Financial Focus on Nitty-Gritty

Fronstin: We have been doing our annual survey on employee benefits since the 1990s. About 10 years ago, when the exchanges got lots of hype, we decided to revise them and branched out to other benefits. Financial wellness started popping up about two years ago, and we decided to rebrand and focus on it.

Employers offer health benefits because they want employees to be healthy and productive, focus on work, and not be distracted by other issues. The same thing has come up with financial wellness. Employees want to be financially fit, so employers are providing extra benefits to get them there. One sizeable way to make sure people are financially secure is to pay them more, but that doesn’t necessarily always go to issues like emergency savings or paying student loans. Sometimes it may be more effective to focus on different circumstances people are dealing with.

Greenwald: Employers have started realizing that financial wellness is critical for employees because it links to productivity issues. Four in 10 workers agreed that financial stress distracts them at work.

Greenwald: I’ve seen that in some other studies over the years, and it’s evident in this study too. Seven in 10 employees say that, generally, they need their employer’s help to be healthy and financially secure. That’s a sizeable majority. And just shy of two thirds say it is the employer’s responsibility to ensure employees are healthy and financially secure.

To give some perspective, financial wellness is a newer phrase; it’s a repacking and bundling of benefits that have been available for a long time. Retirement plan providers have been giving financial advice for decades. There are benefits that focus on life and disability, and health providers have been focusing on wellness.

The whole trend toward financial wellness is trying to pull all of those pieces together and address the more day-to-day financial stresses of employee debt, like budgeting, college savings and homebuying, to include both short- and long-term financial wellness.

Greenwald: Something that struck me in this and other studies was, when we asked employees what type of education and help they need, most of the top items centered on retirement. Many think in the long term how much they need to save, how to invest within their plans, how to generate income from them and to plan for retirement healthcare. I think that’s where employees and employers are most comfortable: educating and communicating about retirement.

But two in 10 workers have a really high level of concern about their household financial well-being and say they can’t handle an unexpected expense of $500. Many say their major financial problem is getting out of debt.

While I think it’s comfortable to talk about retirement in the workplace, it is critical not to forget there are daily financial vulnerabilities that employees may need help with. And that is the critical space where these programs need to provide assistance. There is some reluctance with employers here, and, depending on their size, they are not always offering those benefits that deal with the nitty-gritty.

Employee assistance programs sometimes help with these areas, but employers are not spending a lot of time promoting those and their uptake is low. As I see them, that was the original financial wellness tool.

Greenwald: Some are offering college savings accounts and debt management or counseling. About 28% offer some kind of tuition assistance; 24% provide prepaid legal services; 23% financial planning education; 11% childcare assistance; and about 14% provide payroll advances or some kind of short-term loan program.

Greenwald: Unsurprisingly, they are more stressed about everything. They are worried about household finances and their ability to pay bills. More stressed about their retirement, likely because they aren’t able to contribute to it. Their job and benefits satisfaction are lower.

And one of the things that should be called out is that all of the furloughed workers surveyed still had access to at least one of their benefits. So, if the results were that furloughed workers with some access to benefits is so grim, I can only imagine what it is like for those who have lost access to all of their benefits.

Greenwald: I was surprised to see some of those ratings of the employers’ efforts as high as they were, because certainly there are many out there facing big obstacles and major pressures critical to the health of their companies so employees can stay employed. To me, the numbers were pretty encouraging. Four in 10 said their employers were already doing an excellent or a very good job with efforts to improve their financial, physical and emotional well-being. Three in 10 employees feel their employer’s efforts have increased since the start of the pandemic, and 61% said employers have stayed the same. That may not be so bad if so many were feeling good about their efforts to start with.

It also may be an awareness problem; employees may not know what employers are doing toward financial wellness. It feels like the rating employees gave to employers’ efforts in improving well-being and communicating during COVID were generally pretty positive, at least among those who were still employed. A lot of employees are saying that employers are doing an excellent or a good job talking about the company and their status. I say more is more right now. Going into open enrollment, they should be as transparent as they can and make every resource known.

Greenwald: It’s no surprise that with a huge portion of workers working remotely, whether they want it or it is a necessity, it is going to be a virtual open enrollment season. We are anticipating that and seeing a large share of workers saying they need the same amount of information they have always gotten, if not more. Their preferred method of communication is an online portal, and I thought it was very interesting how high on the list an online decision-making tool was.

These are less common but really critical because a lot of employees can’t interact with human resources this year. There will be no in-person benefit fairs to chat with providers or representatives for the different insurance carriers. People are looking for an online guidance tool to help them make the right selections.

These online virtual assistants can help people assess their need for coverage, but these kinds of decision-making tools are not terribly common right now. People normally want in-person meetings, but because of COVID, a lot of it is going to have to be online. One outlier was the furloughed employees. They overwhelmingly wanted benefits information mailed to them at home.

Greenwald: It may go hand in hand with the uncertainty we are seeing in their data. It could be they want a hard copy in hand. Or the portal is accessed through the internet and they may not have ready access available.

Fronstin: We do these surveys every year, and it’s rare where we see a major change from year to year in the numbers. When we looked at employees’ satisfaction with their health plans, it has gone up marginally compared to past years where it didn’t increase. Their satisfaction has gone up in the quality of medical care provided in their benefits and even in healthcare services not covered by the plan. I think the reason why we are seeing this is because of the timing of the survey. It was done in July, post expansion of telemedicine, and a lot of that care was provided for free.

There was also interesting feedback about telemedicine. The number of respondents who said their employers offer it went up greatly. But we know that’s not true. People have been offering it for years; it’s just that people are just now aware of it.

There are also some internal inconsistencies that are always interesting. Workers say it is their employer’s responsibility to do financial fitness. For years we have been asking the question if they would give up their health benefits for higher wages, and we have about 15% that have said yes, they would rather have higher wages.

If you ask them the same about their financial wellness benefits, 42% said they would give up their financial wellness benefits for higher wages. I think people are thinking they don’t need student loan help or other things like that. But it’s kind of like telemedicine: until they need it, it’s not on their radar, and people don’t see the need to buy things that aren’t pertinent to them. If they are not in that particular situation, they don’t want to pay for it.