DELIVER TANGIBLE BENEFITS ADDING FINANCIAL WELLNESS TO YOUR BENEFITS PACKAGE: THE TOP LINE BENEFITS FOR EMPLOYEES AND EMPLOYERS

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1 WHITE PAPER ADDING FINANCIAL WELLNESS TO YOUR BENEFITS PACKAGE: THE TOP LINE BENEFITS FOR EMPLOYEES AND EMPLOYERS

2 A 2013 Workplace Benefits Report by Bank of America Merrill Lynch asked employees to rate themselves in terms of personal financial wellness. More than one third (35%) of the employees reported that they fared well and felt that they were at least managing their overall personal financial situation. But 65% fell at the low end for financial wellness. Despite having access to retirement savings plans and health insurance at work, the majority of employees did not feel secure in their personal financial situations. 1 The findings at Bank of America Merrill Lynch are not out of the ordinary. In today s economy, many employees are experiencing financial distress. The numbers are daunting 2 : Almost 2/3 of Americans (61%) report having serious financial problems 1 Fewer than 1/3 of employees (29%) say they have savings to cover six months of living expenses 2 Just over 1/2 of American families have a retirement account 3 (median value = $43,000) 4 There have been increases in: Employees asking HR for financial help Wage garnishments by debt collection agencies Employees asking for pay advances And the effects of financial stress are expensive. Employee financial distress costs employers: Increased absenteeism Lower productivity Increased turnover Decreased employee health Diminished work environment Clearly, employees need more guidance. In reality, their retirement assets include Social Security, their workplace retirement plan and their home equity. Unfortunately, these resources are probably not enough. Moreover, how can employees achieve financial security in the future if they can t manage their day-to-day finances now? In fact, 58% of employees said that they need financial planning guidance to help them manage all aspects of their financial lives. 5 58% of employees said that they need financial planning guidance to help them manage all aspects of their financial lives. 81% of employers feel somewhat responsible for their employees overall financial wellness. FINANCIALFITNESSGROUP.COM 2

3 81% of employers feel somewhat responsible for their employees overall financial wellness. Between the Great Recession, the mortgage crisis and watching 401(k) balances plummet, employees now realize they need more help navigating a complex financial world 6 (2013 Workplace Benefits Report). In-Person Workshops Monthly Newsletters That s good news. This gives employers the opportunity to influence positive behavior change. Yet there has not traditionally been a cost-effective way to address employee personal financial education beyond company retirement plan presentations and educational materials mainly distributed by 401(k) providers. Employees need a financial wellness education program that complements existing retirement plan education in an objective, non-solicitous format. Financial Coaching and Planning Services Financial Fitness Challenge Financial wellness education delivers tangible business benefits. More than a decade of research suggests that financial education efforts in the workplace are important to reducing financial stress, increasing workplace productivity, and promoting long-term financial well-being. Effective financial education programs can improve employee finances. One study of a workplace education initiative in Omaha and Kansas City, Missouri found that the program increased the use of budgets, reduced late payment of bills and reported delinquency, lowered credit card balances and increased the frequency of carrying no credit card balance at the end of the payment cycle. 7 Additionally, this program significantly reduced the number of loans from 401(k) programs and produced a marked increase in retirement savings accounts and 401(k) participation. Effective financial education programs can improve employee finances. Other companies providing financial education report improvements in performance ratings and reductions in absenteeism, turnover, health care costs, and workplace distractions. As a result, financial education programs have contributed untold dollars each year to company bottom lines. The ROI of a financial education program is generally 3:1. What return on investment could you realize by providing financial wellness education? Use our ROI model and the ROI Calculator to estimate the benefits for your company. 8 FINANCIALFITNESSGROUP.COM 3

