Part Two-How Businesses Can Help Their Employees Navigate a Permanently Changed Economy
By Christian Mango, AIFA, President, Financial Fitness for Life
As we explored in Part One, the impact that employee financial stress has had on lost productivity from presenteeism, absenteeism, exacerbated health issues, and higher employee turnover numbers has been largely understood. Almost every month, a new study or report is published highlighting the number of Americans living paycheck to paycheck, struggling to save for emergencies, and saving too little for retirement.
There is growing evidence that COVID-19 is exacerbating employees’ financial stress. While savings rates have increased during the pandemic, so have withdrawal rates from 401(k)s, according to a new report from the Employee Benefit Research Institute (EBRI). Social and economic trends such as remote work, are accelerating rapidly, and employees are anxious about their financial stability as well as their physical and mental health.
As a result, more and more employers are beginning to take an active role in helping employees improve their overall health and wellbeing by incorporating a more holistic view of health, wealth and broader benefits.
It’s not only the right thing to do, but it makes good business sense.
Employers that embrace financial wellness solutions can see a payoff in retention, performance, well-being, and health care costs.
When financial wellness is connected to organizational and human capital goals as well as an organization’s culture and mission, it can have a measurable impact on an organization’s bottom line.
The Mass Mutual Financial Wellness Trend Study (2020) documented that companies who offered a financial wellness program showed 51% of employees were more engaged, 47% had a better perception of the organization, 40% reported that employees were more productive and focused, and 35% were less stressed.
Employers who show heightened support for their employees are viewed more favorably by them and can maintain a workforce that reports greater holistic well-being.
And employees are demanding it. Employees who perceive their employer as unconcerned about their financial wellbeing are more likely to leave, increasing the cost of turnover.
Loyalty to a company often depends on how the company thinks about the financial condition of its workforce. Global consulting firm PwC documented this finding, especially with respect to the young workforce, in its 2019 Employee Financial Wellness Survey. 46% of Millennials and 44% of Gen X said loyalty to their employer was influenced by how much the company cared about their financial wellness. Majorities of all three age groups (81% of Millennials, 75% of GenX and 52% of Baby Boomers) said another company that cared more about their financial wellness would be more attractive to them.
In recognition of the problem posed by employee financial stress, more and more employers are looking to incorporate financial wellness solutions. According to the 2020 Hot Topics in Retirement and Financial Wellbeing survey conducted by Alight, 64% of employers say that financial wellbeing has gained more importance at their organization over the last two years. And, three quarters of employers’ report that their financial wellbeing program is part of a broader focus on overall wellbeing. Another 2020 study performed by Willis Towers Watson estimates that 45% of employers are enhancing their wellness benefits due to COVID-19.
In Part three of this series, we will discuss how retirement plan advisors can play an important role in not only re-shaping the concept of retirement but in helping to deliver a more holistic approach to overall employee wellbeing as we confront this changing landscape.
Christian Mango is the president of Financial Fitness for Life , a leading financial wellness solution providing in-person employee financial coaching coupled with best-in-class technology.