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Financial stress burdens too many Americans’ lives on a daily basis. Employees are turning to their employers for help.
A recent seminar, hosted by Fiduciary Investment Trust and Qualified Plan Advisors, explored this topic. The event, focused on explaining the scope and impact of financial stress on both employees and employers, was held in Houston, Texas at the Energy Towers I building on May 30th, 2019.
Glenn Spencer, CEO of Qualified Plan Advisors, welcomed the attendees, who were primarily HR leaders from companies in the Houston area. James Brewer, CEO of Envision Wealth Planning gave the keynote. Speakers included Bilal Zia, PhD, senior economist at the World Bank, Aaron J. Harding, managing director at PwC, and Martha Menard, PhD, senior researcher at Questis. Robert J. Cruz and Christian P. Mango from Financial Fitness for Life closed the seminar, speaking on how employers can create success through financial education.
“The most unfortunate aspect of financial stress is the impact it has on people. With every burden that financial stress causes, the productivity drain on our society has become enormous,” said Spencer in his opening remarks.
Speakers presented recent research documenting the toll financial stress is taking for employees at all income levels. For example, PwC’s financial wellness survey shows that employees are focusing on how to meet their current needs at the expense of saving for the future. Rather than using retirement accounts for their intended purpose, more and more employees are using them as an emergency savings account—42% of employees say it’s likely they’ll probably use money in a retirement account for expenses other than retirement. That percentage increases for employees who are financially stressed or have significant school loan expenses.
Financial wellness is the solution for financial stress. However, the true meaning of the term has become diluted. Authentic financial wellness takes a holistic approach to planning, spending, saving, and protection. But too many employers are instead taking a piecemeal approach, with an average of 7 single solutions addressing different pieces of the puzzle. Only 10% take a truly holistic approach that meets employees where they are no matter where that might be, such as paying down consumer or student loan debt, saving for future goals, or planning for retirement.
The results of such an approach, especially one combining digital tools with human coaching, are impressive. A recent 5-year study focusing on 2,458 employees who regularly engaged with their employer’s financial wellness program shows positive results. Those who said they have a handle on cash flow jumped from 67% to 80%, and those who have an emergency fund rose from 51% to 60%. Those who pay their bills on time each month went from 86% to 93%, while those comfortable with their level of debt increased from 58% to 67%.
The percentage of those who pay their credit card balances in full increased from 52% to 61%, and those who believe their investments are allocated properly went from 43% to 69%. The results regarding retirement security showed the largest gain by percentage overall: those who think they are on track to reach their income goal in retirement went from 21% to 57%.
“It’s so important for people to feel confident in their understanding of their personal financial situation,” says Steve Wilbourne, CEO of Questis. “Our technology paired with a hands on, human approach makes this possible and really, this is the first step toward financial wellbeing. Further, it’s important for employers to realize that their workforces have financial issues. No employee population is void of this problem. Employees are not only looking to their employer for help, these issues are costing employers a LOT more money than they realize. From both sides of the coin, we do what we do to optimize the inefficiencies here and, with the help of our partners, are delivering the best human-plus-technology financial wellness programs out there.”