As the future of work continues to take shape in the new normal, so does the future of employee benefits.
And so far, it’s clear that the flashy perks with which companies once hoped to win loyalty and gain a competitive edge are no longer key factors for how employees measure their job satisfaction or how candidates weigh a potential employer.
Instead, a recent survey found that two-thirds of professionals view wellbeing as a make-or-break consideration when evaluating a prospective employer and that the majority of employees say the area of wellbeing with which they struggle most is their financial health.
While many employers are taking action to align their benefits with these emerging priorities, and nine out of ten executives genuinely believe employees are satisfied with their benefits, the majority of employers still fall short. In reality, less than a quarter of employees participate in their workplace’s wellness program, and a mere 12% believe these programs actually improve their wellbeing.
So how can employers close this gap?
By removing barriers to adoption, starting with the most common blocker—the burden of student loan debt—that holds employees back from participating in the most popularly offered financial wellness benefit—retirement savings plans.
And by evolving their services to support employers through this inflection point, retirement advisors stand to unlock the most lucrative opportunity the industry has ever seen. Here’s why:
The market is huge—and about to get bigger
Two-thirds of college-educated Americans have student debt, and eight in ten borrowers say it hinders their ability to adequately save for retirement—and as the pandemic continues to disrupt Americans’ financial habits, healthy saving habits are likely to move even further out of reach.
The first test of this theory is rapidly approaching. Federal student loan payment suspension is set to end on May 1, 2022, at which point 41 million borrowers will be forced to start repaying their debt—for which the average monthly bill tops $400—for the first time since it was frozen under the CARES Act in March 2020.
Without intervention, the return to repayment will be one of the most financially devastating events many borrowers ever face: nearly 90 percent have said they aren’t ready to resume monthly payments, and two-thirds have been using the extra cash to cover essential expenses.
This profound shift will prompt unprecedented demand for workplace student loan solutions—and advisors who are prepared to respond will stand out from the crowd.
The ‘Great Resignation’ will leave a lasting mark
The dramatic twists and turns of the Great Resignation will eventually subside. But the lessons employers learn from this record-setting turnover will continue to reshape the American nine-to-five for decades to come.
“Student debt benefits are the most effective strategy to unblock retirement savings at scale.”
Most notably is the lesson demonstrated by current retirement plan participation rates: simply offering a benefit isn’t enough. In order for a benefit to drive crucial business objectives forward—especially retention—employers must empower workers to actually benefit from it.
With recent surveys finding that 86 percent of employees would commit to a company that offered student loan repayment assistance for five or more years, student debt benefits — and the trusted advisors through which they’re provided — will continue to be a precursory, inextricable pillar of both wellness and retention strategy in the financially inclusive workplace.
It’s not just about retirement
To be sure, student debt benefits are the most effective strategy to unblock retirement savings at scale. But supporting employees with student debt isn’t just about retirement.
Student debt benefits kick off a chain reaction of positive economic and emotional impacts that translate to recouped operating costs and improved efficiency for employers. After all, one in three employees cite their finances as a major source of distraction at work—which costs employers $500 billion in time spent worrying on the clock each year—and seven in ten employees say student loan support would improve their job performance.
At the advisor level, student debt benefits are a path to both acquisition and expansion. By providing a solution that makes financial wellness more achievable by more end users, advisors stand to unlock engagement with new employee cohorts and redirect available cash and spending to wealth accumulation vehicles and additional voluntary benefits—such as supplemental insurance and lifestyle perks—that would have otherwise been out of reach.
There’s never been a better time for employers to contribute
In 2020, the CARES Act opened the door for employers to make up to $5,250 in tax-incentivized contributions towards an employee’s student loan debt each year—and more major legislative changes are on the horizon.
When passed, the Secure Act 2.0 will allow employers to match the amount an employee contributes to their student debt payoff as a tax-advantaged contribution to the employee’s 401(k) plan, 403(b) plan, or SIMPLE IRA.
But while there’s never been a better time to contribute to employees’ student debt repayment, it’s not the only way employers can support the millions of borrowers and co-signers who carry the weight of student loans.
That’s where my team and I come in: FutureFuel.io’s highly configurable platform allows advisors to curate white-labeled student debt benefit solutions—which can include both tax-qualified, employer-sponsored contributions and low-cost, personalized services for student debt repayment optimization, refinancing, and micro-payments—that can be adjusted to meet the needs of any client and any budget.
We’ve already helped borrowers save $70M and 3,463 years in payoff time, and by partnering with advisors, we’re leading the way to what’s new and what’s next in holistic retirement planning.
Eric Brickman is Chief Operating Officer at FutureFuel.io.