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In the continuing war for talent in the American workplace, employers have added more perks to attract and retain employees.
This includes paying more attention to the financial well-being of their employees.
“I see a greater interest in financial well-being programs because of the large recession, combined with an increasingly complex economic environment,” said Krystal Barker, head of financial well-being at Morgan Stanley at Work.
“Many companies offer a 401 (k) plan and tend to offer training programs, but they come to the table and say what more can we do.”
This change started two years ago with companies assessing their initiatives for diversity, justice and inclusion after George Floyd’s death. Then the Covid-19 pandemic added widespread economic stress, and now it’s red-hot inflation, which is costing US households an additional $ 327 a month on average, according to Moody’s Analytics.
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And workers are seeking help from their companies. More than half (51%) of them believe that employers have a responsibility to help them improve and maintain their financial well-being, according to the TIAA’s 2022 Financial Wellness Survey.
Employers are also attentive. Last year, concerns about employee financial well-being grew, with 34% showing a 9 or 10 out of 10 rating, compared to 25% in previous years, according to a study by the Employee Benefit Research Institute. Just under half were at least interested in implementing economic well-being benefits. Of those who do not currently offer the initiatives, 34% were active in implementing them – up from 12% in 2018.
“We see more of it going to the holistic view of people’s finances and to really help employees understand their overall finances,” said Craig Copeland, director of wealth benefits research at EBRI.
These measures can include personal financial coaching or planning, debt management, and student loan assistance.
Benefits for workers and employers
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The initiatives seem to be working. Those who have participated in an employer program for financial well-being are twice as likely to have a high financial well-being rating than those who are not offered the resources or do not participate, a TIAA survey showed.
Of those who participate, 54% are confident that they will retire whenever they want, compared to 32% of those who do not. In addition, 50% of participants are confident that they will not run out of money, compared to 29% of non-participants according to the TIAA.
Even basic offerings like webinars have been shown to improve employees’ financial knowledge, EBRI data shows. Estimated 401 (k) contribution levels jumped between $ 649 and $ 988 the year after a worker attended a financial well-being webinar, according to EBRI.
What’s more, the initiatives also prove to benefit the employer, Barker said.
Nearly three-quarters of workers with high financial stress said it distracts them at work, according to a 2018 Financial Health Network Survey
And about 60% said they would be more likely to stay in a job if their employer offered financial well-being benefits, the survey showed.
“An employer must always find ways to add value to their most valued asset, and that’s their talent,” Barker said.
But while some companies are addressing the financial well-being of their employees, it is unclear whether this is a trend that will continue to expand, EBRIs Copeland said.
“There is still a need to pay for employers,” he said, noting that it is difficult to show a direct link to improved productivity.
“As long as they can show that they attract and retain workers, and their workers get something out of it, it can expand,” he said.
“If people do not use it effectively, the trend can be curbed.”
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