The Benefits of Workplace Financial Wellness Programs How Companies Can Promote Household Financial Security Mathieu Despard, University of Michigan Meredith Covington, Ellen Frank-Miller, Geraldine Hannon, Michal Grinstein-Weiss, Washington University in St. Louis PlanSource Eclipse 2017 July 21, 2017 Park City, Utah
What is Financial Wellness? Freedom from financial stress and debt, enjoying life, and being prepared for emergencies 1
Employee Financial Wellness 2017 PwC Employee Financial Wellness Survey 53% of employees have financial stress - #1 source of stress Nearly 1 in 3: personal finances a work distraction; 22% say productivity suffers 42% struggle to meet monthly household expenses
Employee Financial Wellness 2017 PwC Employee Financial Wellness Survey 35% use credit cards for basic needs 30% have made non-retirement withdrawals from plans Top concern: lack of emergency savings (50%)
Source: JP Morgan Chase Institute
Source: JP Morgan Chase Institute
What Employers Can Do Financial Wellness Programs services to help employees become more financially capable and secure Financial coaching Credit counseling Online financial management tools Payroll advance or short-term loans Split deposit, automated savings products
Financial Wellness Programs Motives: to help employees and company 41% & 53% say productivity and company loyalty are improved, respectively Table 3. Services Offered (n = 60) % Direct deposit 83 Split deposit 71 Financial coaching In person 56 Online or by phone 71 Financial education classes 64 Online financial management tools 51 Credit counseling 39 Debt management 24 Payroll advance 17 Short-term loans 22 Student debt repayment 18 Research supported by the Ford Foundation, the JPMorgan Chase Foundation, and the W.K. Kellogg Foundation
Survey of 16,343 lower-income tax filers Less than 10% said employers offered a financial wellness program (except split deposit) Lower-Income Employees Much higher utilization among employees w/difficulty covering usual expenses Most interested in split direct deposit; also interested in payroll advance loans, financial coaching, online tools
Considerations for Employers 1 2 3 Survey your employees; note differences by age, position/pay Engage employees in designing wellness solutions Consider existing resources: EAP provider, nonprofit and federal government resources
Existing Resources FDIC Money Smart Consumer Financial Protection Bureau (CFPB) - financial education materials National Foundation for Credit Counseling local accredited providers Local banks/credit unions Savings programs
Considerations for Employers 4 5 6 Financial wellness program no substitute for good wages and health benefits, paid leave Consider both highand low-touch products and services: financial education alone is not enough Choose provider w/track record of promoting financial security; avoid untested, deceptive, or abusive services
Short-Term Loans Loans needed to cope with financial emergencies Few banks offer short-term, unsecured installment loans Payday loans: triple digit interest rates, quick lump sum repayment Employers don t want to make loan decisions Payroll-deducted installment payments may help improve credit scores
Download the Primer Additional tips for each type of wellness product or service Examples of financial wellness providers
References JP Morgan Chase Institute. (2015). Weathering volatility: Big data on the financial ups and downs of U.S. individuals. https://www.jpmorganchase.com/corporate/institute/document/54918-jpmcinstitute-report-2015-aw5.pdf PricewaterhouseCoopers. (2017). 2017 Employee Financial Wellness Survey. https://www.pwc.com/us/en/private-company-services/publications/assets/pwc-2017-employeewellness-survey.pdf