Explore solutions for your employees’ most pressing financial challenges.

Authors: Molly Beer Christian Lauter Rob Leonard

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Every aspect of wellbeing, at its core, is a journey defined by past, present and future experiences. In sum, measures of physical, emotional, career and financial wellbeing combine to influence the quality of a person's life as a whole. Financial wellbeing has become a key benefits design consideration for employers, but what does it really mean for employees?

Financial wellbeing is about having a healthy relationship with money. This journey defined by money earned, spent and saved affects both the reality of people's finances and their perceptions about them, just as nutrition and exercise affect physical wellbeing.

Getting and staying on track with financial goals

Some employees find that improving their current situation and future prospects calls for deconstructing their relationship with their finances and rebuilding toward long-term financial wellbeing. Income aside, personal histories, lifestyles and goals create financial realities that vary widely.

Identifying successful solutions often requires employers to navigate an equally broad range of tools and services for supporting financial wellbeing. This task may seem daunting, but it helps ensure an effective financial benefits program that meets the needs of employees, whatever their situation or goals may be.

Changing habits, planning ahead and understanding financial opportunity

Most employees have faced financial wellbeing concerns or obstacles for various reasons. Consumerism, bad investments and lifestyle creep — a phenomenon that changes a spender's perception of affordability — can undermine financial goals. Increased income may become a rationale for upgrading what was once considered a luxury to a necessity, which is problematic when it downgrades financial stability.

Apart from controllable spending, employees can't escape the reality of unpredictable healthcare costs. To minimize related financial issues, it helps to encourage behaviors that buffer for unforeseen costs in the near term and consider health-related financial risk at later life stages.

Many employers recognize the most pressing financial wellbeing challenges their employees face, including managing uncertainty about the economy and markets (53%), managing debt (47%) and budgeting or cash flow planning (44%).1 But addressing these challenges requires more than discipline. Changing suboptimal habits, planning ahead and understanding how to recognize financial opportunities need to come together in order to sustain and maximize financial success.

Employees' most pressing financial concerns

Approaches to maximizing employee investment outcomes

When it comes to supporting on-time retirement, defined contribution retirement savings programs are still the market's dominant self-funding option, as pension plans continue to fade. Seventy percent (70%) of employers offer a 401(k) and 21% offer a 403(b). Comparatively, just 17% maintain a defined benefit plan.2

For employees who want more direct involvement in their investment decisions, there's an opportunity to engage the stock market through self-service financial platforms. The potential for better returns is enticing. However, without specialized financial market knowledge and planning, investors need to clearly and fully understand the risk before they take it on. Trendy short-term stock picks can be fun, but only up to the point that loss is truly affordable.

Employees often prefer human knowledge and insights to employer-provided self-service tools for investment guidance. While technology interfaces are evolving to fit consumer expectations, progress may not be sufficient enough to make this digital benefit competitive.

Alleviating concerns about meeting financial goals through customizable resources

Meeting employees where they are in their career and their lives, as individuals, is essential to providing an inclusive and effective financial benefit. A tiered approach helps ensure various needs are addressed for all populations within the organization.

Assembling the best selection of financial wellbeing options in the current market can be somewhat of a challenge. Limited employee assistance program resources tend to have low utilization, often because they miss the mark with participants. And add-on offerings may or may not be well received by workforce members. Retirement programs do help employees build a more secure future, but they don't help them get past financial mistakes or thrive in the near term.

Compatible and customizable options are nevertheless available, and once identified, combining them with individual coaching often delivers the best value. Additionally, forming a working relationship with a financial advisor can be a turning point for optimizing the relationship employees have with their money.

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Most employers (63%) offer financial advisor sessions

Getting more than investment advice from a fiduciary financial advisor

The qualifications of fiduciary financial advisors go well beyond providing advice on investing, because their service model keeps employee financial wellbeing at the forefront. Most employers (63%) offer financial advisor sessions to help employees maximize their financial benefits and achieve their related goals.2

In this capacity, the advisor guides employees in selecting the appropriate tools and other resources for their individual financial situation, helping them understand the potential gains. More broadly, support includes advice on next steps and plotting a course to address current financial stressors, while keeping an eye on the future. An advisor can also scale involvement from a specific suggestion to assistance with a lifestyle change — offering a level of customization that tech solutions can't match.

A simpler way to navigate the financial solutions market

Financial intelligence is a unique competency. That's why the experience and results of choosing effective retirement and financial education resources — including self-service tools and advisory access — may be improved with the help of external guidance.

A qualified partner listens and learns about the organization and its people, and evaluating population needs helps further define the balance of benefits. Next, it's important to model and validate how solutions will create desired results. Additional support can also be a success factor when managing the complexity of adoption and rollout planning.

Communication: The bottom line for successful financial wellbeing benefits

There's a fixed relationship between clear communication and achievement of purpose in any effort to influence others. Considering the role of financial wellbeing in advancing other aspects of wellbeing and helping employees understand and use their financial benefits to their best advantage have significant implications. Not all behaviors that support a healthy relationship with money are intuitive, but effective communication makes their value more apparent.

A communication strategy provides the platform needed to choose the right channels and create targeted messaging. For instance, a generic emphasis on the need to save more and diversify investments isn't likely to speak to employees who are deep in debt, enduring a sudden hardship or have never invested.

Because the best approach to messages and delivery methods may vary for different benefits and population groups, determining the content and tone that encourages participation is critical. Successful financial communications require a careful hand in development and a sincere voice.

Employers that feel a responsibility to provide effective financial benefits will position the entire organization for a better future. Not only are effective benefits an opportunity to help strengthen retention, but they also influence a lifetime of financial wellbeing for employees.

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Author Information

Sources

1Gallagher. "Workforce Trends Pulse Survey 2022 Q1 Infographic,"2022 Q2 Gallagher Better WorksSM Insights Report, Mar 2022.

2Gallagher. "Workforce Trends Pulse Survey 2021 Q4 Infographic," 2022 Q1 Gallagher Better WorksSM Insights Report, Jan 2022.

Disclaimer

Consulting and insurance brokerage services to be provided by Gallagher Benefit Services, Inc. and/or its affiliate Gallagher Benefit Services (Canada) Group Inc. Gallagher Benefit Services, Inc. is a licensed insurance agency that does business in California as "Gallagher Benefit Services of California Insurance Services" and in Massachusetts as "Gallagher Benefit Insurance Services." Neither Arthur J. Gallagher & Co., nor its affiliates provide accounting, legal or tax advice.