The findings also revealed an increase in demand for 401(k) loans or hardship withdrawals, and/or a rise in demand for pay advances. Forty percent of employers who have seen such evidence of employee hardship due to COVID-19 say they will spend more on financial health benefits in the next two years compared to only 16 per cent who have not seen an uptick in demand.
“Employers’ interest in financial wellness has been growing for several years, and COVID-19 became a watershed moment,” said Matt Bahl, VP and head of workplace at Financial Health Network. “The pandemic highlighted employee day-to-day challenges like keeping up with bills and paying off debt, and this visibility is translating into a greater commitment to support the short-term and long-term needs of employees by designing benefits that support their financial health.”
In the midst of the pandemic, employers are taking action to address the financial health challenges of their workforce with 82 per cent saying they have incorporated financial health into their human resource department’s strategic plans, signaling C-level attention.
The report also highlights the gap between employee needs and the existing benefits solutions in part due to limited metrics being used by employers today. Employers, though motivated by employee engagement and demand, rely on a limited set of metrics to understand the needs of their employees. Other report findings include:
Sixty per cent of employers report employee demand is a top factor when making investment decisions about financial health benefits, even more than budgetary concerns (49 per cent).
Employer awareness of employee financial health challenges is largely based on limited metrics, contributing to a gap between employee needs and solutions. The most common ways of assessing employee financial health are through 401(k) metrics (75 per cent) and health-related insurance claims (69 per cent), which offer only a limited view into an employee’s financial needs.
The most common types of benefits offered do not address many of the financial health challenges that employees face. For example, fewer than 25 per cent of employers say they offer benefits like childcare or eldercare assistance, emergency savings support, or debt-related benefits, which provide critical support to employees especially during turbulent times.
“Now more than ever, it is critical for employers to offer financial wellness and health benefits that are strategically aligned with their employees’ financial needs,” said Krystal Barker Buissereth, CFA, head of financial wellness, Morgan Stanley at Work. “The current environment has accelerated the need for employers to offer holistic wellness benefits and programs to help reduce stress and improve their employees’ financial health and well-being.”
The survey was conducted by the Financial Health Network in July 2020, and polled 770 HR executives from mid-sized and large companies across eight industries to understand how aware employers are of their employees’ financial health struggles, the actions companies have taken to incorporate financial health into their human capital strategies, and how businesses are making financial health benefits decisions during the current crisis and beyond. Data and insights in this report were developed with strategic contributions and support from Morgan Stanley.