Advisors devote their lives to safeguarding the financial wellness of their clients, but what about that of their employees?
A recent survey reveals that employers play a key role in ensuring their employees’ financial wellness—beyond just paying their salaries. Further, those employers that take a deeper interest in employees’ financial wellness reap benefits of their own in the form of increased retention and productivity.
Bank of America's 12th annual Workplace Benefits Report, “Navigating a New Era of Financial Wellness,” surveys employees and employers nationwide to gather new data around workplace benefits, their impact on employee satisfaction and retention, and the role they can play in fostering positive workplace environments.
The issue underlying the entire exercise is that employees nationwide are feeling the financial strain and crave workplace programs to alleviate some of the burden. Eighty percent of employee respondents are concerned about inflation, and 71% feel the cost of living is outpacing growth in their salary or wages. Looking for any port in the storm, workers are seeking support from the workplace: 82% say employers should play a role in supporting their financial wellness.
Employers, to their credit, are almost universally aware of their workers’ plight and their responsibility to help out. Ninety-seven percent of employer respondents recognize that they’re in some way responsible for their employees’ financial wellness, up over 50% from 2013 (41%). Sixty-two percent feel extreme responsibility for the same, as opposed to 13% in 2013. Employees’ financial stress has hit employers in the wallet, as nearly half of employers (46%) noticed an increase in resignations over the past year, as employees feel more financially stressed. The top reasons they received for this increase in attrition are: compensation, burnout and work-life balance.
This new(ish) concern for employee finances need not necessarily leap simply from the goodness of employers’ hearts. Wellness programs result in tangible benefits for employers and employees. Eighty percent of employers agree that offering financial wellness support can result in more satisfied, loyal, engaged and productive employees. Ninety-one percent see higher employee satisfaction when they offer resources to manage overall well-being. Further, 84% of employers say offering financial wellness tools can help increase employee retention.
As for specific benefits, equity grants are powerful recruitment and retention incentives. Seventy-six percent of employers believe equity compensation is a differentiator for recruitment, and 44% of employees who participate in equity compensation plans say it was an important reason for accepting the job. Diversity is another key driver, with 74% of employers responding they believe diversity and inclusion programs are important for retaining talent, although only 50% of respondents actually currently offer such programs.
Health care education also is an opportunity. Eighty-four percent of employers feel very responsible for their employees’ understanding of retirement health care needs and costs. Health care savings accounts represent a key inflection point, as while 89% of employers who offer HSAs contribute to their employees’ savings, only 54% of employers communicate about these topics at least once a year. Education surrounding such benefits is crucial, as merely 17% of employees without an HSA are saving for future health care expenses. Even employees with HSAs saw contributions decrease nearly 20% between February and June of 2022.
Ultimately, these employee financial concerns dovetail into a single constant issue—retirement. Seventy-one percent of employees are concerned that cost of living is outpacing their salary growth. As such, only 61% are contributing enough to their retirement accounts to maximize their employer match, even though 74% recognize that investing in their 401(k) and other accounts will help them build a retirement nest egg. Further, an anemic 38% of employees say they understand their projected Social Security benefits, yet fewer than 40% of employers offer any form of Social Security–related support. Overall, only 56% of employees are confident they will reach their retirement goals, down 69% from the start of the year.