A new study suggests that employers that focus on the financial well-being of their workers have a significant opportunity to improve employees’ financial health, while also benefiting their business.
Conducted by the Financial Health Network on behalf of Morgan Stanley at Work, the survey of 1,000 full-time employees of mid- to large-sized companies found that many employees are struggling financially and financial stress has an impact on employees’ productivity at work. Consequently, financial wellness is viewed as an opportunity for employers to reduce employee stress, improve retention and engagement, and differentiate themselves.
“Finances are one of the greatest sources of stress for employees, and those concerns affect their productivity,” notes Brian McDonald, head of Morgan Stanley at Work. “Firms that invest in financial wellness resources for employees will clearly set themselves apart in the marketplace.”
The spillover effects of financial stress on employees’ productivity can be consequential, according to the study, which found that 78% of employees who report high financial stress say that it distracts them at work.
Not surprisingly, finances are the greatest source of stress: 58% say their finances cause them stress, more than their work situation (51%), health issues (45%) or family issues (44%). And this holds true for employees at all income levels – even higher wage-earners – with 52% of employees with household income of more than $100,000 per year reporting that finances cause them stress.
When asked where they need help, the top five answers were related to savings and planning:
- Building retirement savings (53%)
- Plan for their families’ future (50%)
- Building emergency savings (46%)
- Choosing and monitoring investments (44%)
- Managing bills and spending (39%)
Recruitment and Retention
Additionally, 74% of employee respondents say that financial wellness benefits are important for an employer to offer, and 60% say they would be more likely to stay at a job if their employer offered financial wellness benefits.
Yet,fewer than a third of employees reported that their employers offer financial wellness benefits beyond retirement plans. When these benefits are offered, however, uptake and employee satisfaction is high, according to the findings.
Among those employees whose employer offers financial wellness benefits that help with financial needs such as emergency savings, student loan repayment tools or access to financial coaching, between 40% and 60% of respondents say they have used them in the past three years. And among those employees who use at least one financial wellness benefit, 56% say that those benefits cause them to feel positively about their employer.
Clear communication and ease of use were found to be important components for uptake. Employees report that making it easier to find and understand their benefits is more important, even more than incentives in encouraging them to use the benefits they are offered. That said, 42% of employees say that they do not feel adequately informed about the benefits and programs their employer offers.
Online calculations and live meetings with a financial advisor are preferred ways to learn about benefits, with 66% and 62% saying they prefer those methods, respectively. Other online approaches such as in-person seminars (55%), live webinars (43%), chat rooms (31%) or social media platforms (31%) were found to be slightly less popular.
The Financial Health Network (formerly the Center for Financial Services Innovation) is a 501(c)(3) nonprofit organization founded by the Ford Foundation. It is supported by a consortium of other foundations, financial services firms, consumer groups and private companies, including AARP, Bank of America, Bill & Melinda Gates Foundation, Charles Schwab, JP Morgan Chase & Co., MetLife, Morgan Stanley, Principal and Prudential. Its mission is to serve as a trusted resource for business leaders, policymakers and innovators united in improving the financial health of their customers, employees and communities through research, advisory services, measurement tools and opportunities for cross-sector collaboration.