Measures of the Impact of Financial Wellbeing Programs Are Being Developed
The fifth annual Employee Benefit Research Institute (EBRI) Financial Wellbeing Employer Survey shows that financial wellbeing programs are being added or improved to increase worker satisfaction and retention. However, costs continue to be reported as the top challenge in offering financial wellbeing programs, and as a result, employers are looking for ways to measure their impact both through employee satisfaction/retention and productivity. Despite the pressures of increasing costs and expectation of the need to measure financial wellbeing initiatives’ impact, employers are expecting their budgets for these benefits to increase. Benefits such as financial planning education, seminars, or webinars and financial investment/investing education, seminars, or webinars that provide broad-based financial knowledge were the most likely to be provided, whereas single-issue-focused initiatives were less likely to be provided. Yet, impact of inflation on retirement planning education, seminars, or webinars and child/elder caregiving benefits, more single-issue-focused topics, were among those most likely to be planned to be offered.
- Measuring Success — The top factor in measuring financial wellness initiatives’ success is improved overall worker satisfaction. The next two most cited factors also dealt with employee happiness — worker satisfaction with financial wellness initiatives and improved employee retention. Increased employee productivity was right there with the lower two employee satisfaction/retention factors. Thus, having an attractive workplace is an important reason for offering financial wellness benefits. However, business factors are still part of the measurement rubric.
- Cost/Benefit Analysis — Eighty-five percent of the companies reported they have explicitly developed a cost/benefit analysis based on employee satisfaction, employee attraction/retention, employee productivity, or medical/mental health claims to evaluate their financial wellness offerings. Cost-benefit analysis by employee satisfaction was the lead factor, with employee attraction/retention next. Productivity tied with employee attraction and retention, showing that employers are also looking at the benefits of these programs relative to their costs outside of just employee satisfaction metrics.
- Top Issues, Areas of Focus, and Challenges — Companies’ top issues to address with their financial wellness initiatives were retirement preparedness, health care costs, and financial-related stress. A new issue that was just below these top three was the high cost of living — an issue that was not part of the discussion last year. Likewise for top focus areas, investments and retirement planning was the top-cited primary focus, with basic financing and education and consulting programs being the next-most-mentioned areas of focus. The top challenges to offering these programs were costs to both the employer and the employee. Outside of costs, data and privacy concerns and complexity surrounding the programs were the top challenges faced by employers.
- Benefits Gaining in Importance — Some of the benefits that were most commonly offered currently also ranked highest among those that companies plan to offer: tuition reimbursement and/or assistance and basic money management tools. Other benefits that were most likely said to be planned to be offered included impact of inflation on retirement planning education, seminars, or webinars; child/elder caregiving benefits; and personalized credit/debt counseling, coaching, or planning.
- Improving Mental Health — Eighty-four percent of the companies said that their financial wellbeing benefits are being used to improve mental health and emotional wellbeing. Sixty-one percent of the companies said they offer mental health benefits or coverage. How the benefit was provided was most likely to occur as a part of major medical/health insurance, but it was also provided as a separate service. Twenty-four percent of the companies provided their mental health benefit as part of their health insurance and as a separate service. Of those who provided a separate service, the overwhelming majority used an employee assistance program (EAP). In addition, over a one-half offered financial therapists, and nearly one-third offered the Calm app.
- Caregiving Benefits —The caregiving benefits most often offered have to do with leave policies as opposed to benefits in the direct provision of caregiving. Approximately one-quarter of employers said they plan to offer various caregiving benefits in the next one to two years.
- Specific Actions Addressing Diversity — When asked about whether their companies were taking specific actions to address diversity, equity, and inclusion in their financial wellbeing initiatives through actions targeted for different genders, races/ethnicities, and ages, benefit decision makers were more likely to offer different types of solutions for the different characteristics and to ensure that financial counselors and coaches were diverse than they were to tailor messages specifically for the diverse groups. For example, the two most cited actions being undertaken were offering different types of solutions to accommodate different age groups and ensuring that financial counselors or coaches were diverse in terms of race and ethnicity. In contrast, tailoring messaging by gender and for minority populations were the least likely to be cited as being undertaken.
- Specific Steps Taken to Understand Diverse Needs — To understand specifically what companies are doing to understand the different needs of diverse workers, a battery of possible steps that could be taken were provided. Of the companies doing a specific task, surveying employees was the most common step taken to understand diverse workers’ needs. Implementing an industry or government financial wellbeing score or metric was the least likely to have been undertaken.
Companies are strongly focused on financial wellness programs’ impact on worker satisfaction and retention. At the same time, employers are seeking to show the impact of financial wellbeing programs on the bottom line in terms of increased productivity — likely tied to the fact that the costs of financial wellness programs continue to increase. The companies are developing cost/benefit analyses to provide some measure of the success of these of benefits as well as more traditional approaches of directly surveying employees.
The continued evolution of financial wellness programs is a crucial question going into 2023. As these programs grow in value to employees and are used for attraction and retention, the expectation that they will be provided will only increase. At the same time, the specter of a recession could turn the tide as employers seek to cut costs. Nonetheless, these programs also have the potential to address companies’ diversity, equity, and inclusion goals, as they increasingly focus on providing help in all aspects of individuals’ finances, allowing them to match the specific issues faced by those in different groups.
This survey was made possible through funding from AARP, American Express, Bank of America, Church Pension Group, Financial Finesse, HealthEquity, J.P. Morgan Chase, Lincoln Financial Group, Mercer, Morgan Stanley, Principal Financial Group, and Prudential Financial.