You may be unaware that your employees’ lack of financial wellness is costing you profits. Stress is a direct or indirect cause of up to 70 percent of doctor visits, according to the American Psychological Association, and financial stress is the most common form of stress. Consider that older employees who are unable to replace a high percent of their salary in retirement will hang on to their jobs. Older workers tend to have higher healthcare costs.
What is financial wellness?
It is being able to manage your money, having no debt or having a plan to reduce your debt, living within your means, having an emergency fund, putting money aside for retirement, financial planning and not being worried about money all the time. In these tough economic times, there are a high number of people who are not financially well and that tends to affect everything they do, from parenting and taking care of their home to performing well on the job.
The people who have high financial wellness scores are prepared and on track to replace 80 percent of their salary in retirement, said Nancy Anderson, Think Tank director at Financial Finesse and a CERTIFIED FINANCIAL PLANNER™ Professional for 25 years.
The cost of poor financial wellness
Poor financial wellness costs you in lower productivity and health care costs. Stressed-out employees are going to have more sick days, less engagement and employers may experience turnover. Stress is a direct or indirect cause of up to 70 percent of doctor visits, according to the American Psychological Association, and financial stress is the most common form of stress.
- Financial Stress is the #1 cause of stress-related illnesses1
- 84% of employees report having some degree of financial stress2
- 24% higher healthcare costs in people who are stressed about finances3
According to Personal Financial Employee Education Foundation research, employees spend an average of 27 hours per month handling personal financial matters. Figure based on U.S. Census Bureau median income of approximately $45,000. That’s a cost of $7650 of lost productivity.
Employees who are unable to replace a high percent of their salary in retirement will hang on to their jobs. “Delayed retirement can cost $10,000 to $50,000 a year4…. Older employees have higher salaries and benefits. That is probably a conservative estimate of what it costs for delayed retirement.”
Financial wellness return on investment
The Personal Finance Employee Education Foundation conducted an analysis of the effectiveness of education on reducing costs. It reported that financial education helps save up to $2,000 per employee annually through increased productivity, reduced health care costs and better utilization of employee benefits.
Employers are increasingly expecting employees to decide about their retirement savings plan. Because of this, employers that motivate and retain the best talent likely won’t be those with the best compensation and benefits, but rather, those that do the best job helping employees maximize the value of their company benefits. Financial Finesse study, showed that after one interaction with the Fi financial wellness program, deferral rates were 5.77%. Employees that had five or more interactions achieved 11%.
Delivery of financial wellness doesn’t have to be disruptive
A unique delivery tool is Financial Finesse’s Workforce Financial Wellness Assessment. Employees take an online financial wellness self-assessment. They receive a personalized report on areas of financial strengths and vulnerabilities. As an employer, you receive a detailed breakdown of data by employee demographic, analysis of employees’ financial wellness levels in every key area of financial planning and recommendations for their program design based on best practices in behavioral finance. This provides focus for communications and educational needs. You may work with your provider to deliver Workplace workshops—on site, one-on-one and online—providing deep-dive coverage of personal financial planning concepts, retirement planning, investing, distribution planning, Social Security and more.
Through a unique partnership with LPL Financial, we are able to provide Financial Finesse’s service at a much reduced cost. If you are ready to identify and plug those leaks, give us a call.
1. Research Works: Partnership for Workplace Mental Health report. Feb 2009.
2. Q2 Trends in Employee Financial Issues, Financial Finesse, September 2012.
3. Higher Health Care Costs for Metabolic Syndrome Risk, Disabled World, September
4 . Estimate based on research from Financial Finesse, Finedco and other industry experts.
(1) The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. (2) Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. (3) The LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following states: AZ, IN, IL, MI.