Supporting Employees' Financial Wellness
Of the many forms that corporate responsibility takes, employee financial wellness is one that has arguably been around the longest. While the 401k may be the original employer program to help improve an employee’s financial well-being, such corporate responsibility efforts have now broadened to employee financial education, savings incentives, student loan repayment programs, and more retirement options.
The demand for employer-offered financial wellness programs is strong. Sixty-two percent of employees state that they would take advantage of financial education through their or their spouse’s employer. Plus, such programs have a positive effect on employees’ financial decisions. Participants in workplace financial education programs were almost twice as likely as nonparticipants to adhere to a budget, undergo an asset allocation assessment, and increase their retirement contributions.
Best Practices to Improve Employees' Financial Wellness
Our newest report, “Financial Wellness in the Workplace: The Business Imperative,” discusses the current financial challenges of American workers and the efforts that eight companies are making around financial education, retirement, and student loan repayment to assist their employees in creating financial stability. Based on findings from the eight case studies, here are some best practices that companies can employ to optimize their employee financial wellness initiatives:
Partner with a third-party vendor: Companies with limited staffing, resources, and expertise in financial wellness programs can align with a third-party vendor to offer financial education, advice, and other benefits.
Create financial benefits and programs with the makeup of your workforce in mind: Keep the demographic makeup of your workforce in mind when developing financial wellness benefits and education. Millennials may desire student loan repayment programs and prefer online programs, whereas older workers may be more focused on retirement issues and prefer one-on-one interactions for learning.
Segment your workforce and use targeted marketing about your benefits specific to each segment: Different segments of the workforce may be receptive to different forms of messaging about financial benefits and programs. Experiment with instant messaging, emails, social media, newsletters, and other forms of outreach to determine which methods of communication encourage the greatest usage and participation in financial wellness programs among various employee populations.
Consider linking financial benefits or program participation with incentives: Offer incentives to promote uptake or involvement in financial wellness benefits and programs. For example, link employees’ performance rating to eligibility to participate in student loan repayment programs, requiring financial wellness days where employees devote work time to address their financial issues, or providing a monetary bonus for completion of financial education programs.
Keep it simple for employees: Functions like automatic 401(k) enrollment or automatic withholding of taxes from payroll to account for additional taxes to be paid when employees are enrolled in student loan repayment programs can ease the burden of financial maintenance for employees.
Look to other businesses for ideas on how to develop and execute your program: Explore how other businesses have tackled similar employee financial wellness issues. Also assess how competitors are addressing financial wellness to stay competitive in employee recruiting and retention.