Is financial wellness in your open enrollment plan?

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Financial wellbeing is high on the performance agenda this year during the open enrollment season as businesses and employees continue to grapple with the effects of the COVID-19 pandemic.

Two new surveys by Goldman Sachs Ayco Personal Financial Management of HR executives at leading companies across America make this clear. the The insights gained can help HR teams develop and implement performance programs that address the wants and needs of employees in the current environment.

According to the nearly 250 HR executives we interviewed, financial wellness benefits are increasing. More than half offer their employees a financial wellness benefit, and nearly two-thirds of them offer financial planning to their entire workforce, not just executives.

Our semi-annual executive merit survey showed similar results. Financial literacy benefits for all employees increased 11% compared to 2019 – one of the largest increases among benefits offered by the 260 companies that responded.

Why Are Financial Wellness Benefits Increasing? We see and hear this from HR leaders in the hundreds of companies we work with and over 1 million employees across America who have access to our financial wellness benefits.

Better attraction and bonding

The US economy set a record last July with 10.9 million vacancies. Another record followed in August – 4.3 million US workers quit their jobs.

In the face of this extreme churn, more companies are realizing how a bespoke, specialty financial wellness benefit can help them attract and retain top talent.

These programs directly address the financial anxiety so many employees are experiencing, which has accelerated the pandemic. When wellness financial benefits include compensation and performance planning, they also help employees better understand, appreciate, and see the overall value of everything their employer offers them. That can make a real difference when a recruiter calls.

Social benefits generally make up 30% of a worker’s total compensation, but are rarely registered as such. Basic benefits like health and retirement accounts are often viewed as table stakes, but different plan designs and options vary widely in their monetary value. Employees often fail to realize the full value of what they are doing, for example by failing to reach their 401 (k) or funding an HSA.

Companies that offer a comprehensive financial wellness benefit are making a strong statement to their employees by supporting their employees where it matters most: their wallet. We all work to live, not live to work. Financial health benefits are valued by job seekers and workers alike because they maximize the value of their work so that they can better live the life they want. They help employees achieve their financial goals and help them better get the benefits of their business.

Technology as a gateway

Apps with gamification capabilities are increasingly used to support the financial wellbeing of employees. They are easy to implement and use, and don’t require much administrative support. They are often offered as “freemium” add-ons from traditional benefit providers such as 401 (k).

The real goal of a financial wellness benefit is to create a financially healthy workforce. Digital resources are a good start, but they require employees to walk alone on their journey to financial wellbeing. Money decisions are inherently complex and fearful. These “freemium” platforms can do only so much to reveal the complexities of the human experience, motivate individuals to act, and provide the security that comes from talking to an experienced professional.

In our experience, apps and other digital products need to be balanced with human interaction in order to achieve lasting financial results. Personal conversations and empathy, beyond what “freemium” solutions can offer, are critical to success.

In its most evolved form, the financial wellness experience is essentially bionic – a technology that makes it easy to get involved, discover resources and find solutions, and a human connection that supports a truly human need.

Volume and scope grow

As the need for financial wellness services grows, so must financial wellness programs.

The pandemic has fundamentally changed the workplace, including the financial burdens on workers and the support they expect from their employer. Over the past year, Ayco has seen many employers expand their wellness financial support to include employees with crisis budgeting, voluntary early retirement, and support for survivors who have lost a loved one.

Employers can certainly do more and better financially without significantly increasing the size of a program. Advances for immediate needs, cash loans that can be repaid through wage deductions, subsidies for childcare and support payments for employees in serious emergencies are possible.

In the long run, however, having a financially well-positioned workforce requires greater size, more human interaction, and more partnerships with specialists.

A dedicated financial wellness provider can be particularly helpful in professionalizing your most sensitive dynamics. An outside partner can provide an additional layer of privacy between employees and their company, and provide a resource to help employees separate their fear of personal finances from their performance in the workplace.

Broader acceptance by all types of employers

Last year, a few months after the pandemic started, 42% of companies with more than 500 employees provided financial support, according to the Employee Benefits Research Institute (EBRI). Only 25% of companies with fewer than 50 employees offered such a program. However, this was before the full effects of the pandemic changed the way we work and live.

The need for financial wellness support is greater than ever today as personal finances have become much more complicated. Employees grapple with sudden financial events such as child stimulus payments and tax credits, suspension of student loan payments, the ability to waive penalties for early withdrawals of 401 (k) s, and the ability to pause or reduce monthly mortgage payments .

More and more medium-sized and small businesses as well as start-ups and entrepreneurs have either already recognized or will soon recognize that employees need help with managing their personal finances and that a dedicated financial wellness solution (not just a “freemium” offer) one of its advantages is program.

It is particularly relevant for younger workers who increasingly want more innovative compensation packages from their employers and have less experience in personal finance management.

Our financial wellness mission

Whatever forms of hybrid work take shape after the pandemic, companies must embark on a new paradigm in workplace psychology.

Workers’ expectations of employers have evolved with the advent of stakeholder capitalism and workers seeking greater purpose in their work.

Add to this the recent historical financial stress and its ongoing aftermath. The results are obvious: persistent financial anxiety and a deep need among the workforce for financial relief.

Seven in ten workers say they need their employer’s help in order to be financially secure, and six in ten expect it to be, according to EBRI.

It is time for all employers to step up and do more to provide truly full support for the financial health of their employees. We believe that companies best serve their stakeholders and the wider economy when the financial lives of their employees are clear, understood and in control. Productivity increases, absenteeism decreases, retention improves and HR teams are less stressed. Equally important, employers gain a reputational advantage by clearly showing that they are investing in their people and committed to healthier workplaces.

Comprehensive financial wellness support is at the heart of Corporate America’s service packages now and in the future.

Greg Wilson is Head of Workplace Solutions at Goldman Sachs Ayco Personal Finance Management, an industry pioneer and preeminent leader in company-sponsored financial planning services.

Research on “Is Financial Wellbeing On Your Open Enrollment Plan?”

Better attraction and attachment: A record 10.9 million jobs were open at the end of July 2021, according to the Bureau of Labor Statistics. Harvard Business Review, September 15, 2021, “Who’s Driving the Great Resignation?”

Another record followed in August – 4.3 million US workers quit their jobs. CNBC, October 12, 2021, “A record 4.3 million workers quit their jobs in August, led by the food and retail industries.”

Wider acceptance by all types of employers: In the past year, a few months after the start of the pandemic, 42% of companies with more than 500 employees provided financial support for well-being, according to the Employee Benefits Research Institute (EBRI). Only 25% of companies with fewer than 50 employees offered a program. EBRI, December 3, 2020, “The Value of Financial Wellness Benefits in the Workplace for Employees”.

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