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Employee Financial Wellness: Why & How

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Sarah Ball

on 7 June 2011

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Transcript of Employee Financial Wellness: Why & How

of employees find dealing with financial situations stressful.
believe financial stress has increased in past 12 months.
of doctors visits are stress-related. 49%
working adults find it difficult to meet household expenses. (43% in 2010)
use credit cards to buy monthly necessities. (15% in 2010)
carry credit card balances.
difficulty making minimum payment on time. (28% in 2010) Why & How? Top HR Trends 2011 - #1 Continued rising costs of health care
2009 - #1 Continued rising costs of health care
2007 - #1 Rising costs of health care
2005 - #1 Rising costs of health care
2003 - #2 Rising costs of health care 59% of employers believe wellness programs are effective at controlling costs 69% of employers agree that financial stress contributes to health care costs Met Life Employee Benefit Trends, 2011 Met Life Employee Benefit Trends, 2011 PwC U.S. Financial Wellness Survey, 2011 PwC U.S. Financial Wellness Survey, 2011 Larocque, 2010 92% of American workers losing sleep over money Larocque, 2010 51% of employees with higher debt (7% more than less debt) Met Life Employee Benefit Trends, 2010 51% of employees with higher debt (20% more than less debt) Met Life Employee Benefit Trends, 2010 27% of employees with higher debt (19% more than less debt) Met Life Employee Benefit Trends, 2010 29% of employees with higher debt (25% more than less debt) Met Life Employee Benefit Trends, 2010 23% of employees with higher debt (19% more than less debt) Met Life Employee Benefit Trends, 2010 6% of employees with higher debt (3% more than less debt) Met Life Employee Benefit Trends, 2010 Improved financial confidence (75% more confident)

Improved financial outlook Holland, 2008; Garman, et al., 1999

Hira & Loibl, 2005; Garman, et al., 1999 Decreased stress-related illness and workplace accidents Hawkins & Prosser, 2010 Increased 401k participation & withholding

Increased funds available for savings Hawkins & Prosser, 2010; Garman, et al., 1999

Garman, 1998 “...sharks swimming around taking bites out of the bottom line.” -- Garman Financially distressed employees are like... $300/employee/year – incremental costs for financially distressed Larocque, 2010; Griggs, 2007 1 in 4 employees – financially distressed. 80% of those spend time at work dealing with personal financial issues. 12-20 hours/month $7,000/employee/year per 1,000 employees Larocque, 2010 Cicione, 2011 Larocque, 2010 Larocque, 2010 78%
employers believe financially distressed employees are less productive.
employers believe financial distress contributes to absenteeism. MetLife Employee Benefit Trends, 2010 $300/employee/year – health care cost savings. $1,274/employee/year if offering flex benefit accounts. Larocque, 2010; Griggs, 2007 Financially educated employees understand benefit of “shopping” their health care spending. 13% savings/employee/year with a High Deductible Health Plan Griggs, 2007 GuideSpark, 2009 7.65% in FICA contribution savings for every $1 contributed to a tax-advantaged benefit plan. GuideSpark, 2009 58% improved productivity
$450/employee/year Griggs, 2007 39% less absenteeism Research Works, 2009 Reduced turnover (estimated costs at $21,430/employee by salary.com) GuideSpark, 2009; Prawitz & Garman, 2008 Increased
Employee Engagemet “Goodwill is immeasurable” (Hanson, 2010)

Employers viewed as “stewards of employees well-being”
(Prawitz & Garman, 2009)

12% higher company rating by employees who had confidence in their financial future; 12% higher rating when asked if they were proud to work for their employer. (Hira & Loibl, 2005)

62% of financial wellness program participants feel loyal to their company (MetLife Employee Benefit Trends, 2010) Other
Employer Benefits Satisfy ERISA compliance requirement to offer retirement information & education (Prawitz & Garman, 2008)

Potentially reduce legal liability (Garman, 1997)

Reduce HR administrative costs due to decline in garnishments, payroll advances & inquiries (Hawkins & Prosser, 2010) Employees trust their employer to provide financial education. 80% would use if available. Hawkins & Prosser, 2010 COSTS:
$50-$300/employee Holland, 2008 ½ to ¼ of 1%
of employee’s income Prawitz & Garman, 2008 Considerations:
Financial sophistication of your workforce (Hanson, 2011; Prawitz & Garman, 2009)
Delivery method preferences: website, webinars, telephone counseling, in-person seminars (MetLife, 2010)
Just-in-time delivery: tax time, birth or adoption, buying a home, retirement (Research Works, 2009)
Confidentiality (Research Works, 2009)
Variety of topics: preventative, remedial, productive (Garman, 1997) Tips:
Survey employees to determine need
Customize to your employees
Choose a vendor/partner carefully Provide neutral financial education
Sponsored by larger entity
Educating not selling
Experienced, educated
Workshops meet ERISA requirements

