Benefits June 24, 2019

Employee Perceptions of Financial Wellbeing Haven’t Improved

Despite that, employees value financial wellness programs and Alight Solutions makes suggestions for improving them.

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More employers are focused on improving employees’ financial wellbeing, yet how employees feel about their financial situations doesn’t appear to be getting substantially better, finds the Alight Solutions’ Health and Financial Wellbeing Mindset Study 2019, with responses from 2,501 U.S. employees.

Alight speculates this could be due to the increased spotlight financial wellbeing programs bring to their personal financial situation and hardships. However, the study also found employees don’t always seem to know what tools are available to them. More than one-third struggle with knowing where to go for wellbeing information—and younger employees are even less likely to know where to go. Among employees who have access to specific action-oriented wellbeing tools, awareness varies.

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In 2019, fewer (75%) employees reported that financial wellbeing is important in their personal life today than in 2018 (79%). Yet, for financial wellbeing, only 34% reported a positive state in 2019.

One in five report they struggle to cover their monthly expenses, one-quarter say their levels of debt are ruining their quality of life—a seven percentage point increase over three years—and 42% are saving nothing for health care expenses not covered by insurance.

In addition, eight in 10 have some debt outside of mortgage (compared to three-quarters in 2017), with more than one-quarter having a student loan. Eighty-five percent of respondents say student loans somewhat or significantly impact their ability to save.

Feelings about retirement

An increasing number of employees are afraid of running out of money during retirement (up 10 points in two years), and believe they won’t be able to retire at their desired retirement age (up seven points in two years), according to the study. Yet, Alight found more employees indicate they are taking the right steps to address these fears.

Fifty-eight percent said they have estimated how much money they will need to live on when they retire, and 55% reported they have compared how much they will need in retirement and how much they are likely to have. Forty-five percent said they have created a financial action plan that details what they need to do in order to retire by their goal, and 40% reported they have projected how to withdraw from savings in retirement.

However, employees are struggling with investing. More than one-third (34%) agreed or strongly agreed they feel overwhelmed by the number of different ways they can invest their money, and 28% agreed or strongly agreed they don’t feel comfortable approaching financial advisers or investment companies for help. These are up from 29% and 26%, respectively, in 2017.

Employees value wellbeing programs

Despite not feeling better about their financial wellbeing, employees still value wellbeing programs, saying they are a good business investment and one of the reasons they stay with their employer, the study finds. Three-quarters said they are effective in helping them create a better financial future.

Across the five wellbeing dimensions in the study and all respondents, financial-related communications, tools and programs are ranked as the most valuable resources an employer can provide (i.e., a financial wellbeing site, retirement savings plan decision tools and one-on-one financial help). Employees, particularly younger ones, find websites, seminars and newsletters related to wellbeing valuable. All employees are, however, more likely to find value in tools that serve a specific purpose or action, compared to the general wellbeing knowledge imparted by websites and seminars.

However, the comfort level of providing employers with financial information has declined since 2015 (a consistent result across the generations). Alight speculates this could be due to data security and privacy concerns. Still, nearly three in five employees said they would be comfortable sharing personal financial information with their employer (or appropriate third party contracted by their employer) to allow them to provide personalized financial guidance or planning.

Actions to improve wellbeing programs

Among the actions Alight suggests in the study report for improving wellbeing programs is to avoid drowning employees in information. “Awareness of resources is important, but avoid overloading employees with a blitz of wellbeing communication once or twice per year. Take a 365-days-a-year communication approach and promote the resources your employees find most valuable and relevant,” Alight says.

Questions to ask include:

  • Are you considering the employee experience in your communication plan?
  • Have you audited or solicited feedback/research on your communication approach to determine the best way to keep communication simple and relevant?

Alight also suggests personalizing communications. ”As part of the information exchange with employees, generate targeted and results-driven communication. Send personalized messages to boost understanding of their options, the benefits of each option, and the resources and tools to which they have access.”

Questions to ask include:

  • What results do you want your communication to drive?
  • Is your communication personal enough to “speak” to your employees?
Employers should also look at the employee experience of making decisions. “When asking employees to make a decision or take a particular action, consider every step of the process through the eyes of your employees. Does each step make sense and are you providing appropriate guidance along the way? Are there simple tools available to support better decision making?”
Benefits June 24, 2019

Financial Wellness Programs Need to Become Personalized

Financial stress is on the rise in all generations, indicating that financial wellness programs are missing the mark, according to PwC. A new survey report from the firm suggests many employers have simply relabeled existing resources as "financial wellness programs."

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With a solid economy and the jobless rate at a 49-year low, one would expect that financial stress among workers would be on a steady decline. However, according to “PwC’s 8th Annual Employee Financial Wellness Survey,” workers’ financial stress is on the rise due to cash flow and debt challenges, supporting adult children and helping parents. Many workers say they are struggling to keep up with their bills and would not be able to cover an unexpected significant expense.

