In December 2021, the Social Security Administration announced a 5.9% increase in its annual cost-of-living adjustment (COLA) to keep up with nationwide inflation. With this ever-rising cost of living and the lack of growth in household incomes, many families are struggling to support themselves. It should not be surprising then that the interest in financial employee wellbeing has also been steadily rising for leading employers.
The Employee Benefits Research Institute’s 2021 Financial Wellbeing Employer Survey found that 34% of employers rated their level of concern for their employees’ financial wellbeing as high, up from 25% in prior years. That’s because an employee’s relationship with their finances has a significant impact on their overall wellbeing – and struggles in finances can lead to struggles at work.
As an emotionally intelligent financial wellness benefits provider, it’s BrightUp’s goal to call attention to the disparities between household incomes and the rising cost of living. In addition, we seek to inspire employers to take action with an Employee Financial Wellness Program (EFWP) and uplift their employees with the right financial tools and skills.
Research shows that an employee financial wellness program (EFWP) is one of the most critical factors in successfully attracting and retaining talent. So if you’re considering launching your EFWP but aren’t sure if it’s right for your company, you’ve come to the right place. In this article, we’ll talk about the most important things to know about financial wellbeing for employees and how we expect to see it become a priority in the workplace.
5 Things to Know About Financial Wellbeing for Employees
You may be asking yourself what financial wellness has to do with employee wellness. If so, you're not alone. Many HR teams are still trying to figure out how financial health connects to their organization's bottom line.
Gallup’s global research has found five elements of wellbeing that add up to a thriving life:
- Career wellbeing
- Social wellbeing
- Financial wellbeing
- Physical wellbeing
- Community wellbeing
All of these elements work together to make a thriving employee. When an employee lacks in one area, it can negatively affect the other areas. This should be especially concerning for their career wellbeing since your workplace is at the center of their career.
If you think a financial wellness program is about how your employees handle their finances and pay off debt, you're only scratching the surface. An effective financial wellness program for employees is about much more than that. Sure, it addresses the financial side of things, but financial wellbeing provides much more significant benefits than that. Financial wellness is also essential to tackling non-financial aspects of financial decisions and behaviors that improve physical, social, and community wellbeing.
So, if you're an employer thinking about enhancing your employees’ financial wellness, it helps if you know these five things:
- Financial stress hurts workplace productivity.
- Financially healthy employees are more loyal.
- Employees expect their employers to support their financial well-being.
- Financial wellness has a strong return on investment.
- BrightUp is a go-to partner for financial wellness benefits.
Let’s look a little deeper into these facts.
1. Financial Stress Hurts Workplace Productivity
Employee financial stress can be costly because it almost guarantees lower productivity. According to Aegon’s Financial Wellbeing in the Workplace report, 2.4 million employees in the private sector experienced a drop in productivity over the last three years due to financial concerns. 30% of employees reported that their financial situation cost them between one and two hours of productivity.
Needless to say, financial stress isn’t just bad for employees. It’s also bad for business.
We work to help companies realize when employees aren’t worrying about their accounts, they can be more focused and engaged in the workplace. We offer financial planning tools to help them keep up with their finances at their fingertips. We also provide them with on-demand financial coaching, so if they have a question, they can get it answered quickly and get back to work stress-free!
2. Financially Health Employees Are More Loyal
A Gallup study found that wellbeing and engagement reinforce each other. They also found that it would take a 20% jump in pay to lure an engaged employee away. It’s clear that employees are beginning to put their own bottom line before their employer’s.
These days, financial benefits need to be about more than a robust retirement savings option. It’s a great start, but it’s only part of the picture.
Every employee has unique needs and goals. For some, that’s saving for a house or college tuition. For others, it’s about paying off a loan or credit card with a high-interest rate. Furthermore, some employees are simply trying to make ends meet between paychecks.
Here’s the new bottom line you need to be paying attention to: your employees need access to tools and experts who can guide and personalize their financial wellness experience. They’ll notice that you are dedicated to their overall wellbeing through an upgraded employee benefit plan.
3. Employees Expect Employers to Support Their Financial Wellbeing
According to a new survey from TIAA, 51% of employees want help from employers when it comes to their financial wellbeing. That’s only 12% shy of the percentage of employees that believe the employer is responsible for their mental health and wellness.
The report also shares that workers who participate in a wellness program are twice as likely to have a high financial wellness rating than those who are not offered the resources or don’t participate. They report confidence in their ability to retire when they want, with their lifestyle, without running out of money.
Unfortunately, only over half of workers receive financial wellness resources from their employers. Employers are in a unique position to help employees improve their financial wellbeing. Through BrightUp, they can offer financial education, coaching and advice, planning tools and resources, and even access to capital to help employees improve their finances.
4. The ROI of Financial Wellness
So, how can an employee benefit plan administrator prove a return on investment for an employee financial wellness program? By calculating the risks and costs of not having one.
Did you know? According to a survey by PricewaterhouseCoopers, the average employee spends 3.2 hours a week thinking about finances at work. That’s a significant amount of time and energy that should be spent focusing on work and achieving goals.