4 Yet, currently, fewer organizations (52%) are providing any kind of financial education to their employees than in 2009 (64%). Larger organizations (2,500 to 24,999 employees) (72%) are more likely to offer financial education to their employees compared with smaller organizations (1 to 99 employees) (36%). 9 Interestingly, concerns that prevent organizations from creating financial education programs are similar to obstacles reported by organizations that provide financial education 33% indicated that the cost of providing education was the biggest obstacle, while 25% said it was a lack of interest among employees. 10 Do employers and employees agree on the benefits of financial education? According to research, 82% of employers that offer financial wellness plans said they felt the benefits of a financial wellness plan are important to their entire benefits program. Employees who participated agreed. Eighty percent said a financial wellness plan was important to their household % of employers that offer financial wellness plans said they felt the benefits are important to their entire benefits program. Going forward, 97% of employers said they plan to continue their financial wellness plan, and 93% of participating employees said they plan to continue their involvement. 12 In a recent survey, employees and their employers were asked how financial education had impacted their lives. Here are their answers. 13 Top 4 benefits as ranked by employees: Improved awareness of their financial situation Knowledge gained to meet financial goals Information that gave them peace of mind Reduced stress Top 4 benefits from an employer s point of view: Improved sense of employee well-being Improved awareness of their financial situation Knowledge gained to meet financial goals Power to change behavior FINANCIALFITNESSGROUP.COM 4

5 The Financial Fitness Challenge: Better results. Better value. Financial wellness involves deploying successful money management strategies. This is critical to reducing day-to-day stress and anxiety and ensuring a degree of both short- and long-term economic freedom. Workers at all income levels struggle to manage money, make investment decisions, improve their credit, and build assets. The Financial Fitness Challenge provides unbiased online, interactive instruction in personal finance and investing fundamentals and produces great results in just five weeks. The program leverages best practices in technology + psychology + online competition to make learning about money efficient, effective and fun. The Financial Fitness Challenge is a proven training program that results in improved employee productivity, increased participation in retirement plans, more engaged workers and a healthier bottom line. Some key reasons to add Financial Fitness Challenge training to your wellness programs: 3:1 program ROI Lower absenteeism Increased employee productivity Higher 401(k) participation It is easy to implement Fulfillment of ERISA 404(c) requirements To date, more than 750 organizations and over 100,000 employees have participated in the Financial Fitness Challenge and completed over 400,000 hours of financial training. The Challenge can be delivered at one quarter the cost and achieve 500% better results than traditional programs. FINANCIALFITNESSGROUP.COM 5

6 Summary Employers that offer financial wellness programs, and employees who take advantage of them, feel strongly about their value. Results show that financial wellness programs improve employees overall well-being and awareness of their financial situation, help them establish financial goals, empower changes in behavior, and minimize stress all of which contribute to greater peace of mind. The Financial Fitness Challenge is an affordable financial wellness program that allows employees to participant in personalized financial education courses at their convenience, from any Internet-enabled device. Typical results based on pre- and post-test measurements include: Up to 30% improvement in knowledge gained Up to 70% change in attitudes and behaviors 70% improvement in confidence 90% would recommend the program to others 90% tell us they want to participate again While participants experience reduced stress and more positive financial behaviors, your organization benefits too. Employees are more loyal and engaged improving your bottom line. FINANCIALFITNESSGROUP.COM 6

7 References Workplace Benefits Report, Bank of America Merrill Lynch. 2 Based on a Boston Research Group interview of a national sample of 1,000 employers from July 2013 through August 2013 on behalf of Bank of America Merrill Lynch. 3 Study of Employee Benefits Trends: Findings from the National Survey of Employers and Employees, MetLife. (Accessed August 19, 2014) Workplace Benefits Report, Bank of America Merrill Lynch. 5 Study of Employee Benefits Trends: Findings from the National Survey of Employers and Employees, MetLife. (Accessed August 19, 2014) Workplace Benefits Report, Bank of America Merrill Lynch. 7 Every American Financially Empowered: A Guide to Increasing Financial Capability among Students, Workers, and Residents in Communities, May 2012, The White House. 8 ROI Model and Personal Finance Employee Education Foundation, Inc. 9 SHRM Research Spotlight: Financial Education Initiatives in the Workplace, Society for Human Resource Management ibid 11 Your Employees See the Benefits of Your Financial Wellness Program, Paycheck Direct Promoting Financial Wellness in the Workplace, PayCheck Direct ibid For more information about the Financial Fitness Challenge, us at info@financialfitnessgroup.com or call FINANCIALFITNESSGROUP.COM 7