Employees’ money worries hit the bottom line
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The US stock market is in its longest bull run in history, the economy is growing at its fastest pace in almost four years and the unemployment rate is near its lowest level in decades.
In spite of the upbeat statistics, however, money worries pervade the country. Psychologists rank personal finance as among the biggest sources of stress, alongside health concerns and personal relationships.
Corporate America is taking note. Managers say financial unease is distracting staff, ultimately contributing to a lack of workplace productivity and hurting bottom lines.
“People are bringing these problems to work,” says Brian Nelson Ford, a financial wellbeing executive at SunTrust, the Georgia-based bank with $207bn of assets. “They are at work, but their brain is somewhere else, dealing with financial stresses.”
In response, companies are trying to help staff better cope by providing a range of so-called financial wellness benefits. They are starting to take money-related problems among the workforce as seriously as they do physical injury or illness.
“Five years ago companies were highly interested in having a conversation about this, but over the past couple of years they have really begun to act,” says Andy Sullivan, head of workplace solutions at Prudential Financial, the US financial services group.
“It can be very basic or much more robust, but at this point almost every large employer has some degree of these capabilities in place.”
Seminars for staff aim to address financial illiteracy and teach money management skills, with tips on budgeting, debt management and savings. Other sessions take in investment options, estate planning and mortgages.
But some employers are going further, stumping up hard cash on top of conventional retirement account contributions and health insurance provision.
Aetna, the health insurer, and Abbott Laboratories, the medical devices and pharmaceuticals company, are helping staff pay off student loans. John Hancock, the financial services company, helps parents find ways to pay for higher education through the College Coach programme. SunTrust even offers staff a day off work each year to get their finances in shape.
Some companies, including SunTrust, are helping staff set up emergency funds. A Federal Reserve study published this year showed that two-fifths of Americans would be unable to find $400 without borrowing or selling something.
It is not only low-paid workers who are afflicted by financial anxiety, notes Mr Ford. Even professionals on six-figure salaries can struggle, especially in places such as Manhattan and Silicon Valley where the costs of housing and childcare are high. “A good portion of folks are living pay cheque to pay cheque, regardless of income.”
Todd Katz, head of group benefits at MetLife, the life insurer, says: “Employers are saying, ‘Look, we feel like we have a responsibility to help’. Employees, because of their being stressed and financial unwell, may not be as effective in the workplace.” They may also be more likely to call in sick and delay retirement, further costing their employer.
Staff benefits that are related to personal finance concerns are among an expanding suite of perks US businesses are providing to keep employees happy and healthy.
Such deals are particularly generous in industries with a high demand for talent, such as technology, where benefits range from at-desk massages to gourmet food. Eye-catching initiatives even include “paw-ternity” leave (paid time off to look after pets).
The demand has spawned an industry of employee benefit providers, which include some of the world’s largest financial institutions. Some charge corporate clients for the services. Others keep them free, hoping they can exploit the opportunity to sell financial products to staff, or deepen their relationship with the employer.
Not everyone is convinced the schemes are in employees’ best interests. Heidi Shierholz, senior economist at the Economic Policy Institute, a Washington-based think-tank, says companies have contributed to personal financial uncertainty in the first place by removing safety nets.
As well as keeping wages as low as possible, she says, they have shifted the risks involved in meeting retirement obligations by eliminating final salary pension schemes.
“My concern is employers can implement low cost, gimmicky ‘financial wellness’ programmes, instead of putting real skin in the game — investments in employees, in the form of higher wages and higher retirement contributions,” she says.
Programmes tied to particular companies also raise questions about provision for workers who frequently change employer.
But proponents say financial wellness plans deliver results. More than half of respondents to a study by MetLife, which interviewed 2,650 full-time employees, said access to financial planning, education workshops or similar tools had made them more productive at work. About seven in 10 said they worried less about unexpected health and financial problems due to workplace benefits.
“Employers still want to help employees get to a better place financially,” Mr Sullivan says. “Ultimately it’s about people adopting solutions, and changing behaviour. Education, advice and guidance are great, but if people don’t act, they don’t become well.”
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