The past two years have created the perfect storm for a financial wellbeing crisis within the lives of our employees. As employers, we’re challenged to respond to the pandemic’s ripple effects, such as the workforce’s ever-changing expectations and an amplified war for talent. A successful response is built upon a comprehensive approach to employees’ financial wellbeing.
In this blog post, we’ll explain what financial wellbeing means, why it’s so important in 2022, and provide three best practices on creating a successful financial wellbeing strategy for your organization.
What is Financial Wellbeing, and Why Does it Matter?
Even before COVID-19, financial wellness has been a core pillar of employees’ total wellbeing and has always made the top priority list when exploring the main stressors in our workforce. Financial wellbeing represents an individual’s ability in managing their finances to meet current obligations while preparing for the future and having the confidence to handle anything unexpected along the way.
And as we kick off another year following the unprecedented events of a global pandemic that impacted all areas of our life – the financial wellbeing of our employees is even more deserving of our attention and support. PwC’s 2021 annual Employee Financial Wellness Survey shows that nearly two-thirds of full-time employees report their financial stress has increased since the start of the pandemic and 87 percent of employees want help when it comes to their personal finances.1
It's important for employers to intentionally engage with their workforce in cultivating a healthier financial wellbeing because the fallout of not addressing this issue can lead to negative impacts – lower productivity, an increase in employee turnover, and a spike in high health care claims due to stress or deferred care to name a few. Here are some tips to help with that intentional engagement.
Here are some tips on how to help ensure employees are not banking on luck with their financial futures:
1. Focus on a combination of short-term and long-term financial solutions.
Most employers offer some type of long-term benefit that supports employees with retirement, like a 401(k) savings plan. However, it can be hard for employees to think about saving for retirement if they are stressed about being able to pay rent next month. According to the 2022 TIAA Financial Wellness Survey, only 25 percent of Americans have a detailed budget they try to follow, and only 16 percent have a written plan from a financial advisor.2 A critical aspect of positive financial wellbeing is being able to manage your day-to-day finances, and this includes budgeting, debt consolidation, college planning, and saving for emergencies. Luckily the financial industry has responded over the past few years, and employers have a plethora of partners and solutions to offer their workforce financial safety nets and expert advice, including access to earned wages, financial coaching, short-term loan assistance and more.
2. Provide multiple ways for employees to participate and access support services.
Employers should adapt their financial wellness solutions, along with the rest of their benefits offerings, to meet the evolving needs and expectations of their workforce. From offering digital options with mobile applications and chat features to in-person/virtual financial coaching and conversations, it’s essential to provide a variety of avenues for employees to access your solutions. A survey showed that more than 50 percent of financially stressed employees are embarrassed to ask for help with their finances, thus demonstrating that employers must find opportunities to talk about the importance of financial wellbeing and provide information in ways that will preserve the dignity and privacy of their employees.3 A great way to address the needs of a multigenerational workforce is to create a financial wellbeing landing page within your benefits platform that provides all the different resources and solutions in one place that everyone can access. In addition, solutions and educational resources should be presented in formats that can be used in the privacy of their home, such as links to on-demand webinars, recommended financial podcasts, and videos explaining the different programs available to them through their benefits package.
3. Use targeted and personalized communications to drive employee engagement.
The value of a benefit or solution is only realized when employees are engaged and utilization is high. Financial wellbeing benefits are never one-size-fits-all. And as employers are striving to rebuild a culture of trust and safety in this new world of work, we’re also attempting to inspire employee engagement through communications that foster connection and a sense of belonging. Combining the power of digital transformation and a multigenerational workforce, HR and Benefits leaders have the unique opportunity to take a data-driven approach to targeted communications. With the majority of younger employees (millennials and Gen Z) topping the list when it comes to experiencing increased financial stress due to the pandemic, a personalized digital consumer-like benefits experience is a must.3 This mobile-first, chat-first segment of our workforce are more likely to get engaged when they feel valued and connected with on their terms and during the moments that matter. Targeted messaging can be sent based on age, gender, salary, location, tenure – the possibilities are endless! But successful employee engagement takes a lot more than sending generic mass communications. Employers need to invest in identifying the areas of opportunities and life moments where they can step up for employees and make a real difference in their financial wellbeing.
While financial wellness is far from a new priority in employee benefits design, there are new opportunities that employers can capitalize on – but only with the right benefits technology partner that enables intentional employee engagement.
For additional insight into how employers are prioritizing financial wellness in their employee benefit strategies, download the Benefitfocus State of Employee Benefits 2022 report.