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Building and maintaining an effective team is one of the greatest challenges that growing businesses face. It’s a constant struggle to hire the right people, keep the team engaged and productive, and keep top performers from jumping ship. Given that 80% of full-time employees are living paycheck to paycheck, taking an interest in your employees’ financial wellbeing can be an effective way to stand out as an employer.

Most people acknowledge the importance of employee benefits to winning the war for talent. But they frequently overlook the potential that financial wellness has to attract, engage, and retain great employees. Let’s explore why investing in financial wellness can help growing businesses succeed and how to create an effective financial wellness strategy, including:

  • The importance of financial wellness
  • How to effectively leverage 401(k) plans
  • Which benefits you should consider in addition to 401(k) plans

Importance of Financial Wellness

Financial wellness benefits can have a significant impact on employee productivity. Seventy-percent of employees currently experience financial stress while at work, which should be no surprise given the fact that most American’s don’t have $500 to cover an emergency expense. What comes as more of a surprise, though is the fact that employees spend an average of 28 hours a month worrying about their finances at work. That’s almost an entire week’s worth of productivity every month! Addressing these concerns and allowing employees to focus on their work should be a top priority for any employer.

You aren’t just losing hundreds of hours of productivity each year from your employees’ financial stress either: you’re also risking losing your most valuable employees to turnover. Employees who are worried about their finances, and especially those who feel their current employer is not dedicated to their financial stability, are much more likely to start looking around for a higher paying employer. This can be an especially potent threat to growing businesses who frequently cannot compete with major companies when it comes to base salaries.

Luckily, financial wellness is an extremely cost-effective way to improve your employee’s financial stress and actual financial wellbeing. Instead of sinking tens of thousands of dollars into increased salaries, you can invest in financial planners, 401k plans with optional matching, loan assistance, financial education, and more.

Financial wellness is not just about avoiding the negative effects of employees’ financial concerns, either. Your benefits package is a powerful tool to attract, engage, and retain the talent you need to thrive as a business. Many employees would accept a lower salary in exchange for better benefits, and that includes wellness benefits. Once again, this is great news for growing companies who can’t always compete on salaries. Stellar benefits show employees that you care about them and will go above and beyond for them, and they will return the favor.

It’s also a good idea to consider not only whether or not to offer financial wellness benefits, but also what financial wellness approach will work best for your business. For financial wellness benefits to work, they have to meet employees’ financial and psychological needs. Which means that employees have to actually use the benefits. It also means that there is no one-size-fits-all approach to financial wellness: your strategy should depend on the specific needs and demographics of your employees.

401K: Taking a Deeper Look at the Cornerstone of Financial Wellness

If you had to implement just one financial wellness benefit, a 401k plan would be a clear choice. According to the 2018 Jobvite Recruiter Nation Survey, 401(K) plans ranked just after medical and dental benefits in their ability to attract top talent. That should make them a top priority for any employer looking to beef up their benefits package and assuage their employees’ financial concerns.

And the importance of 401k plans makes sense. Almost two-thirds of employees do not have any retirement savings and those who do have saved an average of just $40,000. No wonder retirement readiness is a top concern for employees. But just like any other benefit, 401k plans are only as effective as employees make them. How can you make sure that your investment in a 401k plan pays off?

The first thing you can do is implement automatic enrollment to make sure that all of your employees adopt your new or existing 401k plan: this removes a major barrier to saving. You can even automatically deduct contributions from your employees’ paychecks to spur their savings, allowing them to opt-out if they wish. And if you have the budget for it, 401k-matching is a time tested strategy that is sure to both encourage your employees to save and win you major points as an employer.

However, your 401k plan should be just the first step in your financial wellness strategy. By themselves, 401ks struggle address employees’ immediate day-to-day financial concerns which are often the cause of stress and decreased productivity. Many employees are so burdened by debt or day-to-day expenses that they cannot bring themselves to think about saving for retirement even if their company offers good 401k benefits. And they are likely to raid their retirement accounts to pay for emergency expenses without planning and assistance to give them greater financial stability.

Looking Beyond 401k Plans

So what are the other financial benefits that can make you stand out against competitors?

One of the biggest financial concerns for today’s employees, especially for younger employees who are especially prone to switching companies, is student debt. America’s graduates owe a total of over $1.5 trillion in student loans and most Millennials would trade vacation time for student loan repayment assistance. Now, there are plenty of pros and cons to repayment assistance, but you would do well to consider offering these benefits, particularly if you have young employees. Only 11% of employers provide any kind of help or guidance on student loan repayment even though about half of workers want help with the repayment process. But when employers do offer loan assistance, they hire faster and increase average employee tenure by more than a third.

So how can you help your employees with loan repayment? The easiest method is to help them set up dedicated accounts with automatic contributions to make repayment easier for employees to manage. This approach incurs few direct costs to you as an employer, so it should be a viable option for just about any growing company. If you have a bigger budget, you can also match employee contributions to these accounts. Alternatively, you can work with lenders to refinance private student loans at better rates. Finally, you can provide educational materials regarding loan repayment and access to financial advisors so help make management easier for your team members without directly assisting repayment.

A robust financial wellness strategy should also include financial planning and retirement advice. Providing employees with one-on-one financial counseling can help them build their short-term savings as well as plan for retirement, holistically supporting their financial well-being. They can stop worrying about their finances at their desks and put their trust in the experts who you connect them with. Best of all, this can be significantly more affordable than matching contributions and other direct benefits. Financial education is often the most cost-effective financial wellness benefit and growing businesses can use it to improve employees’ financial wellbeing with minimal investment.

Key Takeaways

Today’s employees are having more difficulty saving for retirement, let alone emergency expenses, than in the past. It is probably no coincidence that they are also changing jobs at an unprecedented rate. Financial wellness benefits can be extremely effective at retaining the talent you need and making your employees as engaged and productive as possible. Just remember:

  • Your financial wellness strategy should match your employees’ actual needs to minimize costs and maximize effectiveness through utilization
  • 401(k) plans are still the cornerstone of an effective financial wellness package and you can make the most of them through automatic enrollment and contributions, as well as employer matching
  • Loan repayment assistance is a rare but highly effective financial wellness benefit that can especially increase hiring, engagement, and retention of top Millennial talent
  • Financial counseling and education provides holistic financial support to remove employee stress and improve wellbeing

As with all benefits, it can be difficult for growing businesses to provide competitive financial wellness benefits without incurring excessive costs. The right partners can help you develop a strategy that minimizes those costs while maximizing the impact on employees wellbeing.

You can learn more about how to make the most of your benefits at the lowest possible cost by streaming our webinar “How to Reduce Healthcare Costs at Your Growing Business”. On the webinar, Sean Condon of Windgate Wealth, the author of this guest post, shared his knowledge of 401(k) strategies during the panel-style discussion featuring several leading experts in the healthcare space. Learn more about the webinar and stream it on-demand here.

About the Author

Sean Condon of Windgate Wealth specializes in helping entrepreneurs build a culture of financial wellness by offering their employees unprecedented access to a CERTIFIED FINANCIAL PLANNER™ as well as low-cost 401(k) plans. Part of an employee-owned team, Sean takes an owner’s approach and does his best to understand the many elements of his clients’ own entrepreneurial journeys. Sean has more than ten years of experience as a financial planner & wealth advisor.

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