Prioritize financial wellness programs: Top 5 issues employers need to focus on

More than half of the companies in a survey last summer reported offering financial wellbeing resources, a report from the Employee Benefits Research Institute (EBRI) found.

The survey of more than 250 firms with 500 or more employees found that 54% of firms currently offered financial wellbeing benefits, with another 29% implementing an initiative in that area. The survey was compiled from firms that had indicated an interest in financial wellness programs.

Of the largest firms, those with 10,000+ employees, 58% said they currently offered financial wellness initiatives and an additional 16% said they were implementing a financial wellness initiative.

In an online symposium that drew from the survey data, Craig Copeland, director of wealth benefits research with EBRI, said that this growth in interest around financial wellness is strong among all employers.

“We’re seeing more employers really looking at either actively providing this or in the process of providing these benefits,” Copeland said. “We’re seeing that 80% of employers that are currently offering benefits expect to offer even more benefits in the area of financial wellness.”

Among inflation worries, companies expect to spend more on benefits

Copeland also discussed the survey’s findings on top issues that employers say are affecting their employees. The survey found that the top five issues were:

• the high cost of living (34%),
• retirement preparedness (31%),
• health care costs (28%),
• budgeting and money management (26%), and
• daily living expenses (23%).

Copeland noted that “cost of living” being the top issue is a new thing, and reflective of the economic uncertainty that many Americans are feeling. “Usually when we’ve done this, the top two have been retirement preparedness or health care costs that have been the main focus,” he said. “But given the persistence of high inflation, employers have really tried to step up with their financial wellbeing programs and help people to understand how to save and spend in this high-inflationary [environment]…that is one thing that really stood out.”

The study found that the most prevalent price range for companies offering financial wellness benefits was the $20-$50 cost per employee annually—20% of respondents said that was the cost of their offerings in this area. An additional 16% said their annual per-employee costs were in the $50-$100 range. More than a quarter of respondents (26%) said their costs were in one of three upper ranges– $100-$250 annually, $250-$500 annually (7%), and more than $500 annually (4%).

“One of the big things people are saying who are adding these benefits or expanding this programming is cost,” Copeland said. “That is the top challenge that has come through, and it’s been the top challenge for a couple of years… so there is that tension. But even though the cost is a top concern, they are expecting … to step up and provide more money for these programs.”

The survey backed that up, showing that 70% of respondents expected their budget for financial wellness would increase significantly or somewhat in the next one to two years. An additional 30% said they expected their budget for financial wellness would not change. “No one is expecting their budget to go down,” he noted.

The finding may be more striking considering that more than half of companies (56%) are already offering more than 5 offerings in the financial wellness area. Nearly a third, 31%, offer 8 or more financial wellness benefits.

Top benefits: broad-based help

The survey found that the benefits that were often most often tended to be more broadly-based in how they helped employees. These included employee discount programs and partnerships, basic money management tools, investment education, financial planning, and personalized financial coaching.

“Those at the bottom seemed to be more individually based,” Copeland said, including student loan debt, and childcare benefits. He added that the student loan debt programs may be changing due to recent regulatory changes with the SECURE 2.0 law.

Emergency savings programs are increasing in popularity among benefits, Copeland noted. “Since COVID, emergency savings has really become one of the biggest benefits that employers are focusing on,” he said.

Panel looks into how companies, employees regard benefits

A panel at the symposium took an in-depth look at how employers and employees view their financial wellness programs. They discussed the finding that employers seem to feel strongly that they have a responsibility toward the overall health of their employees.

The survey found that respondents responded uniformly in the high-90 percentages when asked if their company had a responsibility to make sure employees are mentally and emotionally healthy (96%), physically healthy (95%), and financially secure (92%).

Respondents among employers tended to give their companies relatively high scores on how well it was meeting those responsibilities; 78% said they were doing an excellent or very good job in the physical wellbeing area, 74% gave similar ratings in the financial wellness area, and 75% said their company was providing excellent or very good efforts in the emotional wellbeing of their employees. Where there were barriers, employers said lack of understanding of benefits was a top challenge in engagement by employees (33%), and costs were also a barrier (31%).

Interestingly, when workers were surveyed, their reaction was a bit different, 20% of workers said both that lack of understanding of benefits and costs were a reason for less engagement. In addition, 24% of employees said a reason for lack of engagement was that offerings did not address employees’ needs.

Related: 3 key SECURE 2.0 provisions go into effect in 2024: What plan sponsors need to know

Lisa Margeson, a managing director at Bank of America and one of the panelists, said that one of the most valuable parts of these surveys is exploring those disconnects between what employers think about their benefit offerings and what employees think. She emphasized that employers were just beginning to understand their employees’ concerns about economic insecurity. “In this backdrop of inflation [uncertainty] what we saw was that seven in 10 employees said that they are incredibly stressed about their finances. And that of course has implications to their productivity,” she said. “This year we saw only 42% of employees say they felt good about their financial wellness. That is the lowest since we started doing this report. That’s pretty significant.” One area where improvement may be found is in data management and analysis for employee satisfaction or concerns. A finding of the survey is that slightly more than half of employers (54%) tracked data on evaluating the effectiveness of employee satisfaction with benefit offerings. And only a third (33%) tracked data on employee engagement with financial wellness offerings. Data tracking for stress levels was relatively low, at 27%, and data tracking for use of emergency savings (15%), and student loan balances (14%) were also low.