In the ongoing war for talent in the American workplace, employers are adding more perks to attract and retain employees.
This includes paying more attention to the financial well-being of its employees.
“I see a greater interest in financial wellness programs because of the great resignation, along with an increasingly complex economic environment,” said Krystal Barker, head of financial wellness at Morgan Stanley at Work.
“Many companies offer a 401(k) plan and tend to offer educational programs, but they come to the table and say what we can do more.”
This change began two years ago with companies assessing diversity, equity and inclusion initiatives following the death of George Floyd. Then the Covid-19 pandemic added widespread financial pressures, and now inflation is scorching hot, which is costing US households an average of $327 extra per month, according to Moody’s Analytics.
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Workers look to their companies for help. More than half (51%) believe employers have a responsibility to help them improve and maintain their financial well-being, according to the 2022 Financial Health Survey conducted by the TIAA.
Employers take heed, too. In the past year, concern about employee financial well-being has grown, with 34% showing a 9 or 10 out of 10 rating, compared to 25% in previous years, according to a survey by the Employee Benefits Research Institute. Just under half were at least interested in implementing their financial wellness benefits. Among those not currently offering initiatives, 34% were actively implementing them – up from 12% in 2018.
“We’re seeing more of that going to take a comprehensive look at people’s finances and to really help employees understand their overall finances,” said Craig Copeland, director of wealth benefits research at the European Fisheries Research Institute.
These measures may include personal financial guidance or planning, debt management, and student loan assistance.
Benefits for workers and employers
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The initiatives seem to be working. The TIAA survey found that those who participated in an employer’s financial wellness program are twice as likely to receive a high financial rating than those who were not provided with resources or did not participate.
Among those who participated, 54% were confident they would retire when they wanted to, compared to 32% who did not participate. Additionally, 50% of participants are confident they won’t run out of money, compared to 29% of non-participants, according to the TIAA.
Even basic offerings like webinars have been shown to improve employees’ financial knowledge, according to EBRI data. Estimated 401(k) contribution levels jumped between $649 and $988 a year after a worker attended a webinar on financial well-being, according to EBRI.
On top of that, the initiatives have proven to also benefit the business owner, Parker said.
Nearly three-quarters of workers with high financial stress said they are distracted at work, according to a 2018 Financial Health Network survey.
The survey found that about 60% said they would be more likely to stay in a job if an employer offered financial benefits for wellness.
“The business owner always has to find ways to add value to their most valuable asset, and that is their talent,” Parker said.
However, while some companies are addressing the financial well-being of their employees, it’s unclear whether this trend will continue to expand, EBRI’s Copeland said.
“Some gains are still needed for employers,” he said, noting that it is difficult to show a direct link to improved productivity.
“As long as they can show that they are attracting and retaining workers and that their workers are getting something out of it, it can expand,” he said.
“If people don’t use it effectively, this trend could slow down.”
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