Does your company need a financial wellness program? If you have employees, then the answer is yes. Here are just a few reasons why:
- 40 percent of US employees live paycheck to paycheck1
- Money is the main source of stress for Americans2
- 47 percent spend 3 or more work hours each week distracted by personal financial concerns3
If you can offer a financial wellness program that educates and helps your employees tackle financial challenges, then everybody wins. It is no wonder that Wellable found that 68 percent of employers plan to spend more on financial wellness this year.4
Of course, not all financial wellness programs are alike, nor should they be. Different demographics require different types of information delivered in different ways. So, the key is finding a program that addresses your employee’s needs at a cost that addresses your bottom line.
Because program offerings vary widely, so does the cost of these programs. A survey by the Employee Benefit Research Institute showed that 43 percent of employers spend less than $50 per employee per year (PEPY), but 21 percent spend more than $500.5
Let’s examine the main factors that affect the price of a comprehensive financial wellness program.
The more employees a company has, the less expensive it is per employee to have a financial wellness program. This is due to economies of scale, which simply means that the cost per unit goes down as the scale increases.
The main reason for this PEPY decrease has to do with the administration of the program. There are several administrative functions that do not take more time or cost more money as the number of participants in the program increases. So, when the number of employees increases, but some costs stay fixed, the PEPY goes down.
Although 80 percent of companies state that they offer a workplace financial wellness program and most feel that the plan is a quality plan, a recent PwC survey shows that only 24 percent of employees believe this is true6. In many cases, this is due to the lack of customization, with employers assuming that offering a retirement plan and education on that plan is all their employees want or need. The truth is that employees need help with a wide variety of financial issues and the chosen program should be customizable and able to focus on both their short and long-term needs.
Additionally, you’ll want a financial wellness program can be customized according to your company needs, with different branding options, a variety of ways to launch the program, various participant recognition options such as certificates, incentives, and/or special events and customizable questions for surveys, assessments and wellness indicators.
Although a customizable plan costs more than a generic one, the return on investment will be greater as well.
Some financial wellness programs offer account management. This can be a computer program that compiles data and makes suggestions for implementation, a team of people from the financial wellness company, or even a dedicated person who always works with you and your employees. Of course, more personalized services are more costly.
Some of the functions of an account manager could include:
- Training key stakeholders
- Launch preparation
- Creating timelines and promotion calendars
- Managing outgoing communications and promotions
- Helping you and your employees with questions or concerns about the program
- Maintaining records
- Providing reports on real-time deliverables
- Monitoring employee satisfaction and behavior change
If you choose a program without account management, you might want to check out this post on the 3 Crucial Things that Most Financial Wellness Programs Overlook. Also, be sure that you review your program at least yearly to determine its effectiveness and employee satisfaction. Based on the findings of the Corporate Insight’s 2018 survey7, you might want to look at these two metrics:
- Did retirement plan participation go up? Employees with access to financial wellness programs participate more in retirement savings.
- Did emergency savings increase? Of those enrolled in a financial wellness program, 78 percent had an emergency fund with over half having a fund that could sustain them for two months. Compare this to 53 percent of those not enrolled in a program who had an emergency fund.
Other metrics include:
Lower healthcare costs
Those using a financial wellness program decreased their healthcare costs by 4.5 percent or about $271.50 per employee.8
Reducing delayed retirement
66 percent of Baby Boomers plan to work past 659, which leads to increased costs of $10,000 to $50,000 per year for the employers who employ them. Those participating in financial wellness increase their likelihood of being able to retire from 34 percent to 47 percent.10
Reduce financial stress
One estimated cost of workplace financial stress is 15 to 20 percent of the total compensation paid.11 Any reduction in financial stress can affect turnover, productivity, and absenteeism.
Reduce turnover and worker satisfaction
Employee turnover costs companies greatly – between 90 and 200 percent of the employee’s salary.12 With 29 percent of employees stating they would leave a company due to a lack of benefits13 and 45 percent leaving due to low pay14, offering a financial wellness program to help them maximize their earnings could reduce turnovers. Reducing turnover by even 1 percent could pay for a majority of financial wellness plans.
Reduction of absenteeism
Employees with high financial stress take 1.75 sick days for each sick day taken by non-stressed employees.15
Highly stressed employees are only 75 percent as productive as employees who do not suffer from financial stress.16 Between absenteeism, lack of focus on the job, and lost productivity, businesses lose $2,000 PEPY.17
Getting a financial wellness program that offers metrics as part of their account management, can easily save your company thousands of dollars each year.
Counselors and Certified Financial Planners
Plans that offer individualized counseling have the greatest cost per employee. Those that offer such counseling with a certified financial planner have an even greater cost. However, providing such counseling is what employees want access to. The 2019 PwC survey showed that 27 percent of employees would like to have access to unbiased financial counselors added to their plan, which was even higher than the desire for student loan repayment benefits.18
Depending on the program, such financial counseling can happen in-person, online, or by phone. A recent Enrich survey found that such counseling is far more effective when done individually rather than in a group.
Financial counselors and Certified Financial Advisors can help with:
- Specific courses of action for employees experiencing a financial crisis
- Setting goals
- Creating and implementing a plan of action for financial wellness improvement such as saving, budgeting, and paying off debt
Remember, the goal of a financial wellness plan is to increase employee wellness and your own bottom line. As you evaluate different programs, keep these many price factors in mind to help you create a win-win scenario.
Now that you understand the factors which influence the pricing for an employee financial wellness solution, you can now begin your search for a financial wellness program which addresses the needs of your employees.
To find out how much the Enrich Financial Wellness Program would cost for your organization, you can submit an inquiry here.