Plan sponsors are taking more responsibility for the financial wellness of 401k participants according to new research released today from Bank of America.
Findings from its 11th annual Workplace Benefits Report revealed an overwhelming 95% of employers feel a sense of responsibility for the financial wellness of their employees, up significantly from 81% in 2015, and more than half (56%) said they feel “extremely responsible.”
The report also found that over the last year, more employers are offering financial wellness programs (46%, up from 40% in 2020) and expanding several types of financial wellness support. More than two-in-five employers now offer access to financial advisors (47%), support for developing good financial habits (45%), and access to financial products or services (42%), up from 40%, 39% and 33% in 2020, respectively.
Employee feelings of financial wellness are rebounding as well. As employers continue their efforts to improve wellness initiatives, half (51%) of employees surveyed rate their financial wellness as good or excellent, up from 49% in 2020, and making progress toward pre-pandemic levels in 20193 (55%).
“The role of workplace benefits and wellness programs in improving employees’ quality of life is more important than ever, and it’s encouraging to see higher reported well-being among employees amid the pandemic,” said Lorna Sabbia, Head of Retirement and Personal Wealth Solutions for Bank of America. “While we should celebrate the increasing prevalence and expansion of these programs, more can still be done to empower and support employees’ throughout their often complex financial journeys.”
DEI efforts expanding
The survey also found that, as the workforce becomes increasingly diverse, employers are taking a more holistic approach to programs that address their employees overall wellness.
In fact, 72% of employers offer diversity, equity and inclusion programs or plan to in the next one-to-two years, and 55% are taking steps to support an intergenerational workforce. And the approach is paying off, with 57% of employers saying that providing resources to help employees manage their overall well-being has driven increased productivity.
According to the report, younger generations entering the workforce are more ethnically diverse—and both age and ethnicity play a critical role in employees’ sense of financial stress and wellness:
- Employees across various ethnicities reported fairly consistent levels of overall financial well-being, however 40% of Black/African American, 38% of Hispanic/Latino, 26% of Asian and 22% of Caucasian employees say financial stress negatively impacts their productivity at work.
- Younger employee populations have more gender and ethnic diversity. Women make up 69% of Gen Z and Millennial (ages 18-44) employee groups vs. 51% of Baby Boomer and Silent Generation employee groups (ages 55+). Younger employee populations are significantly more ethnically diverse as well.
“As the age, gender and ethnicity of workforces becomes more diverse, the variations of support needed by employees will continue to expand,” said Kevin Crain, Head of Workplace Solutions Integration at Bank of America. “We believe a more diverse workforce will look to employers to provide tailored solutions for help in achieving their goals.
Women lag men in financial wellness
Women continue to trail their male counterparts in their feelings about financial wellness and preparedness. Just 47% of women rate their financial wellness as good or excellent, compared to more than half of men (57%). Additional differences between men and women include:
- 92% of women feel some level of stress about their financial situation, compared to 88% of men. Women are also twice as likely to be kept up at night by financial stress (11% vs. 5%).
- Women are more likely than men to have credit card debt (53% vs. 43%) and to have student loans (25% vs. 17%). They’re also more likely to be adversely affected by this debt. Fifty-nine percent don’t have control over their debt (compared to 50% of men); and 32% say debt impacts their ability to achieve their goals, compared to 23% of men.
- Saving for retirement is the top financial priority for men and women alike, however a smaller percentage of women are prioritizing saving (34% vs. 46% of men).
More key findings
The Workplace Benefits Report examines trends related to workplace financial benefits and wellness programs. Escalent surveyed a national sample of 1,363 employees who are working full-time and participate in 401k plans, and 834 employers who offer both a 401k plan and have sole or shared responsibility for decisions made in the plan. Additional key findings from the survey include:
- Younger generations are lagging their older counterparts when it comes to financial wellness. Less than half of Gen Z/Millennials (48%) and Gen X (48%) rank themselves as financially well, compared to 58% of Baby Boomers/Silent Generation. Gen Z/ Millennials (93%) and Gen X (94%) were also more likely to say they feel stress when thinking about their financial situation, when compared with Baby Boomers/Silent Generation (84%).
- Workplace benefits programs must go beyond financial topics. Employees say their mental (60%), physical (54%) and financial (46%) health significantly impacts their overall well-being, yet only one-third of employers communicate about mental and physical health more than twice a year.
- Healthcare is an area for improvement. Only 35% of employers offer a high-deductible health plan which would give employees access to a Health Savings Account (HSA). Among eligible employees, the use of HSAs is significant, with 68% of Gen Z and Millennial employee groups contributing to their HSA, 84% of Gen Xers (ages 45-54), and 74% of Baby Boomer and Silent Generation employee groups.
- Debt remains a challenge. 88% of Black/African American employees, 87% of Hispanic/Latino employees, 81% of White/Caucasian and 60% of Asian employees currently hold some type of debt. Employers are responding to this challenge, as 53% now offer help with debt as a part of their financial wellness program, up from 15% in 2013.
- Employees crave professional advice and guidance. Employees listed access to a financial advisor, information on retirement plans and help developing financial skills and good financial habits as the top three areas where they desire greater support from employers.
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