Employers are now pointing to high costs of living as the top reason for offering financial wellness initiatives, surpassing retirement preparedness for the first time ever, finds the sixth annual Financial Wellbeing Employer Survey from the Employee Benefit Research Institute (EBRI).
The report, which surveyed 250 benefit decisionmakers, included healthcare costs, budgeting, and daily living expenses in the top five motives, with other primary drivers including productivity and employee satisfaction at work, found EBRI inn the report.
“The survey shows that financial wellbeing programs are being used to increase worker satisfaction and retention. However, employers cited costs to employees, as well as to the company itself, as challenges in offering financial wellbeing programs,” explained Craig Copeland, director of Wealth Benefits Research at EBRI. “Perhaps as a result, employers frequently cited measuring their financial wellness offerings’ impact on employee productivity and worker satisfaction.”
At the same time, most benefits decision makers reported being optimistic that their company’s budget for these benefits will increase in the short term so that they anticipate continued development of these programs, added Copeland.
Other key findings as reported by EBRI include:
• Measuring Success — The top factors in measuring financial wellness initiatives’ success were increased employee productivity and improved overall worker satisfaction. The next two most cited factors were improved use of existing employee benefits and improved employee retention. This is a change from 2022, when the satisfaction/retention measures were cited most often. Reflecting that, while having an attractive workplace is still an important reason for offering financial wellness benefits, business factors are also an integral part of the measurement rubric.
• Cost-Benefit Analysis — Eighty-seven percent of the companies reported having explicitly developed a cost-benefit analysis based on employee satisfaction, employee attraction/retention, employee productivity or medical/mental health claims to evaluate their financial wellness offerings. Cost-benefit analysis by employee satisfaction was the leading factor, with employee productivity next. Employee attraction/retention was just below productivity, showing that employers are still looking at satisfaction measures but are also looking at these programs’ direct benefits to their company relative to the costs of them.
• Impact on Mental Health — Eighty-five percent of the companies indicated that financial wellbeing initiatives had either a large impact or a small impact on employees’ mental, emotional and social wellbeing. Forty-eight percent of the companies indicated it offered mental health benefits or coverage. The benefit was most likely to be provided as a part of major medical/health insurance, but it was also provided as a separate service or through both means. Of those who provided a separate service, the overwhelming majority used an employee assistance program. In addition, four in 10 offered financial therapists and the Calm app.
• Caregiving Benefits — The caregiving benefits most often offered had to do with leave policies as opposed to benefits in the direct provision of caregiving. Six in ten employers allowed for flexible work arrangements (e.g., teleworking or compressing the work week), which was the most offered caregiving benefit. Roughly four in 10 employers offered long-term leave policies and paid family caregiver leave policies. Approximately one-quarter of employers indicated it plans to offer each of the listed caregiving benefits in the next one to two years.
• Addressing Diversity — When asked if their company was taking specific actions to address diversity, equity and inclusion in their financial wellbeing initiatives through actions targeted for different genders, races/ethnicities, and ages, companies were more likely to offer different types of solutions for the different characteristics and to ensure that financial counselors and coaches were diverse than they were to tailor messages specifically for the diverse groups.
• Specific Steps Taken to Understand Diverse Needs — To understand specifically what companies are doing to understand the different needs of diverse workers, numerous possible steps were explored. Surveying employees was the most common step taken to understand diverse workers’ needs. Implementing an industry or government financial wellbeing score or metric or creating a financial wellbeing score or metric were the steps least likely to be undertaken.
“The continued evolution of financial wellness programs is a crucial question going into 2024, particularly with student loan payments restarting this month for many employees,” said Jake Spiegel, research associate, Health and Wealth Benefits Research at EBRI. “As these programs grow in value to employees and are used for attraction and retention, the expectation that these programs to be provided will only increase.”
SEE ALSO:
- Workers and Retirees Report First Dip in Retirement Confidence Since 2008 Recession: EBRI
- Nearly Half of Private Workers Participate in DC Plans: EBRI
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
