Benefits are increasingly taking center stage
Salary, job description and opportunity for advancement continue to be primary factors in successful recruiting. However, benefits have become more important than ever in motivating candidate decisions. First and foremost, a retirement savings plan is a foundational pillar in any benefit package. Typically, the plan is a 401(k) with some level of matching contributions from the employer, with a broad investment menu and often offering employees the ability to make pre-tax or after-tax (Roth) contributions. Additionally in regards to health expenses, employers can offer health savings accounts (HSAs) or flexible spending accounts. HSAs, which are available only to those who have a high-deductible health plan, are particularly attractive since they allow the holder to contribute pretax dollars into an account that is completely portable and offers the potential for long-term accumulation of assets to fund future health care expenses.
Financial wellness and employee education programs are becoming valued benefits
One concept that has taken hold over the past 10 years is how companies can contribute to their employees’ financial wellness. A Bank of America survey of employers found that 95% of employers feel a sense of responsibility for the financial wellness of their employees – up from 81% in 2015.4 Education is one component of a financial wellness program and can address topics ranging from budgeting and building an emergency fund to debt management and retirement savings and investing.
According to Crain, an effective financial wellness program should offer employees tools they can use to assess their financial position and evaluate how they stand based on some type of scoring mechanism. Just like a smartwatch tracks steps, a financial scoring system can look at bank accounts, FICO scores and other metrics to generate a wellness score. Once the user can evaluate their level of financial fitness, personalized educational programs and resources can help them take actions to improve their financial health. And if all of this is being delivered digitally — employees can engage at any time.
Financial wellness programs generate a big payback for employers
The CEO contemplating a financial wellness program might wonder what it means for the company. Sure, it sounds like a nice thing to do, but will it be expensive? As it turns out, it could be more expensive not to offer a program. Studies have shown that employees suffering from financial stress are distracted at work and can cost the company a significant loss in productivity through lost hours and high turnover.5 Financial stress may also lead to other problems, often impacting both physical and emotional health. Crain emphasizes that financially stressed employees have the potential for higher health care costs, take more time off from work and could have greater need for employee assistance programs. Financial wellness can have a positive effect also on employees’ physical and emotional well-being, enabling employers to enjoy lower costs coupled with higher productivity.