Charles Schwab Survey Finds Financial Wellness Programs Are Gaining Momentum With Employers

Business Wire

SAN FRANCISCO--(BUSINESS WIRE)-- A new survey from Charles Schwab reveals that financial wellness programs are quickly becoming a core part of employee benefit and compensation packages. Employers are increasingly finding that financial wellness programs can potentially drive better financial outcomes for employees, promote higher utilization of employer-sponsored savings and investment programs, and lead to productivity gains from a reduction of financial-related stress.

The State of Financial Wellness Programs

The nationwide survey of 302 corporate executives, which is summarized in a new white paper, finds that while financial wellness programs have not yet reached the level of penetration of other longstanding benefits offerings, 52 percent of respondents said that they have implemented or are considering implementing a financial wellness program. In addition, 44 percent believe that a financial wellness program is becoming a “must-have” benefit in order for them to be competitive.

“The path to financial wellness often starts at work, and it is encouraging to see so many companies moving towards making it a priority,” said Nathan Voris, managing director of business strategy for Schwab Retirement Plan Services, Inc. “Employers can play a huge part in helping their employees take ownership of their finances by encouraging them to take an active role, ask questions and ultimately take accountability for their financial future.”

Employees also see the value in participating in a formal wellness program. According to a 2016 401(k) Participant Survey^* by Schwab Retirement Plan Services, Inc., 85 percent of employees would use a financial wellness program if they had access to one.

Defining Wellness

Despite the growing adoption of financial wellness programs by employers, there remains a lack of consensus around a precise definition. Generally, respondents in the new survey defined financial wellness for employees as better financial outcomes and a reduction in financial stress as a result of employees taking ownership of their financial well-being.

According to survey results, a majority of employers believe that a high quality financial wellness program should:

Offer broad guidance on personal financial management principles, including goals-based planning, savings fundamentals, debt management and asset allocation;
Provide an online content portal for access to education and assessment tools;
Fully integrate with existing benefits and compensation packages; and,
Demonstrate a measurable impact on retirement plan usage and retirement readiness.

“The definition of financial wellness is very personal for each employee, and employers need to be mindful of that when implementing a new program,” said Nate Bidner, managing director of Schwab Workplace Financial Solutions. “While general education and tools are useful for a broad cross-section of employees, the real task is to get them engaged and motivated to utilize the resources available.”

Financial Wellness Program Design

A majority (59%) of employers said the best way to structure financial wellness programs is to integrate the offering with the rest of the employee benefits package. While 37 percent of employers expressed concern over the potential cost of implementing a financial wellness program, the truth is that many of the features typically overlap with those already used by employers.

Respondents cited “offering quality content” (35%) and “inspiring employees to take responsibility for their financial future” (25%) as the most important criteria in a successful program. Today’s 401(k) and equity compensation plans are already structured to arm participants with knowledge and encourage active engagement, and as such, these plans may be leveraged to build a financial wellness program without adding cost or significant resource demands.

When asked about how to measure success in a financial wellness program, 62 percent of employers surveyed see increased participation in retirement programs as the biggest measure of success.

“Implementing a financial wellness program doesn’t need to be disruptive to existing benefits and compensation programs. In fact, it should complement them,” Bidner added. “Current programs should be evaluated for their effectiveness in meeting the challenges, whether simple or complex, that employees face. Employers can then incorporate additional elements to help educate employees and enable them to make better use of company offerings.”

About the Employer Survey

The online survey of U.S. and Canadian corporate executives is based on 302 interviews and has a 5.6 percent margin of error at the 95 percent confidence rate. Respondents participated in the study between November 4 and December 16, 2016. The survey was conducted for The Charles Schwab Corporation by P&I Content Solutions Group. Statistical analysis was conducted by Signet Research Inc. The white paper detailing the results can be found here.

About Charles Schwab

At Schwab we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.

More information is available at www.aboutschwab.com. Follow us on Twitter, Facebook, YouTube and LinkedIn.

Disclosures:

* This online survey of U.S. 401(k) participants was conducted by Koski Research for Schwab Retirement Plan Services, Inc. Koski Research is neither affiliated with, nor employed by, Schwab Retirement Plan Services, Inc. The survey is based on 1,000 interviews and has a 3 percent margin of error at the 95 percent confidence level. Survey respondents worked for companies with at least 25 employees, were current contributors to their 401(k) plans and were 25-70 years old. Survey respondents were not asked to indicate whether they had 401(k) accounts with Schwab Retirement Plan Services, Inc. All data is self-reported by study participants and is not verified or validated. Respondents participated in the study between June 2 and June 8, 2016.

Through its operating subsidiaries, The Charles Schwab Corporation (NYSE: SCHW) provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; compliance and trade monitoring solutions; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Schwab Retirement Plan Services, Inc. is not a fiduciary to retirement plans or participants and only provides recordkeeping and related services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at www.schwab.com and www.aboutschwab.com.