Financial stress weighing on your workers? Prioritize financial wellness training

The stock market has been volatile. Inflation is pushing up the cost of groceries. Rents are going up. Are your employees stressed out/? Do they want help? What do you think?

Consider the costs of renting. According to CNBC, 35% of people (households) rent their home. According to Zillow, the average rent in February 2023 is up 6.3% compared to February 2022. Marketplace reports the average person spends 30% of their income on rent. That is a new high. If many of your employees are under age 35, then 65% of them are living in rental properties. Spending a lot of money on rent means other parts of their budget are feeling the squeeze. Small wonder they are feeling stressed.

Is this a real problem? Should the company be proactive in offering financial wellness training? A Bank of America study showed as of July 2022, only 44% of employees surveyed felt “financially well.”  That is a five-year low compared to 55% feeling good in 2019 and 57% as early as recent as February 2022: 71% feel the cost of living is rising faster than what they are getting paid and 80% are concerned about inflation. These statistics indicate there is a problem present.

Do employees think their employer should play a role in educating them about financial wellness? The Bank of America study reports 80% say yes!  Now for some good news:  In 2022, almost all employers surveyed (97%) feel they have some responsibility for their employee’s financial wellness. This is a big change from 2013 when the percentage was only 44%.

The payoffs can be excellent: 80% of employers surveyed feel addressing this need improves employee satisfaction, loyalty, engagement, productivity and performance. It’s a win/win situation.

What do employees want to learn about? What should financial wellness training address? The top five priorities of employees are retirement planning, paying down credit card debt, emergency savings, paying off the mortgage and buying a home. Employees in different stages of life have differing priorities.

Financial stress has caused 50% of employees surveyed by Bank of America to take extraordinary steps to make ends meet. These include accessing their emergency reserve (21%), working longer hours (21%) and taking a 401(k) hardship loan (6%). Reason #3 – 20% have looked for higher paying jobs – has been excluded from this list because it deserves special attention.

How can employers help employees address stress through financial wellness training? A key area is understanding how health savings accounts (HSAs) work. Only 17% of employees who do not have a health savings account at work put money aside for future health expenses. When an HSA plan is offered by the firm, 89% of employees direct money into it.

Related: Feel their (financial) pain first, then employees can focus on retirement planning

Employees also want help in retirement planning. Earlier we mentioned it was the #1 employee concern. The Bank of America says in July 2022, only 56% were confident they will reach their retirement goals compared to 69% in February 2022. Fortunately, 74% of employees believe investing in their 401(k) will help them save for retirement and 61% contribute at a level to maximize their employer’s match.

Social Security education needs special attention. Only 38% of surveyed employees understand their projected Social Security benefits. Looking at it another way, 48% feel they aren’t getting enough education about Social Security and 44% about Medicare benefits. This is a problem because once you are retired, 33% of medical costs are not covered by Medicare.

Financial wellness education and training can help reduce employee stress, but how should it be delivered? Thirty percent prefer digitally-delivered education and more than 50% prefer learning about benefits via e-mail.

The Bank of America study proposed five action steps to deliver financial wellness education:

1. How can workplace education benefit employees? Can it improve recruiting and retention?
2. One size does not fit everyone. Tailor the advice available to address different needs.
3. Once financial wellness education is available, overall wellness training can support employee health.
4. Make employee wellness education available on the employee’s terms. This includes multiple channels like digital training, coaching and mentoring.
5. In addition to making education available, engage with them, helping employees utilize the tools.

Employees are stressed today. Financial stress is a major component. Employees want help in this area and most employers are trying to provide it.

Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, “Captivating the Wealthy Investor” is available on Amazon.