Worrying about money affects both the individual employee and their employer. It can lead to stress, physical illness, reduced productivity and delayed retirement.
Thats why financial wellness is so important and its gaining popularity in the workplace. The words financial and wellness were not combined in the same sentence two decades ago, Greg Ward, chief financial research analyst, said Wednesday during a webinar hosted by Financial Finesse. Things have come a long way in the last 20 years.
Many employers are emphasizing budgeting and saving, he said, and are offering financial wellness as a benefit to employees of all income levels not just executives as was previous practice. We are focusing on the individual, Ward said.
A financial wellness program has four key elements, Ward said. Those include:
1) An unbiased program. We dont want to have a conflict of interest, he said.
2) Information and education should be delivered by a certified financial planner. Certified professionals offer a depth and breadth of insight, he said.
3) Focus on changing behavior. Many programs only offer information, Ward said, but that is meaningless if behaviors dont change.
4) A proven result.
Like reaching any other goal, financial wellness takes effort. A person cant workout once and see more muscle tone, said Daphne Winston, a financial planner at Financial Finesse. Its got to be a lifestyle, she said. It has to be a process.
A huge majority arent saving for retirement
Saving for retirement is a huge problem, Winston said, and just 16% of employees are on track to retire. Employees who want to retire but cant afford to are costing employers $10,000 to $50,000 per employee per year, she said.
Lost productivity is another giant cost to employers. Citing a Gallup poll, Winston said only 30% of employees are actively engaged at work. The 70% of workers who are not engaged cost employers between $450 billion and $550 billion each year, she said.
To combat this, Winston recommended using a retirement calculator. When you run it, you know where you stand, she said. The earlier the better. The results can help employees better prepare for the future and make any changes that are needed, Winston said.
Based on the statistics, its clear that many employees need help getting their finances in order, which is why more employers are offering financial wellness programs, Ward said. Employers are increasingly integrating financial wellness with their health benefits, he added.
That trend will continue. Financial wellness is here to stay, Winston said. People need it.
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