13
July, 2021

How to Choose a Financial Wellness Program

Choosing a Financial Wellness Program for Your Organization

(Written by Aaron Johnson, CEO and President of APS)

Organizations are continually looking for ways to gain a competitive advantage in attracting and retaining qualified employees. People are looking for jobs that offer more than just paid time off and health insurance. Employees want benefits like student loan assistance and personal finance planning aid.

Therefore, many businesses have turned their focus to employee financial wellness programs to add value to their compensation packages. Employers emphasize employee financial wellness so much that flexible earned wage access (FEWA) is expected to increase by 20% in the next two years.

In order to stay competitive in the labor market, companies need to start looking into employee financial wellness programs. This article will discuss what employee financial wellness is, why it’s essential, and how to determine which programs would benefit employers the most. It will also highlight different financial wellness programs available to offer employees.

Contact Us CTA - Payroll and HR Easier

What Is Employee Financial Wellness?

Financial wellness refers to a person’s overall financial health and is one of many factors that makes up employee wellbeing. While wellbeing might make you think of physical and mental stressors, financial stress impacts a person’s health as well.

According to a study by ThrivingWallet, 35 percent of Americans report losing sleep to financial stress. Of the 35% of Americans losing sleep, one-fourth experience symptoms such as insomnia, broken sleep, fatigue on waking, nightmares, and night terrors. That’s a lot of health factors that can impact employee workforce productivity, which is where implementing an employee financial wellness program into your HR strategy can help.

Question Mark

What Is An Employee Financial Wellness Program?

Financial wellness programs help employees reduce money-related stress and budget better. More specifically, financial wellness programs help employees increase their asset-building finances. Programs do this by offering courses on homeownership, retirement account growth, debt reduction, and more.

Question Mark

Is Financial Literacy the same as Financial Wellness?

While employee wellness programs are focused on increasing financial satisfaction and reducing stress, they are not the same as financial literacy programs. Financial literacy is a term used to describe money education programs that focus on understanding financial basics. These basics include how money works, how to budget, build savings, and reduce debt.

A financial wellness program aims to take someone’s existing monetary knowledge and equip that person with the ability to use it properly. Another name for this is financial capability, which emphasizes applying money knowledge to your daily life. Financial capability and wellness programs focus on helping the employee develop a positive relationship with money. Often these programs include work and home scenarios, so the employee learns how to establish financial stability in various situations.

The Different Types of Employee Financial Wellness Programs

When it comes to employee financial wellness, employers can implement a variety of programs throughout their workforce. However, Financial Wellness Expert Laurie Strazzullo recommends companies consider what they are trying to achieve with their financial wellness programs before starting one.

To do this, employers can utilize financial assessments and other HR software tools to ask about employee finances. However, you must err on the side of caution when asking employees questions about their personal finances. More than 50% of financially stressed employees are embarrassed to ask for help with their finances. This statistic means employers need to consider asking questions through avenues that preserve employee privacy.

Once you determine the needs of your workforce, it’s time to decide which financial wellness program is right for your business. Some programs focus solely on financial education, while others layer employer matching, insurance, and other opportunities into the equation.

Let’s take a deeper look at some of the different financial wellness solutions available to you. Then, you can determine the best fit for your organization.

Education

Educational Programs

employer matching

Employer Matching Programs

An education-focused program equips employees with the information they need to plan for emergencies using current employer benefits. These programs come in a variety of forms and can include all or a few of the following components:

  • An online, interactive platform that guides employees through financial topics relevant to them.
  • Financial guidance provides financial coaching on a per-employee basis. These are available to employees via live chat, virtual video, or an in-person meeting scheduled once a quarter.
  • Financial counseling sessions are focused on budgeting, saving, credit card debt, and student loan debt. Some counselors even assist employees with approvals for income-driven repayment plans, forbearances, and deferments on student loans.
  • Financial education workshops that teach employees about retirement savings, savings accounts, credit scores, and more. These sessions are typically offered in a lunch and learn format and led by financial advisers from local credit unions or other entities.
  • Financial aid guidance aimed to provide working parents information on government FASFAs, and other college aid.

