Financial benefits: Employees are ‘laser-focused’ on them in 2023

Recently, Morgan Stanley at Work released the latest findings from its third annual State of the Workplace Financial Benefits Study, revealing that employees are responding to the many challenges of today’s economy. Employees are now laser-focused on financial benefits, paying even more attention than the past two years: 69% of employees say they’re paying more attention to reviewing their financial benefits now vs. a year ago (an increase of 9%).

Employees, especially the millennial and Gen-Z crowd, continue to scale back their level of retirement funding. Now, about 66% of employees have reduced contributions to their accounts, with inflation and/or concerns of a recession being the main reason.

Percentage breakdowns of investment drops are as follows-

• 401(k) plans (33%)
• Long-term savings (28%)
• Emergency and short-term savings (28%)

“This past year we’ve seen an economic climate that frankly a lot of workplace participants—especially younger generations—have likely never experienced before,” said Krystal Barker Buissereth, Head of the Executive Services at Morgan Stanley at Work.

“As a result, financial wellness programs are becoming even more sought-after, and HR leaders can play a vital role by connecting employees with resources to help them navigate each step of their financial journeys.”

Related: Financial wellness coaching: How tailored solutions can help reduce employee debt

When it comes to financial wellness and retirement benefits, financial stress is a concern for both employers and employees alike, 83% of HR leaders worry that employees’ financial issues could impact their productivity, while 66% of employees agree that financial stress is negatively affecting their work and personal life.

It seems that retirement assistance and retention are increasingly linked – 84% of HR leaders view retirement planning as a high priority in retaining current employees (up from 76% last year). Similarly, 92% of employees view retirement planning assistance as a priority when choosing where to work and 89% would be more invested in staying at their company if it provided financial benefits that met their needs.

Financial wellness programs appear to have grown in popularity – 90% of HR leaders now say they offer financial wellness programs (up from 79% last year).

At the same time, financial advisors continue to gain importance to employees all across the world: 3 in 5 employees now rank retirement planning assistance from trained professionals as a high priority when choosing where to work—25% said it’s their top priority.

“Employees want and need greater support when it comes to long-term retirement planning, and while we’re seeing financial guidance being recognized as a priority for HR leaders, there is still more employers can do to support and retain talent,” said Anthony Bunnell, Head of Retirement Solutions and Deferred Compensation at Morgan Stanley at Work.

“These are the times when plan advisors shine by lending seasoned expertise and a steady hand to help ensure employee finances and investments are well positioned to weather whatever economic and market conditions may come our way.”