“As a result, we believe that employee anxiety will continue to mount without a greater emphasis on increasing savings and improving longer-term financial well-being,” the report says. “Stressed employees are nearly three times as likely to say they expect to spend the majority of their time ‘working in retirement’ because they’ll need to financially. We foresee critical issues for organizations if the root causes of this financial stress are not addressed.”

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PwC says that while 80% of employers report having a financial wellness program, some of these programs are still primarily focused on retirement savings and fail to address the wide variety of financial issues that workers are grappling with every day. As well, they do not offer workers an opportunity to sit down one-on-one with a financial adviser.

“Employees crave the element of human interaction,” PwC says. “Successful financial wellness programs find the optimal way to shape the relationship between technology and human interaction, delivering the motivation employees need to achieve their goals.”

As Kent Allison, a partner with PwC, tells PLANSPONSOR, the vast majority of employers may believe they offer an effective financial wellness program, but only 24% of workers say their company offers such a program. The reason for this disconnect is because many companies have simply renamed their retirement planning education as financial wellness, and in other cases, employees don’t know that a financial wellness benefit is being offered, Allison says.

Companies need to step back to ensure they are offering holistic financial wellness programs that address the myriad of issues facing employees, including saving for education, paying down debt, insurance, etc., Allison says. Then they have to ensure that they are delivering this information on an engaging digital platform that explains to workers which benefits suit their needs, he says.

PwC’s survey asked 1,686 full-time employees what financial wellness means to them. Thirty-four percent said not being stressed about their finances, 18% said being debt-free, 16% said having money to cover unexpected expenses, 16% said the financial freedom to make choices to enjoy life, and 12% said being able to meet day-to-day expenses—but only 4% said being able to retire when they want to. Clearly, retirement is not top of mind.

By generation, the top financial concern for Millennials (62%) and Gen Xers (55%) is not having enough money to cover unexpected expenses. For 52% of Baby Boomers, it is not being able to retire when they want to.

Asked what could help them achieve their financial goals, for both Millennials (31%) and Gen Xers (25%), it is better job security. Boomers say it is both lower health care costs (27%) and a rising stock market (24%). All generations think they are doing worse financially compared to prior generations, with this being the case among 62% of Millennials, 46% of Gen Xers and 40% of Boomers.

Less than half of each generation says their compensation is keeping up with the cost of their living expenses, with this being true for only 26% of Millennials, 36% of Gen Xers and 42% of Boomers.

Younger workers are more likely to say their loyalty to their company is influenced by how much the company cares about their financial well-being, with this being the case for 46% of Millennials and 44% of Gen Xers, but only 40% of Boomers.

What Workers Are Looking For

Asked what benefit they would like to see added in the future, 27% say financial wellness programs with access to unbiased counselors, 26% say a student loan repayment benefit, 17% say help understanding and using their benefits, 16% say identity theft and credit protection and 8% say mobile access to benefits.

By generation, both Gen Xers (30%) and Boomers (28%) want a financial wellness program the most, while the priority for Millennials (37%) is a student loan repayment benefit.

The percentage of employees who have used services from their employers to help with their personal finances has been steadily rising since 2012, from 51%, to 71% in 2019.

However, workers don’t tend to use these services on an ongoing basis. Rather, it is when they have to make a financial decision (35%) or face a financial crisis (26%). Fifty-seven percent want these services to enable them to make their own decisions, but to include a counselor to validate those decisions.

Nineteen percent of workers are providing financial support for their parents or in-laws, and 42% of parents with children age 21 or older are financially supporting them.

The percentage of employees who find it difficult to meet their household expenses on time each month spiked form 37% in 2018 to 49% in 2019. Conversely, the percentage of employees who would be able to meet their basic expenses if they were out of work for an extended period of time fell from 47% to 31% in that time.

Fifty-two percent of Millennials, 43% of Gen Xers and 31% of Boomers have less than $1,000 saved to deal with an unexpected expense, and the percentage of employees who consistently carry balances on their credit cards rose from 49% in 2019 to 59% this year. Among this group, 37% find it hard to meet their minimum payment each month.

Twenty-nine percent of employees use their credit cards for monthly expenses because they cannot afford them otherwise.

Given all of these factors, it should not come as a surprise that the percentage of people who find it stressful dealing with their finances soared from 47% in 2018 to 67% in 2019. Thirty-five percent say their finances are distracting them at work.

For thirty-two percent, financial worries are impacting their health, and the same percentage says it is impacting their relationships at home. Twenty-one percent say it is impacting their productivity at work, and 10%, their attendance at work.

Sixty-eight percent of stressed workers have less than $50,000 saved for retirement, and 56% expect they will dip into their retirement savings before leaving the workforce.

Asked about their biggest retirement concerns, 51% say running out of money, 28% say health care costs, 25% say not being able to maintain their standard of living, 25% say not being able to meet monthly expenses, and 24% say health issues.

Forty percent plan to postpone their retirement, 50% plan to work part-time in retirement, and 32% plan to work full-time.

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