Cash Incentives Boost Financial Wellness Program Performance

Bank of America Merrill Lynch published its 2018 Workplace Benefits Report, presenting a wide-ranging overview of the financial wellness of workers in the United States.  

According to the report, both employees and employers agree that financial wellness programs are effective at reducing financial stress. In fact, fully 91% of employees who participate in a workplace financial wellness program say these resources have been effective at helping them to reduce debt, increase savings or otherwise improve their financial outlook in at least one material way. This compares with the 95% of employers who offer such programs agreeing that their financial wellness program has been effective in reaching its own work force goals.

Among the benefits of financial wellness programs cited by employers are greater employee satisfaction, lower employee turnover, improvements in productivity and even lower health care costs for the company. Thus, employers voice frustration that employee participation in voluntary financial wellness programs remains fairly low. According to the survey, while 48% of workers currently are offered a financial wellness program, just 31% of employees participate in these programs.

“The No. 1 way to increase participation, according to employers and employees, is to offer cash incentives or discounts to participants,” the report states. “Availability and the use of workplace financial wellness programs are not yet universal. Employers have significant room for improvement in increasing employee participation.”

Stepping back to define what financial wellness looks like, Bank of America Merrill Lynch says it sees financial wellness “as managing current finances while preparing for the future.”

“It is not about being wealthy, but being able to address short- and long-term financial goals,” the report suggests. “Those who feel like they are not doing financially well often bring financial stress to work, can be distracted on the job and have even reported negative health effects.”

The report shows employees cite a number of reasons for not taking charge of their financial wellness on their own. Many say they need help identifying appropriate goals, while others say they are already doing the best they can. Others say that thinking about finances is uncomfortable, or that they don’t know how to start, where to start or how to set priorities.

As employers might expect, the report shows employees who do not feel financially well are most concerned about shorter-term financial goals, whereas employees who do feel financially well are most concerned about long-term goals.

“Employee needs are not all the same,” the report warns. “The onus is on employers to make sure their financial wellness programs are designed to address a wide range of employee needs — not just planning for retirement.”