The tide appears to be turning in favor of financial wellness programs in the workplace. While lagging more traditional benefits (e.g., health insurance and 401(k) plans), financial wellness programs are closing the gap. And employers are coming to see financial wellness programs within a comprehensive compensation and benefits package as a way to improve the use of other benefit options, particularly retirement benefits.
Executives are the chief decision makers on whether to add financial wellness programs but only with substantial input from human resources, employee benefits and finance. As outlined in the white paper, data from the Charles Schwab survey found no material differences among the attitudes of these groups. Indeed, they were in broad agreement about the advantages and challenges of implementing financial wellness programs. Their chief concerns center on potential costs and resource demands.
That said, an aggregate view of employers’ aims for such a program—including its individual components —points to a program that may be easily managed in the context of existing benefit programs and fee structures. A financial wellness program that serves as a complement to existing programs may be able to potentially drive better outcomes for employees, higher utilization of employer-sponsored savings and investment programs, and productivity gains from a reduction of financial-related stress.
Financial wellness programs are becoming more common as part of a holistic workplace benefits and compensation package. Employers that have no plans to consider financial wellness may want to rethink that position, as a majority of employers now offer, or are considering offering, this benefit.
An overwhelming majority of employees would use a financial wellness program were it offered—a survey result that fits with previous research that found that employees at all levels want and need help managing their finances.
The concept of financial wellness eludes precise definition but can be understood to mean better financial outcomes and reduced financial stress as a result of taking ownership of one’s financial well-being.
The broad outlines of financial wellness programs are visible in the survey results: guidance on basic financial principles, online access to education/tools, integration with the rest of the workplace compensation and benefits package, and the delivery of a measurable impact on retirement plan usage and readiness.
Cost and Resources
Financial wellness as a benefit may not be as resource-intensive or costly as employers fear, even though a basic program could be a new benefit offering. Concerns around cost and resource demands can be addressed by 1) leveraging existing provider programs and fee structures, 2) tying together current benefits programs with financial wellness education and assessment tools, and 3) setting clear objectives for success around retirement issues.
Supporting the concept of financial wellness can be viewed as a way of bringing together, and enhancing, the suite of benefits that employers already offer and believe deliver value to the company and its employees.
Employers should take a deeper look into the potential value of such programs—they may help employees take better advantage of other benefits, enhance the value of equity compensation programs, drive retention, improve retirement plan outcomes, and reduce the impact of financial stress on employee productivity. This report is intended to help executive management—and those with substantial input into the benefit design process—understand and sort through the key issues driving higher adoption of financial wellness programs. Together with employer data from the survey, the report integrates data from the Schwab Retirement Plan Services 2016 401(k) Participant Survey in an effort to draw a complete picture of employee demands around financial wellness and the potential benefits for employers.