Hawkins & Prosser, 2008 Resources:
Financial Finesse – money coach education programs

EDSA - independent financial education company

National Foundation for Consumer Credit - nonprofit credit counseling organization network

Money Management International - nonprofit credit counseling & financial education programs

Personal Finance Employee Education Foundation –

InCharge Debt Solutions - nonprofit credit counseling, debt management, financial education 300% 1,000 employees
$40,000 average salary
60% participating in 401k
20% participating in pre-tax programs
15% financially distressed Assumptions 109% Increased Productivity = $125,200
Reduced absenteeism = $80,000
Reduced HR administration = $12,000
$217,200 Garman, 1998 $200,000 =
$200/employee to implement financial wellness program Costs ROI impact of only the reduction of financially distressed to 5% $41,600 = 5 minutes per day work time by new plan participants (100)
$67,200 = 2 minutes per day by half of remaining workers (400)
$38,250 = Reduced SS taxes (pre-tax health/dependent plans (500)
$ 4,000 = Reduced stress & stress-related illnessess (400)
$ 6,000 = Reduced premiums for health care (400)
$10,000 = Fewer accidents (1,000)
$10,000 = Improved satisfaction with fringe benefits (1,000)
$60,000 = Reduced HR because fewer questions are asked (500)
$60,000 = Reduced turnover saves recruiting 6 new hires (6)
$10,000 = Reduced pressure to increase salaries (10)
$10,000 = Increased morale and satisfaction at work (1,000)
$80,000 = Increased acceleration of retirements (2)
$10,000 = Reduced exposure to future litigation (1,000)
TOTAL RETURN ON INVESTMENT = $624,250 ROI impact of comprehensive financial education Garman, 1998 Garman, 1998 Calculate your ROI online at www.pfeef.org. http://www.theedsagroup.com/ http://www.nfcc.org/ http://www.moneymanagement.org/ http://pfeef.org/ http://www.incharge.org/ http://www.financialfinesse.com/ Anonymous, (2009, February). Employee personal financial distress and how employers can help: The issue and why it is important to business. Research Works: Partnership for Workplace Mental Health. 1(1).

Anonymous., (2011, April 28). PwC U.S.'s 2011 financial wellness survey: Cash and debt management issues keep employees from saving for retirement. Wireless News.

Cicione, M., (2011, February 8). Employers getting proactive to address employee financial stress. truthfullending.com

Garman, E.T., (1998, June. Updated 1999). The business case for financial education. Personal Finances and Worker Productivity, 2(1), 81-93.

Garman, E.T., Kim, J., Kratzer, C.Y., Brunson, B.H., & Joo, S., (1999). Workplace financial education improves personal financial wellness. Association for Financial Counseling and Planning Education.

Griggs, T., (2007, September 9). Workshops teach employees keys to financial wellness. Advocate business writer.

Hanson, W., (2010, July). Focus on employees' financial wellness; Is today's focus on health promotion programs too narrow? Employee Benefit Adviser, 8(7), 27.

Hanson, W., (2011, January 1). Winning over the skeptics to introduce financial education. Employee Benefit News, 25(1), 13.

Hawkins, H. & Prosser, S., (2010, May). A larger view of wellness: Financial literacy as a voluntary employee benefit. Voluntary Benefits Magazine.com

Hira, T., & Loibl, C. (2005). Understanding the impact of employer-provided financial education and assistance program. Journal of Consumer Affairs, 39(1), 173-194.

Holland, J.H., Goodman, D. & Stich, B., (2008). Defined contribution plans emerging in the public sector: The manifestation of defined contributions and the effects of workplace financial literacy education. Mississippi State University: Review of Public Personnel Administration. Larocque, J., (2010, June 11). The cure for employee stress: Financial wellness. CorporateWellnessMagazine.com

Miller, S., (2010, April 16). Health and Financial Concerns Take Toll on Workers' Productivity. Web: www.shrm.org/hrdisciplines/benefits/Articles/

9th Annual Study of Employee Benefits Trends: A Blueprint for the New Benefits Economy. (2011). Met Life. Web:http://www.metlife.com/business/insights-and-tools/industry-knowledge/employee-benefits-trends-study/

Prawitz, A.D., & Garman, E.T. (2008). Education to promote employee financial well-being: what role for employers? Personal Finance Employee Education Foundation, http://www.PersonalFinanceFoundation.org. Article for inclusion in GTZ Case Study Book on Financial Wellness.

Prawitz, A.D., & Garman, E.T. (2009, April). It’s time to create a financially literate workforce to improve the bottom line, Benefits Compensation Digest, 46(4), 1, 11-14.

SHRM Workplace Forecast: The Top Workplace Trends According to HR Professionals. (2011, February). Web: www.shrm.org/research.

The need for financial wellness. (2009). GuideSpark. www.guidespark.com. References Employee Financial Wellness Programs
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