Financial wellness program evolution, challenges discussed

During EBRI’s recent 2022 Financial Wellbeing Symposium, several industry executives explained how employers are adapting financial wellness programs to their employees’ evolving needs, and the challenges they are facing as they offer these programs.

Craig Copeland, director of wealth research at EBRI, discussed findings from EBRI’s 2022 Financial Wellness Employer Survey, information for which was collected from a 15-minute, online survey of 250 full-time benefits decision-makers working at firms with at least 500 employees. The survey was conducted in June and July of this year.

Copeland said that more than half of participating firms offer financial-wellness initiatives, and nearly eight out of 10 of the firms that offer these initiatives are providing a broader range of benefits.

Benefit focus

Investments and retirement planning, basic financing, and education or consulting programs were benefits respondents cited most often as areas of focus for financial-wellness initiatives. These were followed by improving physical health, improving mental health, and discounts, bonuses and incentive programs. Few employers are currently offering debt or child/elder caregiving benefits.

The cost of offering these and other financial-wellness programs has been increasing since 2018, Copeland added. Over half of survey respondents said that the annual cost of offering them is now more than $50 per employee. And three out of four employers believe that their budget for financial-wellness programs will increase in the next one to two years, while another quarter said that their budgets will not change.

In addition, four out of 10 of the firms that are offering financial-wellness benefits reported that over half of their employees are using them, and four out of 10 are seeing more employees than expected using them, Copeland said.

Measuring initiatives’ success

Copeland also shared some of the factors used to measure the success of financial-wellness programs. These include:

• Improved overall worker satisfaction
• Improved worker retention
• Increased worker productivity
• Reduced employee financial stress
• Improved use of existing employee benefits
• Improved employee recruitment

The areas most commonly tracked by employers to evaluate the effectiveness of their financial-wellness offerings include:

• Employee satisfaction, retention, and productivity
• Employee absences and tardiness
• Medical claims and costs
• Employee stress levels

Challenges encountered

Employers reported that they are encountering several challenges as they provide these benefits to their employees, Copeland said. Their top challenges include:

• Cost of the programs to employers as well as to employees
• The complexity involved in choosing programs
• Lack of interest among employees
• Data and privacy concerns
• Legal and/or regulatory hurdles
• Buy-in from upper management

New era of financial wellness

Another panelist, Lisa Margeson, managing director, external affairs, retirement research and insights, Bank of America, shared highlights of two Bank of America surveys, one fielded in February 2022, and the other in July 2022. With the change in economic conditions, Bank of America decided to re-field the survey in July 2022.

The July 2022 report explored the impact of the current economic and inflationary environment on employees’ financial wellness and revealed that many employees are extremely stressed about the current economic conditions.
Eighty percent are concerned about inflation across all demographic groups – age, gender, race and income – and 71% feel the cost of living is outpacing the growth in their salaries or wages.

The current economic conditions are also having an impact on the state of employees’ financial wellness. Forty-eight percent worry that with the current rate of inflation, they will not be able to make ends meet.

Seventy-four percent said that investing in their 401(k) plans and other accounts will help them build a retirement nest egg, 61% are contributing enough to maximize their (401)k plan match, and 56% are confident that they will reach their retirement goals. This is down from 69% in February 2022.

The survey also identified what employees want. Among other things, they want a clear explanation of their plan options, one-on-one consultations, personalized advice, and regular updates on plan changes.

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected]. 

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Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected].