June 16, 2021

Financial Wellness: "Life-Changing" Benefits to Scale for Any Size Employer

The Nava Team

"Helping your employees improve their financial futures is the single biggest life-changing benefit you can provide," writes Sara Anderson from the financial management platform Origin. You read that right: financial wellness benefits can be transformative, both for your employees and your business.

And if there's ever been a time for life-changing benefits, it's now. No one felt the pressure of the last year quite like small and midsize employers. Between increased safety precautions and sharp economic downturns, many employers were forced to make difficult decisions to stay above water.

Now as we move on from the pandemic, millions of Americans are left to rebuild their lives and finances. Some will be starting from square one. But far too many weren't able to weather the storm in the first place.

When we talk about "building back better," the focus has to be on resilience — both for the employer and employees. And if you want to provide meaningful support to your employees while building a stronger tomorrow for your business, look no further than financial wellness benefits.

Not only can these tools help your employees build that financial resilience, but they can also unlock significant returns for employers — ranging from morale, to productivity, to the bottom line. In fact, a study by the financial wellness platform Enrich showed that, when done right, financial wellness benefits can deliver up to a 1500% return on investment. (More on that soon.)

Okay, we know what you're thinking: There's no way we can afford these specialized benefits, especially right now. Leave that to the big guys. Well, think again. Although you may assume financial wellness is a fancy benefit for large companies, there are many offerings that can scale to your size and budget — and you simply can't ignore that potential ROI (once again, 1500%).

Moving forward, financial wellness will be in high demand for employers of all sizes, so you'll want to get in on this. Read on to learn more about this benefit and why it matters in a post-pandemic world.

What are financial wellness benefits?

In short, financial wellness is an emerging category of benefits that give employees the support, knowledge, and resources to manage their own financial obligations and prepare for the future.

You're probably familiar with the 401(k), which covers retirement planning. But what happens between now and retirement?

Offering a 401(k) is a great first step, but financial planning is necessary throughout every phase of life. Think managing student loans, building a budget, saving for a house, paying off medical bills — we could go on.

If you really want to build financial resilience, then it's time to start thinking outside the 401(k). Thankfully, there's a wide range of services and platforms available to address varying financial priorities, both short- and long-term. From student loan management, to budget coaching, to tuition reimbursement, there's a financial wellness program for every step of your employees' financial journey.

But can SMBs offer these benefits?

Short answer: absolutely. But it may not look the same as the benefits offered by the big guys. (And that's a good thing.)

Some benefits providers actually specialize in working with SMBs, so they can deliver an offering that works for their unique strategy, budget, and talent. In fact, the team at the financial wellness platform Northstar told us that they serve employers with head-counts ranging from the thousands to as few as five.

And implementing these benefits is easier — and faster — than you think, Sarah Quirk at Northstar says. "Our deep experience with employer launches of all sizes enables us to anticipate any company-specific details or requirements, and we can launch in as soon as a few weeks."

You might even already have these benefits waiting to be unlocked. Your existing benefits partners may also offer financial services, Kelley Elliott, VP of Global Rewards at Delta, pointed out. "Most 401(K) providers today offer a suite of financial wellness and financial health solutions."

Plus, this is that rare kind of investment you can really count on for returns — these benefits can generate an ROI of 300 to 1500 percent. Conversely, poor financial wellness can cost an 1000-employee company $240,032 in lost productivity each year.

Why is financial wellness important right now?

Last year too many Americans saw their personal savings and financial wellbeing decimated by job losses, reduced wages, and unforeseen instability. Over half (51%) of non-retired American adults said that the economic impacts of the pandemic will make it harder for them to achieve their financial goals.

"Financial stresses have only been heightened by COVID-19," writes Anderson. "The pandemic also revealed just how unprepared people are to deal with financial hardships, such as sudden job losses or economic downturns."

And that experience has changed their priorities and expectations at work. "Employees had new perspectives on their benefits," the Northstar team told us, "and employers have responded by replacing free lunch and commuter benefits for those that can improve quality of life, such as financial wellness, mental health, and child care."

No one knows what tomorrow holds. But when things go sideways, you'll be glad that your employees have a foundation to depend on.

Here are just some of the wide-reaching impacts of financial wellness benefits, both for your employees and your business.

Bolsters mental health

We've previously written about why 2021 is the year of mental health benefits. But what if we told you that financial wellness goes hand in hand with mental health?

"When asked what they feel causes them the most stress, employees cite financial matters more than any other life stressors combined," Anderson emphasized.

Maybe financial wellness benefits won't solve mental health challenges completely, but it's one less stressor to worry about.

Boosts employee engagement (and retention) at a crucial time

In the midst of a massive employee exodus, employers are looking for any way to prevent burnout, engage their teams, and keep their people on board.

"A recent survey found that 50% of employees are distracted by finances at work," Anderson explains. "This ends up costing employers an estimated $250 billion per year in lost productivity and absenteeism. Knowing this, it’s easy to see how the right benefit can decrease the mental and physical side effects of financial stress, improve focus, and save your company a significant amount of money."

And when employees feel financially supported, they're more likely to be in it for the long haul. Among employers who offered a financial wellness program from 2018-2020, there was an 18.8% increase in retention among salaried and hourly employees.

Increases DEI

A holistic financial wellness benefits plan can help break cycles of inequity, even the playing field, and empower your employees to bring their whole selves to work.

"Financial wellness benefits are a core part of company DEI efforts to ensure employees across all backgrounds and life stages can understand and make the most of their total compensation package," writes the Northstar team. "Unlike many benefits, financial wellness can be utilized by every employee regardless of their age, gender, family structure, and financial health."

Solving the modern money maze

Let's be real — personal finance doesn't work the way it used to. "It used to be that receiving a pension when you retired was enough to feel financially stable," writes the Northstar team.

"Today’s environment couldn’t look more different — employers offer equity and ESPPs, HSA and FSA accounts, health and life insurance, 401(k) matching — but it’s up to the individual to try to make the best financial decisions."

In this day and age, personal finance is confusing, overwhelming, and nearly impossible to navigate on your own. So don't make your employees handle this alone.

By offering a financial wellness plan, your employer signals that it understands the complexities of modern finances — and cares about its employees, both on and off the clock.

Maximizes enrollment across all benefits

When employers offer financial health benefits, their employees are actually more likely to take advantage of their other benefits. That's because most other benefits rely on a strong foundation of financial support.

"Financial wellness is the opposite of a fringe benefit," the Northstar team explained. "It serves as the foundation to a benefits program, as healthcare, equity, 401(k) plans, life insurance, and more all have significant financial implications for employees.

"By offering a financial wellness benefit, employees are equipped with the knowledge to make the right benefits decisions for them, which often leads to higher adoption."

So which financial wellness benefits will have the greatest impact for your employees right now? Check out our blog Thinking Outside the 401(k): Three Financial Wellness Benefits to Build Resilience Post-Pandemic.

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