As workers try to make ends meet, onus on employers to enhance financial wellness programs
By Guest Columnist JIM WALLACE, an Atlanta-based managing director of Global Corporate & Institutional Advisory Services for Bank of America Merrill Lynch
A study released in August examines how both employers and employees feel about financial wellness, their expectations of one another and the resources employees want to be made available to them in the workplace.
Findings from the study reveal the growing importance of workplace financial wellness programs, and the findings point to the value of personalized advice and planning as key to improving participation and employees’ financial wellness. This includes encouraging workers to participate in their employer’s financial wellness programs.
Consider these findings from Bank of America Merrill Lynch’s 2018 Workplace Benefits Report: Just 31 percent of employees participate in a financial wellness program; just 7 percent of employees have identified health care as an important building block of financial wellness; women are more likely than men to be less well off financially; and employees say they are struggling to pay for the present, let alone save for the future.
The following talking points cover some highlights revealed by the study and how they apply to employers seeking to help their employees plan for their financial future, and for employees as they establish their financial wellness program:
Q: How do employees perceive their current financial status?
A: Nationwide, 38 percent of employees consider themselves to be doing less than financially well. That number rises to 44 percent for workers under the age of 40. While these numbers represent employees overall, the report still finds that women are less financially well than men, underscoring the need for financial wellness programs that are tailored to women’s financial journeys and life paths.
Q: Are employees engaging in workplace financial wellness programs?
A: Yes, to some extent. There is certainly room for more employee participation. The study showed about one-third (31 percent) of employees participate in employer-sponsored financial wellness programs, even though many report they are struggling financially.
Q: Do employees consider health care a factor in their financial wellness?
A: Only 7 percent of employees identify health care as an important building block of financial wellness. A startling 53 percent have skipped or postponed at least one health care need (e.g., medical appointment, medication) to save money.
Q: Were there any gender gaps between men and women present in the study’s findings?
A: Yes. In fact, 47 percent of women say they are less than financially well, compared to 29 percent of men who fall in the same category. There is also a gap between men and women when it comes to retirement savings. On average, female employees contribute less to their 401(k) than men and have $119,000 in investable assets, compared to $196,000 for men. This gender savings gap is particularly concerning given the increased financial demands placed on women, such as higher health care costs and the need to work longer than men in order to save for retirement.
Q: What do employees want out of an employer-sponsored financial wellness program?
A: Employees want their employers to help manage their financial lives by providing access to professionals who can perform personal financial assessments and offer guidance on specific actions to take based off these assessments.
They also want help measuring their progress in meeting financial wellness goals, which may require employees to disclose their financial information. To achieve this, 70 percent of employees say they would be comfortable sharing financial information, such as savings and investments, as part of an employer-offered financial assessment, and 81 percent of employees say they prefer financial wellness to be offered as a bundled program rather than a standalone resource.
Q: Where do employers and employees differ in their approach to managing employees’ financial needs?
A: Employers tend to focus on actions to manage immediate financial needs, such as budgeting and handling expenses. Meanwhile, employees most prioritize long-term financial goals, such as tactics that help them save and invest for the future.
Q: Where do employers and employees stand on financial wellness plans offered in the workplace?
A: A clear majority of employers and employees agree that financial wellness programs offered in the workplace are effective. In fact, employers report financial wellness programs are paying off – leading to greater employee satisfaction, higher productivity and other benefits for employees and the firms they work for.
However, there is still room for progress in increasing employee participation.
Employer-sponsored financial wellness programs are having a positive impact, although employee participation is low. The findings further highlight the need for programs that are tailored to female employees to help address the savings gap between men and women.
Note to readers: Jim Wallace has been with the firm for 32 years and, as head of Global Corporate and Institutional Advisory Services, oversees a team that serves 193 of the Fortune 1,000 companies. The team has donated more than $1 million and provided more than 8,000 hours of community service.