With feelings of financial wellness hitting a five-year low among employees, employers increasingly are turning to financial wellness programs to address employee stress and improve retention, according to a new report.
Findings from Bank of America’s 12th annual Workplace Benefits Report— Navigating a New Era of Financial Wellness — reveal that 84% of employers now say that offering financial wellness tools can help reduce employee attrition, and 81% say wellness tools help attract higher-quality employees.
This is critical to employers, according to the report, as 46% have seen an increase in resignations over the past year. In addition, approximately one in three employees have switched jobs or thought about switching jobs in the past year.
The report also explored the impact of the current economic and inflationary environment on employees’ financial wellness, revealing that current conditions have increased financial stress among employees. According to the findings, 80% of employees are concerned about inflation and 71% feel the cost of living is outpacing growth in their salary or wages.
Wellness Declines
This is having an impact on employees overall feeling of financial wellness, with levels varying based on employees’ ethnicity, gender and generation.
After the percentage of employees who feel financially well returned to above pre-pandemic levels in February 2022 (57% versus 55% in 2019), the percentage dropped to a five-year low of 44% in July 2022. And this decline is occurring across generations. Since February, feelings of financial wellness declined by 15% for Gen Z/Millennials, 14% for Gen Xers and 10% for Baby Boomers/Silent Generation.
By gender, women still lag men in their feelings about financial wellness, but they are closing the gap. As of July 2022, women were less likely to feel financially well than men by five percentage points (42% of women vs. 47% of men)—down from 10 percentage points in 2021 (47% of women vs. 57% of men) and 17 percentage points in 2020 (41% of women vs. 58% of men).
However, even though the gap has improved for women, it has expanded for minorities since February. In this case, 49% of white employees feel financially well (compared with 56% in February), followed by 37% of Asian employees (67% in February), 33% of Hispanic employees (47% in February) and 32% of black employees (50% in February).
Employee Support
In response to increased stress about financial wellness, employers continue to embrace programs to expand support for their employees. Bank of America notes, for example, that 91% of employers see higher employee satisfaction when they offer resources to manage overall wellbeing.
In addition, employers who take it a step further and broaden their wellness programs to include mental and physical wellness resources are seeing noticeable improvements in productivity (50%), employee stress (43%), employee morale (41%) and employee creativity and innovation (36%).
Other top findings include the following:
Retirement remains a top concern. As of July 2022, 56% of employees were confident they will reach their retirement goals, down from 69% in February 2022. Seventy-four percent say investing in their 401(k) and other accounts will help them build a retirement nest egg, and 61% are contributing enough to maximize their employer match.
Employees are dipping into savings due to financial strain. Half of employees have acted in the last six months due to financial strain, including tapping into emergency savings (21%), working additional hours (21%), looking for higher paying jobs (20%) and taking out a 401(k) hardship withdrawal (6%).
Access to investment advice. With 4 in 10 employees saying they want access to advice from an investment professional, the survey found that 62% of employers are now offering employees access to investment advice services (up from 55% in 2021).
Digital tools play a key role in driving employee engagement. Employees are seeking out digital tools that offer personalized support, and employees find tools that can provide streamlined information and help track and set financial goals most useful. Fifty-two percent of employees prefer to use a digital app to manage their finances.
Equity grants are powerful recruitment and retention incentives. 76% of employers believe equity compensation is a differentiator for employee recruitment and retention, and 44% of employees who participate in equity compensation plans say it was an important reason for accepting the job.
Education about Social Security is an opportunity. Only 38% of employees say they understand Social Security benefits. Even among Baby Boomers, 41% still do not understand Social Security. While 48% of employees indicate they are not getting enough education about the program, only 40% of employers offer employees Social Security support and education.
Health care remains an opportunity. 84% of employers feel very responsible for their employees’ understanding of retirement healthcare needs and costs, and 89% of employers who offer health savings accounts (HSAs) contribute to their employees’ savings.
The findings are based on two surveys conducted by Escalent on behalf of Bank of America. The first was conducted between Feb. 3–28, 2022, among 834 employees who are working full-time and participate in 401(k) plans, and 846 employers who offer both a 401(k) plan and have sole or shared responsibility for decisions made in the plan. The second survey was conducted between July 5–19, 2022, among 478 employees who are working full-time and participate in a 401(k) plan.
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