Financial wellness is no longer a matter of just being a nice thing for employees or a way to help recruiting and retention, but an important tool for improving profits.
It’s clear that there’s demand from the workforce. A recent survey indicated only 42% of employees feel compensation has kept up with higher living expenses, compared with 52% a year earlier.
The same survey indicates that 19% of employees are looking for a new job primarily to improve their compensation.
With numbers like these, a strong financial wellness program can have a significant impact ultimately your bottom line.
Here’s three ways that financial wellness can improve the bottom line:
It drives down the cost of turnover: Losing employees is an expensive proposition: While estimates vary, it can cost more than $4,000 to replace an employee in terms of upfront “hard” costs, while in terms of other costs, the price can be in multiples of salary.1 In addition, organizations lose the institutional knowledge of an experienced worker, which drives up turnover costs higher through training and loss of productivity.
At the same time, 65% of workers have felt stressed regarding their finances due to the COVID-19 pandemic, leading to increased turnover and lower productivity.2 Among employees who feel financial worries have hurt their productivity, two-thirds are struggling to meet their household expenses. One-quarter have saved less than $1,000 for retirement; more than half plan to postpone their retirement.1Given the high cost of employee turnover, it’s in employers’ best interest to improve employee financial wellbeing. Student loan debt management plans and financial coaching can help young employees’ stress of paying the bills; improved education on retirement planning will lessen workers’ fears of the future.
Financial wellness lowers stress and boosts morale. Financial wellness does far more than lower turnover: Almost half of financially stressed employees say money worries has had a negative impact on their mental health.
Given the connection between financial wellness and mental health,3 employers can consider offering financial coaching alongside mental health resources. Employees are likely to respond to one-on-one financial coaching via phone or video chat because of the personal and confidential nature of their financial issues.
It boosts productivity. Even when financial issues don’t take a toll on employees’ mental health, the stress still reduces productivity. About 40% of workers say they’d be more productive if they didn’t have to worry about their personal finances while on the job,4 and employees spend around one-quarter of their time at work coping with financial issues.5
Employers who promote financial wellness programs (HUB’s FinPath is but one example) can reap tangible gains in employee focus and productivity. Mandated education on budgeting, debt management and building emergency savings shouldn’t be considered an expense or loss of productive time, but an investment in worker wellbeing that will have a long-term impact on the bottom line.
1 SHRM, “The Real Costs of Recruitment,” April 11, 2022.
2 EY, “How is your bottom line linked to your workers’ finances?” April 25, 2022.
3 BenefitsPRO, “The role of financial wellness when it comes to mental health,” June 23, 2022 (subscription required).
4 John Hancock, The impact of the pandemic on stress, finances, and well-being, accessed December 7, 2022.
5 Employee Benefit News, “Employees spend 25% of their workday worrying about money,” April 11, 2022.
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.
HUB Retirement and Private Wealth offers institutional and retirement services to for-profit and not-for- profit organizations and customized private wealth management services to individuals and families. HUB Retirement and Private Wealth employees are Registered Representatives of and offer Securities and Advisory services through various Broker Dealers and Registered Investment Advisers, which may or may not be affiliated with HUB International. Insurance services are offered through HUB International, an affiliate.
HUB Retirement Services provides ongoing guidance on your plan’s structure and management to ensure it meets regulatory compliance guidelines and the interests of your employees.
Securities offered through LPL Financial, member FINRA/SIPC. Investment advisory services offered through Global Retirement Partners, LLC (GRP), a registered investment advisor. Insurance services offered through HUB International. GRP, Washington Financial Group and HUB International are separate and unaffiliated with LPL Financial. Washington Financial Group is the approved name under which LPL Financial business is conducted.