Employers like and want financial wellness programs as part of their core benefit packages, and their importance are finally (finally!) getting through to employees, according to a new survey from Charles Schwab.
The nationwide survey of 302 corporate executives finds that while financial wellness programs have not yet reached the level of penetration of other longstanding benefits offerings, 52 percent of respondents said that they have implemented or are considering implementing a financial wellness program.
In addition, 44 percent believe that a financial wellness program is becoming a “must-have” benefit in order for them to remain competitive.
“The path to financial wellness often starts at work, and it is encouraging to see so many companies moving towards making it a priority,” Nathan Voris, managing director of business strategy for Schwab Retirement Plan Services, said in a statement. “Employers can play a huge part in helping their employees take ownership of their finances by encouraging them to take an active role, ask questions and ultimately take accountability for their financial future.”
Employees also see the value in participating in a formal wellness program. According to a 2016 401(k) Participant Survey by Schwab Retirement Plan Services, Inc., 85 percent of employees would use a financial wellness program if they had access to one.
Despite the growing adoption of financial wellness programs by employers, there remains a lack of consensus around a precise definition, according to the company.
Generally, respondents in the new survey defined financial wellness for employees as better financial outcomes and a reduction in financial stress as a result of employees taking ownership of their financial well-being.
According to survey results, a majority of employers believe that a high quality financial wellness program should:
- Offer broad guidance on personal financial management principles, including goals-based planning, savings fundamentals, debt management and asset allocation;
- Provide an online content portal for access to education and assessment tools;
- Fully integrate with existing benefits and compensation packages; and,
- Demonstrate a measurable impact on retirement plan usage and retirement readiness.
“The definition is very personal for each employee, and employers need to be mindful of that when implementing a new program,” added Nate Bidner, managing director of Schwab Workplace Financial Solutions. “While general education and tools are useful for a broad cross-section of employees, the real task is to get them engaged and motivated to utilize the resources available.”
Financial Wellness Program Design
A majority (59 percent) of employers said the best way to structure financial wellness programs is to integrate the offering with the rest of the employee benefits package.
While 37 percent of employers expressed concern over the potential cost of implementing a financial wellness program, the truth is that many of the features typically overlap with those already used by employers.
Respondents cited “offering quality content” (35 percent) and “inspiring employees to take responsibility for their financial future” (25 percent) as the most important criteria in a successful program.
“Today’s 401(k) and equity compensation plans are already structured to arm participants with knowledge and encourage active engagement, and as such, these plans may be leveraged to build a financial wellness program without adding cost or significant resource demands,” the company reports.
When asked about how to measure success in a financial wellness program, 62 percent of employers surveyed see increased participation in retirement programs as the biggest measure of success.
“Implementing a financial wellness program doesn’t need to be disruptive to existing benefits and compensation programs. In fact, it should complement them,” Bidner added. “Current programs should be evaluated for their effectiveness in meeting the challenges, whether simple or complex, that employees face. Employers can then incorporate additional elements to help educate employees and enable them to make better use of company offerings.”