Helping Your Employees to Become Financially Well

The term “financial wellness” triggers a number of questions. It’s a broad, frequently undefined, and fairly subjective term. For many years, the term was more of a retirement industry buzzword, intended to suggest care for participants, but without a lot of substance behind the sentiment.

Fortunately, employees are providing answers and clarity around their financial wellness wants, needs, and expectations. As your organization continues to compete in a challenging labor market, it’s more important than ever to hear what employees are telling us and to build out a culture and program reflective of their feedback. Although many of our 2023 newsletters have included updates on SECURE 2.0 and litigation trends, this is a good opportunity to return our focus directly to your employees and their financial wellness.

Annual Financial Wellness Survey. Financial Fitness for Life has developed an annual survey that allows employers to better understand what their employees are feeling and thinking about financial topics. You can view the most recent Financial Wellness Survey report here. We’ll expand on its findings and identify emerging best practices in this month’s Fiduciary 15 webinar, but the newsletter will identify four key themes.

1. Employees Are Under Financial Stress. A Lot of It.  We experienced historically rapid inflation in 2022, and it hit your employees directly in their wallets and checking accounts. 72% or employees indicated they are experiencing moderate to extreme financial stress. Although inflation has slowed, we should be mindful of the pain many will experience when student loan repayment obligations restart soon.
2. Employees Are Not Ready for an Emergency. This really hit home when the pandemic struck in 2020. Even before companies had begun mass layoffs – and frankly, still at a time of great uncertainty – Congress was so concerned about Americans’ short-term cash reserves that it opened up long-term retirement plans to higher loans, as well as coronavirus-related distributions of up to $100,000. The Survey reflected that 64% of employees are not adequately prepared for an emergency.
3. They Want Personalized Help. Employees now have access to more online and virtual content than ever before. Those resources help employees to fill knowledge gaps and gain greater confidence regarding financial concepts. But they leave employees wanting more. Nearly half of Survey respondents would like a one-on-one meeting with an advisor or financial consultant. Each employee has issues, problems, or concerns that are personal to him or her. The spiking demand for one-on-one meetings reflects their desire to have a more intimate forum to explore those issues.
4. They Want Help With All Sorts of Things. An organization’s retirement plan remains a reasonable centerpiece for employees’ financial foundations. Naturally, employees have questions about how the plan works, how much to save, how to invest, and how to track their progress toward goals. They also have questions about myriad other topics, including budgeting, debt, credit scores, emergency savings, insurance, and estate planning.

Closing Thoughts. Every time I write about employees’ attitudes around financial issues and their financial wellness, I find myself writing about three distinct angles: (1) what they want; (2) what they need; and, with increasing frequency (3) what they expect. As we consider the right financial wellness program for your organization, the most helpful answer does not result from a Google search for “how to define financial wellness”. Instead, it stems from what the employees are telling us. They want help. They need help. They expect their employers to be a part of this. Is your organization listening to what they’re telling us?

– Matthew Eickman, J.D., AIF®