their finances, and 78% are deeply worried about the direction of the economy.

NEXT: Workers’ financial worries

Citing a survey by the National Foundation for Credit Counseling, Alliant notes that only 28% of Americans say they are financially fit. More than three-quarters, 76%, live paycheck to paycheck. Forty-four percent don’t have even $2,000 set aside in an emergency fund, 33% are not saving anything each month, 30% save less than $100 a month, 36% are not contributing to a retirement savings plan, 46% spend two to three hours of company time each week dealing with their personal finances, and 79% say their financial worries keep them up at night.

“With workers reporting financial problems as their chief cause of stress, the need for financial wellness programs is both a physical and a fiscal imperative,” Alliant says.

Employers can definitely reap the benefits of such a program, the credit union says. The Consumer Financial Protection Bureau found in 2014 that companies enjoy a return of up to $3 for every $1 they spend on financial wellness programs. This return on investment occurs due to increased productivity, less sick leave taken and reduced disability and workers compensation claims.

In its survey of HR executives, Alliant asked how their financial wellness program had improved their bottom lines. Forty-three percent said it increased employee engagement, 40% said it boosted productivity, 40% said it provided education for employees’ goals, 36% said it reduced employees’ financial stress, and 23% said it alleviated employee absenteeism.

And employees want a financial wellness program, Alliant notes, citing a Gallup poll that found that more than 80% say they would participate in a financial wellness program if their employer offered it, 67% of employees think they lack the knowledge to make sound financial decisions, and 40% want help achieving financial security.

In its survey of employees, Alliant found they have a great many financial goals, starting with building up an emergency savings fund, cited by 58%. This is followed by: saving for retirement (cited by 55%), paying off credit card debt (37%), saving for an automobile purchase (34%), improving credit history (30%), saving for children’s education (24%), saving for a home purchase (24%), staying afloat with debt obligations (22%), paying off student loans (17%), financing their own education (8%) and saving for a recreational vehicle purchase (7%).

NEXT: Best practices when establishing a financial wellness program

Alliant concludes its white paper on financial wellness by laying out some ground rules when setting up such a program. First, it recommends that companies consult with an expert to help them address the specific needs of the workforce. This is a critical component that most employers do not consider, Alliant says. “Today, 63% of U.S. companies with a financial wellness program offer financial education courses, but only 35% of them target the courses to the specific needs of their workforce,” Alliant says.

This can be achieved by surveying employees to ask them about their own economic situation and level of financial stress, Alliant says. This needs to be done confidentially so that employees answer the questions honestly, Alliant suggests.

“Once you have the aggregate results, work with your trusted partner to develop a comprehensive strategy for the program—its objectives and deliverables that address your employees’ needs,” Alliant says. “The program should cover all aspects of financial wellness relevant to your employee population, from debt management to more advanced wealth protection and estate planning, based on the results of the aggregate assessment report. Programs should not be one size fits all.”

And once the program is in place, employers should remember to periodically survey participants on how well it is doing and make adjustments accordingly.

Alliant Credit Union’s white paper on financial wellness programs can be downloaded here.