A tale of two economies is the overarching theme of a new report released today by Financial Finesse, where macroeconomic conditions are helping stable employees with assets to pull ahead while persistent inflation and higher interest rates have left Americans who are struggling more financially vulnerable than ever.
The report, Workplace Financial Wellness in America, is an annual snapshot of the American workforce through the lens of financial wellness, analyzing employee financial stress and resilience levels. It found inflation and higher interest rates continue to have a tremendous impact on financial resilience and retirement preparedness.
One key finding is that at-risk employees are falling farther behind: The percentage of employees in financial crisis increased by an alarming 24% compared to the previous year’s study. Financial stress is also increasing, with the percentage of employees reporting unmanageable levels of financial stress rising by 16%.
On the other hand, financially stable employees with assets are pulling further ahead. The report found the percentage of financially secure employees increased by 69%.
“The story we’re seeing emerge from this past year is a tale of two economies,” said Liz Davidson, founder and CEO of El Segundo, Calif.-based Financial Finesse. “While there are encouraging signs with gains in the stock market and more people reporting financial stability, these positive trends come from people with existing assets. Persistent inflation and higher interest rates have left Americans who are struggling more financially vulnerable than ever.”
The flagship study from the Financial Finesse Financial Wellness Think Tank analyzes employee financial stress and resilience levels, reporting on how workers feel about their finances, what’s contributing to the financial wellness gap, and the role of holistic financial wellness programs in addressing these issues.
This study comes along with the release of Combating Employee Financial Stress, a companion report featuring proven tactics employers can use to increase the efficacy of financial wellness benefits.
The report also analyzed the effectiveness of financial coaching, finding that more than half of workers (52%) who initially reported “high” or “overwhelming” financial stress subsequently reported “some” or “no” financial stress after working with a financial coach. Additionally, after working with a financial coach, there was a 53% increase in those who were in the stable planning/optimizing stages of the financial wellness journey, having progressed from the uncertain and significantly more stressful struggling/crisis stages.
“Americans have been living under extreme levels of financial stress for far too long without guidance on how to navigate these challenging economic times,” said Greg Ward, CFP, Director of the Financial Wellness Think Tank, and one of the report’s authors. “The good news is that more employers are implementing financial coaching programs to address this issue. Not only is this good for their employees, but it’s also good business.”
Leveraging a proprietary predictive ROI model developed by the Think Tank and featured in an essay awarded first place by the Society of Actuaries, the report details how employers who implement financial coaching can save an estimated $587,125 per 1,000 employees. These savings come from reduced stress-related healthcare claims, lower turnover, and less unplanned absenteeism.
Download the full Workplace Financial Wellness in America report HERE and the Combating Employee Financial Stress companion report HERE.
SEE ALSO:
• Just 1 in 4 401(k) Participants Expect to Maintain Standard of Living in Retirement
• How AI is Changing the Game with Financial Finesse’s Liz Davidson
• Financial Wellness Month: Younger Americans More Likely to Feel ‘Economically Empowered’
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.