According to a survey by Willis Towers Watson, 51% percent of employees joined their current employer primarily because they offered a retirement plan. Offering matching benefits is a great way to recruit, retain, and increase employees’ financial health. Here are a few examples of matching opportunities you can layer into your financial wellness plan:

  • 401(k) Matching: This involves an employer matching a certain percentage of retirement contributions employees make to their 401k. Employer contributions can vary, but the most common percentage match is 6 percent.
  • Student-Loan Matching: There are two different approaches you can take to this. One method is to match employee contributions to student loans by helping employees pay down the loan quicker. Another way is to match employee student loan contributions to that employee’s retirement fund. This process allows employees to build retirement income while paying on their student loans.
  • 529 Matching: This plan is great for employees who have children, as they are more than likely looking for ways to provide educational savings. Employers contribute funds up to a specific percentage or dollar amount directly to employee college savings accounts.
insurance program

Insurance Programs

Financial assistance

Financial Assistance Programs

85% of employees feel their employer should offer more insurance benefits that meet their diverse needs. Partner with different benefit specialists to come to your office or provide virtual sessions. This structure helps employees feel at ease when choosing which insurance program is the best fit for them.

There are a variety of insurance opportunities out there aside from health insurance. Employers can consider including alternative insurance programs in their financial wellness offerings. These include but aren’t limited to:

Life insurance Long-term care insurance
Disability Insurance Critical illness insurance
Pet Insurance Hospital indemnity insurance
Legal insurance Travel accident insurance
Adoption and fertility insurance Homeowner’s insurance
Accident insurance Umbrella insurance

 

Besides educating employees and providing insurance and retirement benefits, employers might consider integrating financial assistance programs into their employees’ economic well-being strategy. These programs focus on alternative stressors employees might not have considered as a factor in their financial health. Types of financial assistance offerings include:

  • Medical bill zero-interest financing
  • Medical bill negotiation
  • Debt negotiation or settlement
  • Health savings accounts and flexible spending accounts
  • Relocation assistance
  • Home loan assistance
  • Professional development stipends
  • Stock options

The Benefits of Employee Financial Wellness Programs

Now you know what financial wellness is and the types of programs available for employees, you might be wondering whether employees are interested in economic programs. According to a survey by the PWC, 87% of employees want help with their finances and when assistance was offered, 88% of employees used their employer’s financial wellness services.

Employees are indeed interested in financial wellness programs employers provide and most will participate should employers choose to offer them. Let’s look at the benefits of implementing such offerings throughout your organization:

Financial Wellness Benefits for Employees:

 

Check Mark

Reduce Mental Stress

According to the Society for Human Resource Management, financial stress results in a 34% increase in absenteeism and tardiness among employees. Financial programs focused on difficult money-stressors like credit card debt, student loan navigation, and retirement planning can help alleviate this burden. Moreover, these programs reduce employee stress levels and increase their overall health by providing them with the tools they need to take control of their finances.

Check Mark

Increase Time Off Availability

According to the American Psychological Association, 70-95% of doctor visits are due to money-related stress. Furthermore, employees who worry about money miss two times more days per year than their unstressed colleagues.

Financial wellness programs offer a variety of free resources to help employees during their workday. Whether it’s mental counseling, financial education classes, career coaching, or benefit and assistants programs, financial wellness programs help employees reduce finance-related health symptoms. Instead of sitting in a doctor’s office for hours on end, less-stressed employees can use their time off for relaxation and rejuvenation.

Check Mark

Decrease The Effects of Catastrophic Financial Events

A comprehensive wellness program provides an umbrella of coverage for employees. Plans like employer-sponsored life insurance and umbrella coverage can help employees navigate more challenging moments. Likewise, financial planning and savings information help individuals prepare and reduce their economic impact when problems occur.

How Financial Wellness Programs Benefit Employers:

Check Mark

Increase Workforce Productivity

2020 brought many challenges, including employee financial stress and reduced workforce productivity. Employees whose financial pressure increased due to the pandemic were four times as likely to admit that their finances have been a distraction at work.

