Americans added $333 billion to overall household debt in the fourth quarter of 2021, a bigger increase than at any time in the past 14 years, according to a report from the Federal Reserve Bank of New York. and brings the national total to $15.58 trillion.
If reading this makes you want to close all your tabs and slip into bed, you’re not alone. A 2021 survey by SHRM and Morgan Stanley at Work of Americans’ financial well-being found that monetary stressors and mental health are, for many respondents, linked. In June, nearly a third of American workers surveyed said they had experienced financial anxiety during the pandemic and nearly 20% said they had experienced financial depression. The figures are higher for those who are unemployed.
Yet even as companies invest in mental health benefits such as teletherapy and employee assistance programs, fewer would have made similar investments in financial wellness programs. According to the same SHRM/Morgan Stanley report, only one in four HR professionals surveyed said their organization had added or expanded existing financial wellness benefits to “help employees manage their financial stress since the start of the pandemic.” of Covid”.
The SHRM/Morgan Stanley report suggests that companies that adopt such benefits may have a recruiting advantage: their data suggests that unemployed Americans “tend to value financial benefits for well-being more than American workers” and might view these perks as “welcome incentives” when choosing a workplace. .
One company banking on this prospect is Northwell Health, New York State’s largest healthcare provider. Diana Witkowski-Grubard, the company’s chief human resources officer, told CNBC that they introduced financial wellness benefits last year, including financial planning, both as a recruiting tool and as a mental health boost for current employees.
“Think about how you feel when you are financially stressed and how this leads to anxiety, depression, weight gain and underlying medical conditions leading to increased absenteeism and lower productivity,” Grubard told CNBC.
In his view, providing financial benefits helps workers perform at their best at work.
“Our consistent, long-term focus on wellness allows us to differentiate ourselves in this environment,” Grubard told CNBC. “It’s what we use to attract and retain our talent.”
A few introductions are in order. David Fairburn, associate partner in Aon’s retirement solutions practice, told HR Brew that financial wellness benefits tend to fall under what he calls the four Ps: “prepare, plan, protect, preserve”.
“Prepare, plan, protect, [and] preserve,” Fairburn described. According to Fairburn, “prepared” benefits cover short-term benefits such as budgeting, creating an emergency fund, or helping with student loan repayment. “Plan” benefits are long-term financial offerings, such as pension plans. “Protect” benefits consist of “protecting the assets you already own” through insurance coverages such as life insurance. The final area, “preserving” benefits, strives to help an employee’s assets last their lifetime, promoting products such as lifetime income benefit riders.
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When defined this way, Fairburn said “almost every benefit offered by employers affects someone’s finances in some way,” but he notes that the bucket that received the More attention recently is the “prepared” bucket, in part, he says, because “squeezing” financial needs can mean employees are less able to plan for the future.
“A lot of employers consider these types of ‘prepared’ benefits in order to meet employees where they are,” Fairburn explained. “Sometimes it’s hard to think about saving for retirement when you have more pressing short-term needs, like paying off a student loan, dealing with credit card debt, or building an emergency fund.”
Ana Mahony, Founder and CEO of Addition Wealth, a financial wellness platform, echoed the need for employers to offer financial planning benefits.
She said the changing nature of compensation and benefits over the past few decades, including the shift from defined benefit pension plans to defined contribution plans and the emergence of new sources of income, such as secondary turmoil,” has created complex financial realities that are sometimes difficult for workers to navigate.
“You see a lot of responsibility on the individual to make financial decisions, whether it’s understanding their salary and benefits and budgeting or thinking about how best to plan their own future,” Mahoney explained. “We live in a world where there are a lot of sophisticated trade-offs… We don’t necessarily grow up in a world where we’re taught to deal with all those decisions.”
Vendors venture there. Venture capitalists have taken notice. In recent years, venture capital money has poured in to fund financial wellness startups to the tune of $5.6 million for HoneyBee, “a startup that aims to help companies provide access to financial support to their employees,” and $7.3 million for Northstar, a startup that works with employers to deliver “financial wellness as a benefit.”
Julie Scotland, co-founder and chief growth officer of Pasito, a fintech company that specializes in helping employees understand pre-tax allocation options, says technology solutions can offer customized solutions to the complexities described by Mahoney.
“What is really unique at this time is that there are five different generations in the workforce. And what is really difficult for employers is to understand [is that] each person wants something different. And how do you respond to each of them? Scotland explained. “How do you do this hyper-personalization, without investing in hundreds of vendors who are going to apply from your veterans and baby boomers all the way up to your Gen Z?”—SV
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