Employees don’t feel in control of their finances. Here’s how organizations can help.
By James Reid
Employers play a large and important role in educating employees to help them address their rising financial concerns. This is the key finding from MetLife’s 14th annual U.S. Employee Benefit Trends Study (EBTS), which found that just 46 percent of all employees expect their personal financial situation to get better in the next year, compared to over half (52 percent) in 2014. Similarly, just 44 percent of employees felt in control of their finances.
This may be why employees, particularly Millennials, are looking to their employers for support to achieve financial security. The study found that just under half of Millennials (44 percent) said they wanted their employer to help them solve their financial concerns, a response more than double that of boomers. In addition, the majority of employees (65 percent) said that their employers have a responsibility for the financial wellbeing of their employees. On top of that, nearly twothirds (62 percent) of employees said they’re looking to their employer for more help in achieving financial security through employee benefits -an increase of 13 percent since 2011.
This growing demand for education offers HR a unique opportunity to drive loyalty and retention by empowering employees to make more informed benefits decisions that can help them meet their specific financial needs.
To do this effectively, however, it’s important that HR teams employ benefits strategies that reflect employees’ financial concerns and benefit needs. How can organizations do this? The findings suggests four key areas of focus:
- Clear and engaging communications is critical for benefits understanding. According to MetLife’s study, employees are unclear about the value of benefits and the important role they can play in addressing financial concerns. The study revealed that only 47 percent of employees agreed that non-medical benefits can help employees limit their out-of-pocket medical expenses, whereas 74 percent of employers believe they can. This lack of understanding can put employees’ financial health at risk -nearly 65 percent of Millennial employees do not have a savings cushion of three months. An unexpected accident or illness could result in a significant, negative financial impact.
Confusion also reigns in terms of understanding specific benefit options; this is especially true among Millennials. Only 52 percent of Millennials understood the rationale behind having life insurance, compared to 69 percent of boomers. Similarly, only 38 percent of Millennials grasped the concept of long-term disability insurance, compared to 57 percent of boomers. Employees across all generations remain confused about other benefit options, with only 48 percent of all employees reporting an understanding of short-term disability insurance and only 31 percent of critical illness insurance.
To address this lack of understanding about how benefits work, it’s important for organizations to clearly communicate their offerings and explain how these benefits can fit into employees’ lives. It’s not enough to simply show employees their benefits options on a website or pamphlet. Instead, companies need to understand how their employees want to be communicated with and what makes the most sense for their culture. This is especially important as only onethird (37 percent) of employees found their company’s benefit communications easy to understand, according the MetLife’s study.
2. Optimal enrollment conditions help employees make more informed decisions. Organizations should provide employees with a variety of robust decision-support resources, including a benefits website, mobile app, text messages, one-on-one consultations, and personalized offerings to help them learn about their benefit options and how these options can fit into their lives.
According to MetLife’s study, employees across all generations found one-on-one consultations with a nonsales benefits expert to be the preferred way to learn about their benefits. In fact, 68 percent of Millennials said they value one-on-one consultations, compared to 62 percent of Gen X and 57 percent of boomers. A mobile app followed as the next preference with 49 percent of all employees saying they would be interested in this option for managing their benefits.
Providing a variety of tools, resources, and options will help employees to understand their benefits and make more educated choices to meet their financial needs.
3. Benefits customization drives loyalty. Along with choice in their benefits, employees also want the ability to customize their benefit selections to address specific life events such as marriage, a first child or retirement. This is becoming increasingly important to employees: 70 percent said that having benefits customized to meet their needs would increase their loyalty to their employer, a rise from 65 percent in 2014.
The study also found that the majority of employees (54 percent) are willing to pay more for a broader choice of benefit offerings that suits their personal needs, and 55 percent said they are interested in having their employer provide a wider array of non-medical benefits that they can choose to purchase and pay for on their own.
For organizations, providing a greater array and more personalized benefits options to reach different segments of the workforce is not only vital to attracting new hires, but this can also help boost loyalty by increasing satisfaction among current employees. The days of a one-size-fits-all approach are over.
4. Financial education programs are desired by employees. Organizations should take note that employees want financial wellness programs. According to MetLife’s study, over half (53 percent) of employees believed that financial education workshops are valuable for helping them to understand their financial needs, options, and solutions, yet under a third (38 percent) of employers offer these programs. This represents a big opportunity for employers to provide real value to their workforce.
Organizations can start small with tools and incentive programs to encourage employees to manage their personal finances. Thirty-six percent of employees said that seeing how much more they need to save to reach their financial goal would help them stay on track with their financial well-being plan. Similarly, 27 percent of employees said that employer incentives would help them take the right steps to improve their financial wellbeing.
Organizations should take note of their employees’ needs and interests, especially when it comes to managing personal finances. With continually changing economic conditions, heavy debt loads, and the need to make every dollar earned stretch further than ever before, employees’ financial concerns may continue to rise. Employers who provide financial education and tools, clear communication, and optimum enrollment conditions will build stronger relationships with their employees, boost satisfaction and as an added bonus, engender loyalty.