Connecting the dots to support employees’ diverse financial needs  

August 3, 2023

Financial security is a perennial concern for most of us, but it has been heightened by recent economic challenges. In our most recent Inside Employees’ Minds survey, when we asked employees to rank the issues keeping them up at night, a number of financial concerns came out on top – the ability to cover monthly expenses, the ability to retire, and personal debt. Of course, underserved populations are especially vulnerable to economic turmoil.  

Helping all employees achieve a measure of financial security should be a business priority for employers. As one of the four pillars of well-being, financial wellness is essential to an engaged and productive workforce. While wages have risen, they have been outpaced by rising prices. If further wage increases are not in the cards – or even if they are – now is a good time to step back and consider the total rewards package. There is a range of voluntary benefits that can provide financial protection for employees with differing levels of risk tolerance — helping them to cover everyday living expenses, manage personal debt, and save for the future. There are more voluntary benefits carriers to choose from than ever before, and benefits are evolving to deliver flexibility and address diverse employee life experiences.

In Mercer’s 2022 Health on Demand survey, 41% of the more than 2,000 US workers surveyed said they valued financial wellness and planning tools – or would if their employer offered them. This combination of macro-economic trends and employee demand sets the stage for employers to expand their benefits portfolios with innovative financial wellness solutions. Consider these relatively inexpensive -- but potentially highly impactful – programs that allow employees to customize total rewards to suit their needs: 

Pay flexibility. While needs vary, many employees would benefit from the flexibility to select pay frequency, same-day pay or early access to pay. Instead of turning to other means of paying for an unexpected expense (e.g., retirement savings, high-interest credit cards, etc.), early wage access programs help immediately ease the financial stress of employees by offering responsible access to earned pay. These aren’t loans or an employer advance — rather, employees unlock transfers from a vendor app. By providing access to income as it is earned, this voluntary offering helps employees pay bills on time and meet unexpected expenses.

PTO reallocation. PTO reallocation programs allow employees to self-direct the value of unused, accrued vacation and sick time to help meet personal financial needs or support charitable causes. Specifically, employees can swap time off to prioritize financial wellness needs, including funding retirement, HSA accounts, student loans/tuition reimbursement or emergency cash payouts. With broad appeal in specific industries, such as healthcare and education, PTO exchange offerings enhance a total rewards strategy by giving control back to employees, while still encouraging them to take the time they need to recharge.  

Financial education. Employees are looking for resources, tools and education tailored to their specific financial needs, goals and aspirations. In fact, PwC’s 2023 Annual Employee Financial Wellness Survey reports 74% of employees seek guidance when dealing with financial decisions, crises and life events. Introducing employees to financial well-being platforms combines educational resources with personalized, timely, unbiased prompts to help employees plot a path to a stronger financial future. 

In addition to these measures, one of the best ways to safeguard your employees’ financial wellness is to underscore the connection between health and wealth, both in your own program offerings and in employee communication and education. Our physical and mental health are inextricably linked to financial well-being. Poor health creates financial pressure in the immediate timeframe, and chronic conditions accelerate the consumption of an employee’s finances. In addition, poor health can limit enjoyment of life in the retirement years. We need to think and plan around well-being with the mantra: “There is no wealth without health.”  

The Secure 2.0 Act acknowledges the real-world, uphill struggles of American workers with financial security, and tries to expand options through employer-based financial programs. But the Act is predicated on the employee having discretionary income to contribute to various expanded savings and investment options. Medical expenses can drain the amount of discretionary income available for financial planning.  

Those who are healthy and without chronic diseases spend less money on healthcare out-of-pocket and can take advantage of high-deductible health plans with savings and investment opportunity via a health savings account (HSA). Those who are less healthy will have less flexibility, but healthy lifestyle choices can help keep chronic conditions – and the associated cost of care -- in check. For employees who need support in making healthier lifestyle choices or managing a chronic condition, employers can offer relevant point solutions that reduce the financial barriers to optimal care – and help keep funds available for savings opportunities. 

It is critical to provide clear and persistent messaging that helps to “connect the dots” across employee health and wealth benefits, so that education, guidance and benefit options are in sync for all employees. There is no quick fix for financial wellness. Individual, career and lifestyle needs are changing rapidly, and employers can’t rely on historical data to prioritize what voluntary benefit solutions resonate most with their employees, or what health solutions will have the biggest impact. By helping support diverse financial needs – and keeping a strong focus on health – you will add value to your total rewards proposition and gain a more productive and highly committed workforce.