How to Talk with Your Employees About Financial Wellness

Nick Spagnoletti, Jr., CFP®
Business people shaking hands

On average, for every dollar spent on payroll,1 companies in the United States spend 43 cents on benefits in order to offer their employees:

  • Health, life, and disability insurance
  • Performance bonuses, profit sharing, and stock purchasing programs
  • Pensions, 401(k)s, and 529 plans
  • Paid time off, including family, bereavement, or sick leave

Smart businesses recognize the value of a strong compensation package in attracting and retaining key employees. The menu of benefits offered is designed to give employees peace of mind about their health and financial wellbeing, today and in the future.

But peace of mind is hard to come by for the average American worker. In the PwC 2018 Employee Financial Wellness Survey, 57% of employees said they are stressed about their finances,2 especially in regard to retirement.

In companies large and small, from 50 to 500+ employees, workers face considerable financial wellness anxiety as they do not fully understand how to structure their retirement savings plans. Nor do they know how to adapt them over the length of their employment.

Perhaps not surprisingly, participation in financial wellness programs is low. Bank of America Merrill Lynch found that although 48% of the employees surveyed were offered workplace financial wellness plans, only 31% participated in them.3 Meanwhile, research shows that only 41% of eligible workers actually contribute to their 401(k) plans, and 25% do not maximize their employer matching contribution.2,4

The difference between education and advice
It can be intimidating to be handed an enrollment packet and then be left to your own devices – especially since a 401(k) plan puts the risk back on the employee. He or she needs to make these important decisions alone, and the decisions are often ill-informed.

For instance, a 401(k) plan provider will educate employees on the plan(s) they offer and the investment options available. They will explain what the employee could be contributing and what their employer will match (if applicable). But they are not explaining how, and at what level, each individual should be investing and how it can impact the employee’s overall investment strategy. The advice is as important, if not more so, than the education.

As employees make these decisions, they should be thinking about things like:

  • Preparing for retirement
  • Caring for elderly parents
  • Planning for college tuition payments
  • Addressing needs for family member(s) with serious illness

But the reality is, they may not know to consider these things because they haven’t been properly advised. Unfortunately, the lack of guidance in this area is similar to that of a patient who walks into his or her doctor’s office complaining of chest pain, and the doctor offers a few thoughts and then tosses the patient a medical book, saying everything needed to heal him or herself is in that book.

In fact, 1 in 5 respondents to the PwC survey say they need help understanding their benefits, and 1 in 4 want access to unbiased counselors for financial wellness assistance.2

Seeking outside channels to maximize financial wellness benefits
Few companies have the inhouse resources to offer their employees the personal financial wellness assistance they want and need. As an additional benefit to employees, some companies bring in external resources, such as independent financial advisors who are able to provide an objective viewpoint on how employees can maximize the investment opportunities they are offered.

These financial advisors can expand on information beyond the enrollment packet, explaining how employees can specifically use the accessible options to help prepare for and meet their work and life challenges. For instance:

  • Does the employee have a working spouse who is also contributing to retirement?
  • How will 401(k) investment decisions impact other investments?
  • What goes into making a good decision on what and where to participate?
  • Does the company offer stock options or tax-favorable options?
    • What are the different ways to own company stock, and what are the tax consequences for each of these options?
    • Which are best to own inside or outside the 401(k), or are best to meet current and future financial objectives?

In addition, the financial advisors can demonstrate to your employees the value in your offerings and how they contribute to their overall financial goals, such as retirement.

If you are interested in having a financial advisor from MACRO Consulting Group speak to your employees about the benefits you are providing, please contact us today.

1. Healthfield SM. Are You Getting the Best Benefit From Your Employee Benefits? Accessed October 10, 2018.
2. PwC. 2018 Employee Financial Wellness Survey. Accessed October 26, 2018.
3. Bank of America Merrill Lynch. 2018 Workplace Benefits Report. Accessed October 26, 2018.
4. Financial Engines. Missing out: How much employer 401(k) matching contributions do employees leave on the table? Accessed October 26, 2018.