What is financial wellness and why is it a big deal?
Open any business publication and you’ll find articles on financial wellness. Ever wonder why employee financial wellness is an employer issue?
In our annual Financial Stress Survey,1 we’ve learned that employees are under financial stress. Young or old, low income or high income – anyone can feel boxed in by their financial situation.
People feel better about their financial situation, the farther we get from the great recession. But the recession left its share of scars. People are very aware that external forces – like a downturn in the economy or a stock market crash– can have a serious impact on their financial situation. And even though people might feel confident in their financial situation, they still face a wide variety of financial obligations that compete for their paychecks, from credit card debt and student loan debt to emergency savings and retirement savings.
But why do employers need to care? Beyond providing that paycheck, how and why should they help their employees manage their financial situation?
The answer is twofold. First, when people are stressed, that stress doesn’t stay at home. In our 2017 survey of more than 2,000 retirement plan participants:
More than a third said they worry about their finances while they’re at work
44% say they spend up to 10 hours a month on finances while they’re at work, including 15% who spend 3-10 hours, and 4% more than 10
42% know they would be more productive at work if they weren’t worried about their finances.
All of this ends up costing employers real money in lost productivity.
Still, it’s possible to see that employees are stressed and that it’s impacting the workplace, and not conclude that the employer needs to provide the solution. Do employees expect help from their employer?
Here’s the important second half of the answer. In our survey, we found that when people need to make a financial decision, many turn to their employer for help. The most popular place to look for help is personal research, going online to financial companies and financial planning websites. Next in line, though, they look to their employer – followed by retirement plan provider and financial professional – for help making a decision. And when asked whose responsibility it was to provide financial wellness resources, most employees answered that it is either a shared or an employer responsibility.
This is why we’re talking about financial wellness. Employee financial stress impacts the employer, and people are looking to their employer for help. Companies that can engage their employees in financial wellness are providing a valuable benefit that can help in the attraction and retention of talent, while helping to alleviate some of their employees’ financial stress.