4 trends in financial education

Having financial wellness within your business is incredibly valuable for its overall growth and success. In this article, we are going to take a look at four trends contributing towards financial wellness in the employee benefits realm. Read more below.


Employees’ financial well-being is a hot topic these days. Right now, it’s top-of-mind with most employees. And it’s becoming more so with employers, not only because they are realizing the effect employee financial stress has on their bottom line, but also because industry surveys are revealing that employees want their employers to help by providing financial education and benefits.

Benefit advisers have a definite role in helping employers take steps toward building a more financially-secure workforce through financial wellness benefits. What should advisers expect to see this year in financial wellness benefits?

Industry research confirms the impact employee financial stress has on a company’s bottom line, including lower productivity, higher absenteeism and more healthcare claims. Only about half of employers offered some kind of counseling or instruction about money last year, according to SHRM and IFEBP surveys. Certainly, more employers will want to add financial education benefits this year. Benefit advisers can help by bringing this to the attention of their clients.

Another trend to consider is that financial education benefits are becoming more holistic. Financial education benefits should be more than planning for retirement and having access to supplemental medical benefits. Financial education benefits today should include financial education tools and resources as well as voluntary benefits that are designed to address both physical and emotional struggles while working to help employees with short-term financial needs.

Look for more student loan repayment benefits to become available in the industry this year. In 2017, more Americans were burdened by student loan debt than ever before. It’s a major concern among today’s millennials, the largest generation in today’s workforce. This year we likely will see more student loan repayment benefits appear, including programs in which employers are making contributions to loan balances or providing methods for employees to refinance their debt.

Increased attention to helping employees with short-term financial issues also will be a focus this year. In spite of the improved economy, employees are still struggling financially. Statistics show the alarming number of employees that continue to live paycheck-to-paycheck and do not have even $1,000 in savings for emergency needs.

While financial education benefits can help employees with budgeting and debt reduction needs, employers should offer additional voluntary benefits that provide employees some financial assistance in the short-term. Benefit advisers should bring short-term financial assistance voluntary benefits to the attention of their clients. Among these are employee purchase programs and low interest installment loans and credit that help employees avoid payday loans and cash advances from credit cards when they have emergency needs such as a broken refrigerator or unexpected out-of-pocket medical expenses.

Employers are realizing the important role that financial education plays in an employee’s overall well-being and will look to increase their financial wellness benefits on several levels. Benefit advisers not only can bring the need to the attention of their clients, but can also offer benefit recommendations to round out their clients’ employee benefits programs.

Read the original article.

Source:
Halkos E. (February 9th, 2018). "4 trends in financial education" [Web Blog Post]. Retrieved from address https://www.employeebenefitadviser.com/opinion/4-trends-in-financial-education

Are employee purchase programs with payroll deductions a good idea?

By Jason Steed

Source: http://www.pacresbenefits.com

It sounds like a good plan: Offer your current and retired employees discounts on products and services from companies that you have existing business relationships with.  Then, arrange for employees to have payroll deductions to help them more easily pay for these items (without finance charges, of course). These types of employee purchase programs are quite active in some companies, giving employees a semi-personalized ‘mall’ of products and services to choose from.

In some cases, these programs provide a solution for employees that cannot get credit for a longed-for big ticket item, do not have all the money on hand for an emergency purchase (such as replacing a broken washing machine) and / or would appreciate a much easier way to buy a new item, like a laptop, for their college student.  There is certainly some value for both the company (bringing business to their client helps the client be more successful) and the employee (discounts and payroll deduction make payment much easier) with this arrangement.  This benefit also gives employers an extremely low or no cost way to deliver direct value to employees by helping them save money on products and services they may be purchasing anyway – but not necessarily from the company that the employer already has a relationship with.

This seemingly “no brainer” employee benefit does have its downsides.  Many employees are already underinsured, some perhaps even living paycheck to paycheck, and some people would argue that employees should never buy anything that they can’t already afford, whether it’s a washing machine or flat screen television.

One interesting question is what participants are actually doing with the savings they can get from these purchase programs. Are employees ever encouraged to then contribute more to their retirement plans or buy insurance or other items that can help them financially down the road? Would having that option or information change the value of a employee purchase program?

With all the discussion recently on the consumer driven healthcare – employees making their own decisions on medical insurance based on their individual / family needs - where do other benefits decisions fall?  Should there be other consumer driven benefit options, including employee purchase programs?

Due diligence is a very important part of any benefit product offered to an employee, even these types of non-traditional offers.  So why not find a way to integrate them?  Given the advances in technology over the last five years, why not educate employees and offer them some valid tools to help improve their financial future?  Example: “Congratulations!  You just saved $1,000 on your new dishwasher.  With that savings, you may want to contribute more to your 401k or buy additional life or disability insurance. Here’s how…………”

The bottom line is that employers need to consider all the aspects of having an employee purchase program, and whether its purpose to help employees financially outweighs the potential personal financial mistakes some employees may make. I suggest we work on creating an employee benefits marketplace where all of these different types of benefit components can work together: 1) consumer choice (which automatically brings some personal responsibility) and 2) employer due diligence including the appropriate vetting of programs and the technology platforms they run on. Integrating core and these types of voluntary benefits is the best way to ensure your benefits programs delivers real value to your employees and is truly in their best interest.