Financial Wellness Focus Shifts—Some

While the challenges of, and interest in, financial well-being programs remain strong, there has been some shuffling of program priorities, though advisors remain key.

According to the fourth annual Employee Benefit Research Institute (EBRI) Financial Wellbeing Employer Survey, costs continue to be cited as the top challenge[i] in offering financial wellbeing programs—and as no surprise, employers are (still) looking for ways to measure their impact, with employee retention and productivity being at the top—and with productivity notoriously hard to measure, EBRI says retention and satisfaction are more likely measures to be tracked. Beyond costs, EBRI found that data and privacy concerns—and complexity surrounding the programs—are the top challenges employers say they face. More on that shortly. 

Now, less than half (46%) of the employers surveyed that were (at least) interested in implementing financial wellbeing benefits were, in fact, offering a program in 2021—pretty much unchanged from previous surveys (2018–2020). EBRI commented, however, that there was a shift—that increasingly, employers that do not currently offer financial wellness initiatives say they are actively implementing a program (12% in 2018 and 34% now), rather than just being “interested” in doing so (that had been 34%, slipping now to 20%). 

Unsurprisingly, the largest firms (10,000 or more employees) were more likely to be currently offering a program than the small employers (72% compared with 44% for employers with 2,500–9,999 employees and 41% for employers with 500–2,499 employees), but EBRI found no significant difference in the proportion currently offering when it came to the two smaller employer sizes.

Access to Advisors

Nearly two-thirds (64%) reported their employees have access to retirement plan representatives and financial advisors either in person, through the phone, or via video calls, though access to financial coaches (30%) and debt counselors (20%) was much less likely available. Seventy percent of employers agree that it is necessary that financial wellbeing benefits are offered by retirement plan providers. 

Utilization

Of the companies currently offering financial wellbeing programs:

• 31% said that more than half of eligible employees were using the benefits they offer; and
• 28% said between a quarter and half of eligible employees were using the benefits. 

However, nearly a third (30%) said that only somewhere between 11% and 25% were, and another 8% put that number at less than 10%.

Expectations

Forty-one percent of firms offering these benefits said that the share using them was higher than expected, and 43% said the use matched expectations. Firms with fewer than 10,000 employees, with a strategy, who have created a financial wellbeing score or metric, or who held employee interviews or focus groups, were more likely to have had their employee use exceed their expectations, according to the EBRI report.

Barriers

The top reasons that were cited by benefit decision makers for workers not being more engaged in their financial wellness benefits were:

• lack of understanding on how the benefits work (42%); 
• costs/fees of benefits to employees (30%); and 
• not wanting to disclose finances/financial issues to employer (28%). 

However, workers from the Workplace Wellness Survey who were not participating in financial wellness benefits were less likely to cite these as reasons for not participating. Instead, they cited all the reasons offered almost equally likely, according to EBRI. Which, of course, suggests that there is a misalignment in perspective that might undermine attempts to resolve those issues.

Goals

Companies’ top issues to address with their financial wellness initiatives were:

• 36% - retirement preparedness
• 33% - health care costs
• 30% - financial-related stress 

Costs

As noted above, cost remains a focus, but costs per employee being paid for these initiatives varied significantly from firm to firm, with most having said they spend between $5 and $250 per employee, though most commonly, employers cited costs of $50.01 to $100 per employee (24%) for these efforts. Costs appear to be climbing—as just over half (52%) of the companies reported the costs being more than $50 per employee

The focus of these programs has shifted some as well—initiatives that are a top priority of employers, deal with immediate financial help—emergency fund[ii]/employee hardship assistance and short-term loans through payroll deduction. Roughly half of these emergency fund/hardship assistance features currently offered were added in response to the COVID-19 pandemic, according to the report. Some benefits such as student loan debt assistance have lost importance, whereas emergency savings/hardship assistance has grown in interest.

Shifts

Only two benefits showed a significant change in being offered from 2020—employee discount programs and payroll advance loans. The percentage of companies currently offering payroll advance loans increased to 26% in 2021 from 20% in 2020, while the percentage currently offering employee discount programs decreased to 51% in 2021 from 60% in 2020.

Interestingly enough, when benefit decision makers were asked about the impact of offering an emergency fund or employee hardship assistance, EBRI reports that half (51%) reported that they have seen increased employee contributions to their employees’ retirement plans, while 49% saw increased employee contributions to their employees’ health savings accounts (HSAs) or flexible spending accounts (FSAs), and 36% saw reduced loans/hardship distributions.