Besides losing profits to low productivity, financial distress can also cause difficulties in employee retention and increases in the cost of employee health coverage. Altogether, these costs can directly impact your company’s bottom line. Think about how much distracted employees cost, the time and money spent hiring new employees to replace the ones that left for better financial support, and the increased medical costs needed to cover unhealthy employees. It adds up!
One Mercer study estimated employers lose up to $250 billion in lost wages each year. And lost productivity is only one of the risks!
If you want happier, more focused, and loyal employees, start by supporting them financially.
5. BrightUp: A Partner for Employee Financial Wellbeing
The same Mercer study we mentioned above also has a fascinating insight into the level of involvement employees want from their employers regarding improving their financial wellness. It’s minimal.
The study showed that employees might be hesitant to engage in a financial wellness program if they think their employer would be directly involved. Only those with high financial courage reported feeling comfortable with the idea. This is where a third-party financial benefits provider can step in to help (that’s us!)
BrightUp was created to empower employers to support their employees with evidence-based tools that will help them gain financial health. Instead of an in-house wellness program, we work as a separate entity to accompany your employees on their path to feeling financially secure.
We accomplish this by taking the time to dig deeper than their account balances and learn more about their feelings and emotions around money. We get to the root of what prevents them from being financially secure - whether it’s a mindset or a tangible issue. Our tools, content, and coaching will empower your employees and members to build a sustainable financial future and achieve generational wealth.
Through our platform, employees can access:
- Compassionate Capital: low-interest emergency and debt consolidation loans with an alternative underwriting algorithm that looks past an employee’s credit score.
- Financial Planning Tools: centered around each user’s needs, the BrightUp app helps people understand their current financial health and provides tech-based tools to help them set, track, and achieve goals.
- Financial Coaching & Advice: real, empathic human support via text, phone, or video call. Our financial coaches take the time to get to know each employee’s needs and cater their advice accordingly.
- Financial Education: personalized financial, educational content on a wide range of topics accessible anywhere.
It’s easy to see why you may want to consider partnering with our team. But if you’re not ready to make the jump yet, let’s look into the future to see where financial wellbeing in the workplace is headed and how you can keep up.
The Future of Financial Wellbeing in the Workplace
It’s clear that implementing an employee financial wellness program is the right thing to do. So how do you catch up and keep up? Let’s look at two elements of the outlook of financial wellbeing in the workplace and beyond:
- Normalizing conversations about finances
- Making financial wellness programs the standard
Based on the volumes of research and recent trends in workplace benefits, it’s no question that robust financial wellness benefits will soon become the norm in company benefit offerings. In addition, we’re seeing a movement toward normalizing conversations about finances in the workplace.
Normalizing Conversations About Finances
The National Labor Relations Board (NLRB) works to protect the rights of workers to discuss their wages in the workplace. Previously, this taboo topic was looked down upon and possibly punished if a manager heard about the conversation. Today, the National Labor Relations Act claims employees have the lawful right to communicate with other employees about their workplace wages.
In 2014, then-President Barack Obama proclaimed, “Pay secrecy fosters discrimination, and we should not tolerate it.”
Women have been talking about the gender pay gap for decades. Now, we’re seeing that conversation become more and more common in the workplace, especially between younger generations of workers. According to BankRate, Millennials – who have been historically challenged by multiple recessions and national crises – are making the topic of swapping salary information more common.
With this in mind, these conversations are likely starting to happen in your workplace. They’re inevitable. The best thing you can do is embrace the conversations and normalize transparency and candid conversations about money in the workplace.
Every single person faces financial stress at some point in their life. Creating a space where employees feel comfortable expressing their stress and sharing advice with one another can transform the company’s culture. It’s also a great way to prime your employees to engage in their new employee financial wellness program!
Transparency and compassion can make a big difference in the efficacy of your financial program. The features and positive outcomes of the program must be constantly communicated to keep employees engaged. Hold regular check-ins with your team. Whether you have a weekly one-on-one meeting with an employee or a weekly team meeting, make time to talk openly and honestly about money matters. Your employees will thank you.
Financial Wellness Benefits Programs Will Become the Norm
The numbers don’t lie. The PwC Employee Financial Wellness survey found that 84% of employers believe financial wellness programs will become standard in the workplace. And a 2020 report noted that 66% of responding organizations have started providing financial literacy benefits – a number that has increased since the pandemic.
This is good news for employees who want to take back their finances and work toward financial wellness. It’s also good news for employers seeking ways to improve employee retention by offering attractive benefits packages.
If employees are not given the opportunity to learn how to manage and become comfortable with their finances, the repercussions are detrimental for both the individual and the organization. For individuals, it can lead to extreme levels of stress; for employers, this can mean negative effects on health and productivity and an increase in turnover.
There’s no denying that financial wellness benefits need to become the new standard for employee benefit plans.
Launch Your Financial Wellbeing Program with BrightUp
Financial wellbeing benefits everyone – your employees and your company. It’ll also save you fewer headaches when your employees are happy and engaged! The time is now. If your company is struggling with current employees' morale or having problems attracting new talent, financial wellbeing at work can be the solution you need.
Launching a financial wellbeing program can be an exciting and rewarding accomplishment. BrightUp can help you from start to finish by offering coaching, financial education, and much more. So if you’re ready to join the movement, you have three options to contact us:
Together, we can build a brighter future for all.
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