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Financial Wellness Takes Center Stage in the War for Talent

Practice Management

Amid the financial challenges of the pandemic and the Great Resignation, a new survey finds that employees are demanding more support from employers than ever.

The survey from Betterment’s 401(k) business found that, above in-office perks and vacation time, financial benefits are now a top priority for employees, including help with retirement planning and student loan debt. 

Findings in the resulting report, "The Impact of The Great Resignation on Benefits Needs and Expectations," are based on a poll of 1,000 full-time U.S. employees conducted in September 2021 to better understand their current financial situations, how they prioritize various types of benefits, and what impact these benefits may have on employee recruitment and retention. 

While most employees did not leave their jobs voluntarily, many report that they are still hurting financially from the last 18 months and they desire additional support from their employers to avoid being enticed to look elsewhere, the report explains. In fact, more than a quarter (28%) of respondents are currently in the process of looking for a new job, including 25% of Gen Zers, 33% of Millennials, 36% of Gen Xers and 13% of Boomers.

401(k)s Still Rule

When asked to prioritize financial wellness benefits, employees ranked access to a high-quality 401(k) match program as the most highly sought-after financial benefits, but employees are also seeking benefits like health savings accounts, a wellness stipend, and employer-sponsored emergency fund and student loan repayment programs.

Overall, 78% of respondents say it’s important that their employer offer financial wellness benefits, and 71% say these benefits are even more important now than they were before the pandemic. Moreover, of the employees the firm surveyed, 74% said they would likely leave their job for an employer that offered better financial benefits. This is especially true amongst younger generations, climbing to 79% for Millennials and 84% for Gen Zers. 

Student Loan Program

The survey found that 85% of student loan borrowers would be enticed to leave their job for an employer that offered better financial benefits. In fact, student loan borrowers were nearly three times as likely than those without student loans—43% versus 12%—to say that a prospective employer offering a student loan repayment program would entice them to leave their current job. 

When asked about retirement, slightly more than half (55%) of student loan borrowers indicated that having access to a high-quality 401(k) would motivate them to stay with their employer, compared to nearly three-quarters (72%) of those without loans. While retirement planning is clearly important to both groups, people without student debt are prioritizing it more, the report observes. 

Employer Response

So how are employers responding to the Great Resignation and the renewed focus on benefits? According to Betterment, 34% said their employer has begun offering new financial wellness benefits over the past year—the most common being a 401(k), wellness stipend, and 401(k) matching program, which aligns with what employees indicated they want from their employers.

The survey also found that 30% of employers began offering access to a financial advisor, but employees apparently don’t prioritize that benefit as highly as other offerings. “As this could be an employee’s first time having access to a live advisor—and they may feel intimidated, or unsure of how to work with them effectively—employers can play a key role in helping employees understand the value a financial advisor can provide and the best times to engage with them,” the report suggests. 

And with expectations rising, Betterment emphasizes that it’s critical for employers to take stock of their benefits packages and how they communicate them to employees. “The last couple of years have been financially challenging for workers and business owners alike,” notes Kristen Carlisle, General Manager of Betterment’s 401(k) business. “Faced with new realities and shifting work environments, it’s time that employers rethink traditional perks and consider what might provide greater value to their employees.

“What’s helpful is that great financial wellness benefits don’t need to break the bank, and can pay dividends towards employee retention and talent acquisition,” adds Carlisle. “Moreover, taking the time to help your employees understand how to take advantage of the benefits that you’re currently offering can go a long way towards boosting happiness and morale.” 

To that end, the survey found that 36% of respondents are not sure what financial wellness benefits their employer currently offers and 30% either haven’t gotten around to signing up for them or don’t know how to do so. So employers should provide clear, regular communications around benefits programs to help employees understand what is offered, and how and when to sign up, the report emphasizes. In addition, employers should consider sending regular email reminders to employees to raise their 401(k) contribution rate or instructions for how to take advantage of their wellness stipend or schedule time with a financial advisor.