Retirement

Why Is Financial Wellness a Priority in 2015?

Holistic financial wellness programs are not only here to stay, but are already proving to gain momentum in 2015. According to an Aon Hewitt study that was just released, 93% of companies plan to focus on the financial well-being of their workers beyond the realm of retirement. This is the largest percentage of employers tuned into financial wellness that we have ever seen.

This may leave many asking why financial wellness is so important now, why the urgency. Everyone who works in an HR function or is a manager can approach this logically, of course we want employees to get the most of their salary and benefits and be financially well. But if part of the purpose of working has always been improving our financial outcomes, why is this so important today?
The answer boils down to three converging market factors that have now gotten to the point of critical mass. These factors are the reason you have heard so much in the news recently about financial wellness programs and why the topic continues to gain momentum with employers, employees, and it is even showing up in the political sphere. These three important factors are benefits, wages, and behavior.

  1. Benefits: Benefit costs are increasing at an alarming rate. In the past decade alone, the employee share of healthcare contributions has increased 150%. Employees need help managing the new costs associated with consumer driven healthcare and retirement plans. Additionally these benefits are also becoming increasingly tied to employee behavior with their specific choices influencing cost and quality in new ways.
  2. Wages: Real wages, taking inflation into account, have been falling or flat for decades. Regardless of job creation or elimination, there has been a lack of meaningful wage growth. Additionally, take-home pay that employees do retain is generally not optimized for benefits.
  3. Behavior: We live in a spend economy and are wired for instant gratification which is particularly problematic in a world that is moving away from defined benefit security. Employees who live in cities see about 5,000 advertisements each day, making it very difficult for them to exercise willpower and to want to save. It is also noteworthy that expenses rise to income, so when employees do achieve incremental income, their expenses and standard of living increase as well.

These three factors are coming together as a perfect storm and if they continue at their current rates, employees will be faced with significant barriers to prosperity and secure futures. Financial wellness programs are designed to assist employees at all levels of the financial wellness ladder. A well designed program will help employees manage their spending, save for the future, and maximize the benefit programs provided by employers like yours.

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Lacey is the team lead focused on B2B demand generation for Morningstar’s growing Workplace segment. This includes responsibility of marketing strategy and execution with plan sponsors and key providers to expand Morningstar’s market reach. The Workplace umbrella includes financial wellness and retirement products for employees as well as custom models and fiduciary services. With products, services and thoughtful marketing, we strive to empower companies to help employees build financial wellness today and get ready to retire when the time comes.

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