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Financial Wellness Still Seen as Evolving Concept Among Employers

Industry Trends and Research

Employer interest in financial wellness continues to grow, but when it comes to approaches, no one size fits all, according to new research.  

The Employee Benefit Research Institute’s 2019 “Employer Approaches to Financial Wellbeing Solutions Survey” explains that some employers are focusing on demographics they believe are financially stressed, such as with student loan debt, while others are taking a more holistic approach. 

Conducted in June 2019 among companies with at least 500 employees where respondents expressed some level of interest in financial wellness programs, the survey asked these employers to define, among others, what issues they are trying to solve, what types of solutions they are providing and what constitutes success. 

Among these respondents, more than half reported currently offering financial wellness initiatives to employees (51%), while another 20% were actively implementing such initiatives and 29% were interested in implementing. In 2018, 12% were actively implementing and 34% were interested in implementing such initiatives. 

Definitions and Priorities

Despite this broad interest, however, there was little consensus around the definition of financial wellbeing among employers. According to the survey: 

  • 34% define financial wellbeing as having access to assistance and resources that enable good financial decisions;
  • 30% define financial wellness as being comfortable or financially secure overall; and
  • 21% equate it with achieving retirement security through planning and saving.  

Not surprisingly, employers have different goals when it comes to employees’ financial wellness and often it depends on their industry and employee demographics. For instance, while most employers list preparing for retirement as a top priority (40% overall), the education and state/local government sectors were less likely to cite retirement preparation as a top issue, possibly because these sectors are more likely to still offer DB plans. Instead, financial planning (26%), budgeting and money management (21%) and not saving enough (21%) were of greater concern for these sectors.  

Similarly, student loan debt was more commonly cited by respondents from the professional, scientific, and technical services sector as a top issue (17%). In contrast, student loan debt was not considered an issue by respondents in the retail trade industry.  

The survey also finds that the four most common employer financial wellbeing initiatives are relatively traditional, but employers implement them in a wide array of ways. They include tuition reimbursement (64%), financial planning education (60%), employee assistance programs (55%) and basic money management tools (49%). 

Beyond these, the survey finds, for example, a myriad of both student loan debt assistance initiatives and emergency liquidity help. A third (34%) of employers reported either currently offering student loan debt assistance (11%) or planning to offer (24%) such initiatives. Traditional approaches such as loans offered through the employer-sponsored retirement plan were the most common approach to offering this benefit (39%), while student loan debt payment counseling or education ranked number two in prevalence at 27% of those offering. 

EBRI also found that a surprisingly large number reported that they actively help workers pay down student loan debt either via matching 401(k) contributions tied to employees’ student loan payment (25%) or through loan payment subsidies paid by the employer (15%). 

Success Measures

As in 2018, EBRI found that the top ways of measuring the success of financial wellness initiatives are:

  • improved overall worker satisfaction (37%); 
  • improved use of existing retirement plans (31%);
  • reduced employee stress (31%); and 
  • improved employee retention (28%). 

Worker satisfaction with financial wellness initiatives was the only factor that dropped slightly in the ranks, moving from third to fourth place at 26% of employers citing this as a measurement approach – which was tied with reduced health care costs. 

Also like the 2018 findings, the most common approach to understanding employees’ financial wellbeing needs was examining existing data: 

  • 62% of firms have examined existing employee benefit data; 
  • 53% have examined health-related data;
  • 52% surveyed employees; and  
  • 32% have done a financial wellness needs assessment.

And while creating a financial wellbeing score or metric was still the least common way that employers went about understanding employees’ financial wellness needs, EBRI notes that the number rose significantly – 23% had taken that step in 2019 versus only 14% in 2018. 

Those creating a financial wellbeing score were characterized by more commonly offering (68%) or actively implementing (28%) financial wellness initiatives (vs. 51% currently offering and 11% actively implementing among those that haven’t created a financial wellbeing score or metric). 

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