Employee wellness – a concept long embraced by employers as a linchpin of increasing workplace productivity and decreasing health care costs – is undergoing a makeover.
“More and more employers are understanding wellness as a three-legged stool — physical, mental and financial,” says Freeman, vice president of St. Louis-based Four Seasons Financial Education (FSFE), which provides workplace financial wellness tools.
Workplace wellness programs have, in their nearly three-decade history, addressed physical and mental health through lifestyle and disease management. According to some estimates, today’s wellness industry is worth around $6 billion. And 78 percent of employers offered some form of wellness benefit last year, according to the Society of Human Resource Management.
The idea behind these programs – and part of the reason for their popularity -- is that physically healthy workers cost less to insure, have lower rates of absenteeism and are more productive at work. This is despite conflicting data on wellness programs’ returns on investment for employers.
But according to Freeman and a growing cohort of benefits stakeholders, programs with a physical focus don’t go far enough. Financial stress, in fact, may do more to harm productivity and overall workplace health even more than poor lifestyles and chronic diseases.
A new FSFE study suggests that workers under high levels of financial stress report depression three times as much as workers who report low financial stress, and anxiety nearly twice as much. The most financially stressed workers also have higher rates of insomnia, heart attacks, high blood pressure and infertility,.
The study doesn’t show whether financial stress can create or exacerbate health or emotional issues, but Freeman says the new data draw a clear correlation between financial and stress-induced health issues.
As more employers and human resource leaders are noticing how financial wellness, or lack thereof, negatively affects worker productivity, more legacy benefits providers and independent firms are rolling out workplace platforms designed to help workers bring – and maintain – their financial houses into order.
“We think there is a major difference between ‘financial education’ and ‘financial wellness’,” says Freeman. “In many respects, education is not the issue. People have been taught that they should save money since they were kids. They don’t need ‘education’ on the virtues of saving.
“But the problem is, so many don’t save. With ‘financial wellness,’ the objective is to give people the tools to change behaviors and focus on specific goals so they can do what they already know they should be doing.”
Freeman says there are six established, independent firms providing workplace financial wellness platforms throughout the country, but more tech-focused providers are emerging out of Silicon Valley.
FSFE partners with benefits brokers, but those who recommend FSFE’s platform don’t get a commission for doing so: As a fee-based fiduciary firm that is an SEC-registered RIA, paying a commission would be a conflict of interest, Freeman explains.
So why would a benefits broker advocate for a product for which they aren’t paid?
“So much of the benefits and retirement space is being commoditized,” he adds. “Competitive brokers understand they have to deliver more value for employers.”
But Freeman says a broker/platform relationship goes beyond creating intrinsic value. He cites the popularity of high-deductible plans and health savings accounts among employers, which can leave employees feeling confused and disenfranchised. Tech solutions can make it easier to educate employees on how to fund and use HSAs, which can, in turn, help employees maximize their benefits’ value.
Since increased deferral rates for funding HSAs lower employer tax exposure, an organization’s costs can go decrease if high-deductible plans with HSAs are fully utilized, notes Freeman.
There are no shortage of data documenting the nation’s collective financial stress.
A recent survey by GoBankingRates.com, which connects consumes with lending rates, found seven in 10 Americans have less than $1,000 in savings; 34 percent have no money saved.
Retirement statistics vary, but most show that Americans are woefully underprepared. Financial Finesse, a California-based provider of financial wellness programs for large employers, says that only 21 percent of employees are on track to meet basic retirement goals.
The nationwide retirement crisis has massive implications for employers, as it may mean more workers delaying retirement – which could lead to higher payroll, medical and disability costs.
In order to show the tangible value of financial wellness programs, Financial Finesse examined one large health care company’s experience with its financial wellness program.
In the end, employees with the lowest wellness scores cost the employer up to $200 in absenteeism, health costs and wage garnishments per employee per year, while the most financially healthy employees actually save their employers money. Even a small improvement in the overall financial health of a large employer workforce would save the company more than $5 million.
Greg Ward, who oversees Financial Finesse’s research arm, says the industry will need more research to draw clear conclusions on the ROI of financial wellness programs.
But, he says, emerging data clearly show that even small improvements in a workforce’s financial wellness can add immediate – and, in some cases – substantial improvements to a company’s bottom line.