Financial Wellness Series Part Four – Build, Educate & Engage: Financial Wellness Benefits

In this fourth installment of our Financial Wellness series, we lay out how the next steps to alleviate the burden of financial stress and build upon the suggestions made in the earlier parts of the series. The stress from finances that people feel can have a profound effect on their overarching wellbeing – physically, mentally, and emotionally. The negative effects of financial stress can bleed into the workplace; it’s important to not only show you care about your employees but also consider the benefits in keeping financially well employees in your workplace. Employers can offer financial wellness programs to help mitigate these negative effects, and steps should be taken to build an impactful plan, educate employees about available resources and engage them to participate.

Where to start when building or selecting a financial wellness plan? Well, there are two steps that can be taken to get the ball rolling.

1.Build a Strong Retirement Plan Foundation

 Employee benefits have the power to drive employee behavior for the better. Employer-sponsored retirement plans have long been used to help employees prepare financially for the future, while also being utilized as recruitment and retention tools. Retirement plans are popular because they are one of the best benefits employees have available to help improve their financial security and reduce financial stress. Any retirement plan can be strengthened through plan design and help employees become financially well faster.

Consider these optional, and often automatic plan design features proven to strengthen a plan and positively improve participant saving and investing behavior:

• Auto-enrollment with periodic auto-enrollment sweeps for those not yet participating.
• Tip: Consider auto-enrolling employees at a 6% default rate and running a 1% or 2% challenge program each year to help them increase savings with little impact on their take-home pay.
• Auto-escalation.
• Tip: Consider auto increasing participants’ deferral rate 2% per year with a 0% -15% cap.
• Regular Auto-rebalancing.
• Tip: Consider auto re-enrolling employees into a QDIA.
• Employer match, which has been proven to motivate participants to increase their 401(k) contributions.
• Tip: Consider a stretch match or profit sharing.
• Eliminate or reduce of 401(k) loans. Consider an employee lending program.
• Utilize eligibility and entry dates that best suit plan demographics.
• Provide after-tax accounts (i.e. “thrift plan” or Roth).
• Offer effective retirement plan education seminars and webinars. These help to ensure employees know their financial deficiencies, understand how to correct them, and make the most of their retirement plan.
• Tip: Consider including financial education material on the employee portal with information on how to build savings and create an emergency fund.

2.Engage with a Financial Wellness Education Program

Experts have identified the workplace as being effective for providing financial education and engaging workers to improve their financial situation. Many employers already offer health and retirement benefit education – a financial wellness education program is a natural evolution. Employers are in the best position to offer financial wellness education, and employees trust employers to provide them with sound, unbiased financial information. 87% of workers, of all ages and income levels, agree they would be comfortable getting retirement education help from their employer[1].

• 91% of employees participate in wellness programs when they are offered[2].
• These programs are popular because they address employee financial pain points that cause stress and provide tangible ways to improve.
• 82% of employees participate in wellness programs to manage their stress levels[3].
• Well-designed financial wellness education programs take into consideration employee financial knowledge levels, life stage and family, and teach them how to make decisions to improve their financial state, reduce financial stress, and retire when ready.
• 83% of plan sponsors feel general and multiple employee communications and education are the best way to encourage savings and raise financial awareness[4].
• It’s important to view the program as a long-term investment in your business. Savings is a habit, and good financial habits are learned. As with any habit, it takes time to improve a financial situation.
• 70% of employees feel their wellness program means their employer cares about them[5].
• Over time, more and more employees will join in as they see their peers benefitting from the program. It’s critical for financial wellness programs to have employer support and be embraced by company culture. Employees need to know financial wellness is part of their work culture, not just some fad, in order to fully invest the trust and time needed to change behaviors. A financial wellness program with a long-term vision shows employees their employer cares and wants to help them succeed.

Once the benefits of offering these programs have been decided on, it can be a confusing time figuring out what to start with or where! These tips should guide any organization along the right path towards having financially fit employees. In the next installment of the series, we will examine the best practices and considerations for established wellness plans.

AssuredPartners has industry-leading employee benefits advisors that can guide your organization, making it easier for your employees to achieve financial wellness. Reach out to your local AssuredPartners contact for a discussion on the best options for you and your employees.

[1] Workers’ Financial Woes Impact Small Business, smartdollar, 2016 study of employers with fewer than 200 employees.

[2] The Business of Healthy Employees, A 2016 Survey of Workplace Health Priorities, Virgin Pulse.

[3] Ibid.

[4] Annual Defined Contribution Benchmarking Survey, Ease of Use Drives Engagement in Saving for Retirement, 2015, Deloitte.

[5] Engage Me”, Study by HealthFitness, 2016.