Benefits decision makers have cited high costs of living as the top issue to address through financial wellness initiatives, superseding retirement preparedness for the first time ever, according to Employee Benefit Research Institute’s (EBRI) sixth annual Financial Wellbeing Employer Survey.
While retirement preparedness remains an important area of focus for employers as the second-most cited area to address, issues such as health care costs, budgeting and money management, and daily living expenses rounded out the top five—perhaps signaling an increase in employers’ concern for their workers’ day-to-day finances, EBRI notes.
To that end, productivity and employee satisfaction were cited as the primary reasons for employers to offer financial wellness benefit programs, according to the findings.
“The survey shows that financial wellbeing programs are being used to increase worker satisfaction and retention. However, employers cited costs to employees, as well as to the company itself, as challenges in offering financial wellbeing programs,” explained Craig Copeland, Ph.D., EBRI’s wealth benefits research director.
Perhaps as a result, employers frequently cited measuring their financial wellness offerings’ impact on employee productivity and worker satisfaction, Copeland further observes. At the same time, most benefits decision makers reported being optimistic that their company’s budget for these benefits will increase in the short term, so they anticipate continued development of these programs, he added.
Among the top focus areas, investments and retirement planning were the most cited, with basic financing and education and consulting programs being the next-most-mentioned areas of focus. The top challenges to offering these programs were costs to both the employer and the employee; data and privacy concerns and the complexity surrounding the programs were the other significant challenges employers faced.
Additional key findings include the following.
Measuring Success. The top factors in measuring financial wellness initiatives’ success were increased employee productivity and improved overall worker satisfaction. The next two most-cited factors were improved use of existing employee benefits and better employee retention.
EBRI notes that this is a change from 2022, when the satisfaction/retention measures were cited most often. Reflecting that, while having an attractive workplace is still an important reason for offering financial wellness benefits, business factors are also integral to those measurements.
Cost-Benefit Analysis. A large majority of companies (87%) reported having explicitly developed a cost-benefit analysis based on employee satisfaction, employee attraction/retention, employee productivity or medical/mental health claims to evaluate their financial wellness offerings.
Cost-benefit analysis based on employee satisfaction was the leading factor, with employee productivity next. Employee attraction/retention was just below productivity—showing that employers are still looking at ways to boost employee satisfaction and are also looking at these programs’ direct benefits to their company relative to the costs of them, the study shows.
Impact on Mental Health. As to overall wellbeing, 85% of the companies indicated that financial wellbeing initiatives had either a large impact or a small impact on employees’ mental, emotional and social wellbeing. Nearly half (48%) of the companies indicated they offered mental health benefits or coverage. They most likely did so as part of major medical/health insurance, but they also provided it as a separate service or through both means. Of those who provided a separate service, the overwhelming majority used an employee assistance program. In addition, 4 in 10 offered financial therapists and the Calm app.
Caregiving Benefits. Interestingly, the caregiving benefits most often offered had to do with leave policies as opposed to benefits in the direct provision of caregiving. Here, EBRI found that 6 in 10 employers allowed for flexible work arrangements (e.g., teleworking or compressing the work week), which was the most-offered caregiving benefit. Roughly 4 in 10 employers offered long-term leave policies and paid family caregiver leave policies. Approximately one-quarter of employers indicated they plan to offer each of the listed caregiving benefits in the next 1-2 years.
Addressing Diversity. When asked if their company was taking specific action to address diversity, equity and inclusion in their financial wellbeing initiatives by targeting them for different genders, races/ethnicities and ages, companies were more likely (1) to offer different solutions for the different characteristics and (2) to ensure that financial counselors and coaches were diverse than they were to tailor messages specifically for the diverse groups.
The Bottom Line
“The continued evolution of financial wellness programs is a crucial question going into 2024, particularly with student loan payments restarting this month for many employees,” stated Jake Spiegel, research associate for health and wealth benefits research at EBRI. “As these programs grow in value to employees and are used for attraction and retention, the expectation that these programs to be provided will only increase.”
The survey responses were collected through an 18-minute online survey of 252 full-time benefits decision makers conducted in July and August 2023. All respondents worked full time at companies with at least 500 employees that were at least interested in offering financial wellness programs. Respondents were required to have at least moderate influence on their company’s employee benefits program and selection of financial wellness offerings. Additionally, respondents were required to hold an executive, officer or manager position in the areas of human resources, compensation or finance.
To view a summary of the survey report, visit www.ebri.org/fwes-2023.
