A Case for Employer-Sponsored Financial Wellness Programs

Image - ForestPathGreen - unsplash.jpgFinancial Finesse recently released its 2016 ROI Special Report. The report served as a case study that evaluated workplace financial wellness programs among Fortune 100 companies between 2009 to 2014. The study concluded that employees who experience financial stress have a more difficult time achieving and maintaining financial stability. A lack of financial stability among employees may also have an adverse effect on employers as it relates to absenteeism, wage garnishment, payroll taxes, delayed retirement, and ultimately the company’s bottom line. However, as employee financial situations improve, the costs to employers in these areas diminish.

To obtain the data used in the report, Financial Finesse compiled tracking questions through the utilization of an online financial wellness assessment. Employees were then classified into one of five categories using a wellness score that is based on a 0-10 scale.

The five categories are:

  • Suffering..........(0-2)
  • Struggling.......(3-4)
  • Stabilizing.......(5-6)
  • Sustaining......(7-8)
  • Secure............(9-10)

Employees who are suffering are often behind on bills, overwhelmed with debt, and struggle to manage cash flow effectively. Struggling employees typically lack emergency savings and are uncomfortable with their debt positions. Those that are in the stabilizing category have a handle on their cash flow, but are not on track to achieve long-term goals such as college or retirement savings. Sustaining employees are on pace to reach their long-term goals but worry about how to invest and protect their wealth. Lastly, secure employees have taken steps to build wealth and are mostly concerned with issues such as wealth preservation, retirement income and distribution strategies, and long-term care planning.

Employers can encourage their employees to improve their financial health by offering education on topics that include financial planning basics, retirement and investment planning, and utilizing company benefits. In addition to financial education, the report listed individual financial advice as a best practice for improving employee financial wellness programs.

The most common ways employees were able to improve their overall financial health when provided with financial education and advice was to:

  • Establish an emergency fund
  • Calculate the need for and purchasing life insurance
  • Paying off credit card balances
  • Developing a master asset allocation strategy
  • Rebalancing investment accounts
  • Taking a risk tolerance assessment

Multnomah Group offers Participant Services that are relevant to a wide range of employees and focus on broad financial wellness. For more information, please download our fact sheet and contact us today.

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