Luckily, financial wellness programs can provide employees alternative options to thinking about finances. Financial coaches, benefit funds, and employer-paid student loans can help alleviate worries current employees may have. Productivity increases and your organization thrives when you can reduce these types of distractions.

Check Mark

Reduce Absenteeism

When employees aren’t missing work due to their financial stress, organizations save on labor expenses. Harvard researchers looked at the ROI of wellness programs related to absenteeism. They demonstrated that for every dollar companies spend on wellness programs, they can save $2.73 and reduce absenteeism.

Luckily, financial wellness programs can provide employees alternative options to thinking about finances. Financial coaches, benefit funds, and employer-paid student loans can help alleviate worries current employees may have. Productivity increases and your organization thrives when you can reduce these types of distractions.

Check Mark

Increase Savings

U.S. companies lose $500 billion a year due to their employees’ personal financial stress. That’s a massive impact on an organization’s bottom line. A company could use those lost dollars to further its growth initiatives.

The good news is, a financial wellness program can help. According to Health Affairs, for every dollar an organization spent on a wellness program, the company saved $3.27 in reduced health costs.

These are just a few of the benefits of employee financial wellness programs. Other advantages include:

  • Reduced employee turnover
  • Increase in employee talent acquisition
  • Higher 401(k) contributions
  • Reduced cases of employee theft

-Source: What Is A Financial Wellness Program

Even though several metrics above speak to the ROI of financial wellness programs, sometimes it’s harder to quantify their success. Financial wellness is still a new topic in the HR world, and success looks different across organizations and industries. Consult with your software vendor or their success team when you think about measuring the ROI of these programs. That way, you can quantify your employee financial wellness program’s success and measure its return accurately.

What’s The Employee Financial Wellness Option for You?

Now that you’ve looked at how these programs benefit employees and employers, let’s determine which program is the best option for your organization. To do this, we recommend leveraging your workforce’s financial needs against payroll and HR technology to create your employee financial wellness program.

Some HR software providers have integrations with learning management systems (LMS), so you can create a dynamic financial program best suited to employee needs. These integrations link employees’ LMS financial progress to your HR platform for comprehensive tracking and ROI visibility.

In addition to LMS integrations, payroll and HR software provide a mix of payment methods employers can offer employees. Flexibility in payment methods can ease employee financial stress while providing organizations greater returns on investments. Some examples of payment methods include:

  • Paycards for employees who don’t like banking or direct deposit
  • Direct Deposit for employees who want their paychecks deposited in their account
  • Digital Wellness Payments that reward employees for reduced screen time
  • Earned Wage Access (EWA) enabling employees to receive daily or weekly pay

You may still be concerned about the success of a financial wellness program and how to leverage your payroll and HR technology to implement one. Consider the case of Noodles and Company in the example below.

Information

In the fall of 2019, restaurant Noodles & Company teamed up with the financial app Even to provide over 8,000 employees access to early pay. This program improved retention and financial wellness for employees throughout the organization.

Since then, a quarter of Noodles’ workforce is actively saving every month and has collectively deposited more than $550,000 into their Even savings accounts.

-Source EBN: 5 Companies Tackling Financial Wellness

The Future Of Employee Financial Wellness In The Workplace

According to a survey by the Employee Benefits Research Institute, more than 51% of organizations offer financial wellness initiatives and 29% of companies are interested in launching financial wellness programs. Financial wellness programs propel company initiatives forward while simultaneously taking care of its most important assets: employees.

To be competitive in today’s ever-changing workplace, employers need to consider the effects of employee financial wellness programs on their staff’s health and engagement. These offerings combined with workforce software set the organization and its employees up for success. When employees and employers can plan proactively, financial crises are easier to prevent.

(Originally published on the Sage Advice blog)

 

Let's Make Payroll and HR Easier

See why APS’ award-winning technology and services have earned us a 98% customer retention rate.

Recent Posts

Check out more great articles from the APS Blog covering HR, payroll, and everything in between.

Share This