Are employers concerned about the financial health of their employees? Yes, and they are increasingly looking at ways they can help their workers improve, according to a new survey by Aon Hewitt, a company that provides talent, retirement and health solutions.
In the survey, the company surveyed more than 400 U.S. companies, which have a combined workforce of nearly 10 million workers, seeking to determine the business' current and future approach to financial wellness benefits. The results showed that 76 percent of companies surveyed are somewhat or very likely to expand their focus on the financial well-being of their employees in 2014.
"In the past, companies were primarily concerned about whether workers were participating in their 401(k) plans, but we're now seeing employers expand their focus beyond just retirement savings to help workers improve their overall financial health," said Rob Austin, director of Retirement Research at Aon Hewitt. "A growing number of companies are offering tools and services to help employees make smarter financial decisions, which can help improve employee engagement and productivity as workers focus less on financial stressors."
According to a separate Aon Hewitt survey of more than 2,800 workers and their dependents, an individual's financial situation is the most commonly cited stress factor, and 51 percent of workers surveyed said that stress caused them to be less productive at work.1 To help workers better manage their financial health, Aon Hewitt's survey shows companies are planning to take the following steps in 2014:
Providing help to manage budgets. A growing number of employers realize that basic money management plays a critical role in an individual's financial well-being. To ensure workers are able to pay for day-to-day living expenses, a quarter of employers are very likely to provide some assistance to employees to help with budgeting.
"Employers understand that workers can't adequately save for retirement if they don't have their financial house in order," added Austin. "To help employees take this first step, companies are offering and promoting services to help them manage their debt while also encouraging them to save."
Offering tools and resources to improve saving and investing decisions. Aon Hewitt's survey found that more companies plan to offer access to advice, tools and resources that help employees examine their overall financial picture. Increasingly these resources allow workers to consider a variety of factors including expected retirement date, all income sources—not just their paycheck from their employer, and other details of their personal financial situation.
Companies are providing these types of advisory services through a variety of channels:
- Online: Nearly half (44 percent) of employers currently provide access to online third-party investment advisory services and another 14 percent are somewhat or very likely to offer them in 2014.
- Phone: More than a third (35 percent) of companies provide access to third-party financial advisors via phone and another 14 percent are somewhat or very likely to do so in the next 12 months.
- Face-to-Face: Nearly one quarter (23 percent) of employers offer face-to-face meetings with financial advisors and another 10 percent are somewhat or very likely to add this feature in 2014.
Simplifying investment options. Employers continue to offer options to provide workers with a simple and straightforward approach to investing. Most employers (79 percent) offer target-date funds in their defined contribution plans as a turn-key approach to saving. Of those that do not currently offer them, 36 percent are somewhat or very likely to add this feature in 2014. More than a third (39 percent) of companies offer managed accounts, with nearly one quarter (24 percent) of the remaining group somewhat or very likely to offer them in the year ahead.
"To ensure that they're making the most of their retirement savings, workers need to take an active role in managing their 401(k) through regular rebalancing and re-evaluation of fund choices," explained Austin. "However, many employees feel they either lack the time or the understanding to make sound investing decisions. Features like target-date funds and managed accounts help workers stay on track to meet their retirement savings goals by making some of the investment decisions for them."