Workers’ Financial Stress Increases. Can Enterprise Programs Help?

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Soni Kapoor wanted to stay ahead of the game when it comes to personal finances and retirement planning. As director of product marketing at Silicon Valley tech firm Synopsys, Mr. Kapoor kept meticulous entries of his spending and investments into a personal spreadsheet.

But last year, his company introduced a new benefit that made his financial life easier: a so-called “financial health” program. BrightPlanThis allowed her to track her finances in one place – everything from retirement contributions to health savings account balances. A dashboard feature gave him access to most of his accounts in a few clicks.

“I have added all my financial accounts to the dashboard and I can do everything from budgeting to portfolio performance in one click,” said Mr. Kapoor, 34. “I use it every day.” Help with paying off debt or building a retirement portfolio can come from digital tools or from a professional – human – advisor.

Employee financial stress is a major problem for US employers. According to a recent PwC study, 63 percent of American workers He said their financial stresses had increased since the start of the pandemic. More than half of those surveyed by PwC just before the pandemic said money was already a significant burden.

Recognizing some of these challenges, particularly in areas such as debt and retirement savings, large employers have adopted and expanded their financial health programs. one wide variety of companies, but usually larger ones like Delta Air Lines and SunTrust Banks now offer such plans. Independent companies as GO Plan101, Best Money Movements and enrich build and operate wellness platforms.

More than half of companies surveyed by the Employee Benefits Research Institute in 2019 reported providing financial health initiatives to their employees. 20 percent were also installing them, and 29 percent were interested in presenting such programs.

Alight Solutions, a global outreach executive, conducted a survey this year showing that nearly 80 percent of U.S. workers have taken one specific step, such as reducing debt or creating an emergency fund, to better manage their money because of the pandemic. This is where financial health programs can help.

“The last year has shown us how hard he struggled,” he says. Gretchen Daywith a vice president AIA Alera Group, an insurance consulting firm. “Many had medical emergencies, student debt, and caregiver issues with aging parents. Employers needed to think more holistically about these employee issues.”

The main purpose of financial wellness programs was to help employees save more for retirement, often through company-sponsored 401(k) plans. However, in recent years plans have evolved from serving as long-term savings vehicles to advising employees on emergency savings and college debt, and even giving paycheck advances in times of urgent need.

“Most health programs now offer solutions beyond guidance and investment advice,” said Alison Borland, vice president of Alight Solutions. “They can help employees answer these questions: How is your budget today, how much should you save for the future, and how can you prepare for the unexpected?”

If you have a wellness suite at work, what’s the best way to use it? Ann House, director University of Utah Center for Financial Health, He says the first step is to ask your human resources department what benefits are available and how they work. Then evaluate what you need most. Do you need consultancy to reduce debts? Are you overspending and not saving enough for retirement?

“Very few adults have the budget,” Ms House, an accredited financial advisor, said she found. “One of the foundations of financial well-being is knowing how long you have to live. This is a real eye-opener.”

Although wellness plans offer nut soup tools for personal financial advancement, there are areas where they may fall short. Employees may not want to share the fact that they are experiencing financial difficulties, even if the information is not shared with their employer. While it is relatively easy to get employees in auto-enrollment 401(k)s to save more for retirement, it is difficult to get them to cut back on their spending, especially when faced with numerous emergency expenses and impending debt.

“Employers realize that personal finance is a very private matter, and many are uncomfortable asking their employees to share details,” Ms Day said.

Having third-party services separates these specific issues from the employer-employee relationship. Concerned about privacy before signing up, Mr. Kapoor said, “his employer has zero visibility into my personal finances.”

“That was my first question before I created your account,” he added.

During the pandemic, employees in need of cash have been dipped into their 401(k) accounts, a move that could delay retirement if the money isn’t replaced. “Many of them saved in 401(k)s and the money didn’t go back to the plans,” Borland said. Three in 10 employees surveyed said they withdrew money from their 401(k) or individual retirement accounts during the pandemic, mostly for medical expenses and auto and home repairs. according to a recent survey.

Another potential downside to these employee programs: Some of the more complex issues many workers face have yet to be addressed, such as paying for aged and child care and property planning.

“There is not enough childcare for working parents,” said Ms. House. Helping employees understand how to pay for it “still isn’t addressed in most health plans,” he added.

No matter how good data collection and analysis is, it is natural that there will be some shortcomings in any digital platform once it becomes available. Even after consolidating his financial accounts, Mr. Kapoor discovered that he had to manually re-establish the link between the BrightPlan board and some bank accounts, “it’s a minor inconvenience on some accounts,” he said.

Mr. Kapoor also said he sought more specific guidance from the wellness platform to enable him to easily “anticipate the best estate planning needs – what and why this private life insurance or other policy is good for you.”

Although most health plans are paid for by employers, they are not completely free. Investment accounts and brokerage accounts for mutual and exchange-traded funds often carry additional fees. For example, the investment account managed by BrightPlan charges an annual fee of 0.25 percent of assets. Employees leaving the company can receive and pay for BrightPlan services out-of-pocket; The first three months are free, then $15 per month for the full suite and unlimited access to a financial advisor.

Despite all the new financial offerings, parts of these programs are more popular with employees than others. In a measure of how successful employer-defined contribution retirement plans are (the core offering of most wellness plans), half of employees surveyed by Alight said “investment performance” was most important to them, while only 24 percent said “risk management” was at the top. He said it’s level. priority list. As with the rest of the retail financial education universe, conveying complex concepts such as risk/reward trade-offs, post-retirement income, investment fee impact and estate planning is a constant challenge.

You may be feeling overwhelmed at the thought of reducing your finances and you are not doing it. if you want to use your employer’s resources. If this is the case, it may be helpful to use an independent, nonprofit resource that is not affiliated with your workplace. Federal Consumer Financial Protection Board offers a toolMs. What House suggests can help you determine what you need to do.

Your employer may not offer a financial health program – so take a DIY approach. Focus on your most pressing problems. If you need debt relief, consider the nonprofit National Consumer Credit Foundationoffers a free online assessment and referrals to counseling agencies. Also consider an accredited financial advisor. advices It can be found through the Association for Financial Counseling and Planning Education.

Looking for some great college loans? Think refinancing To lower your monthly payments. Do you want to create a retirement plan? Countless retirement planning calculators online it’s geared towards expected longevity and savings, but you can also take a paid-only approach for a more customized approach, certified financial planner, who do not work on commission but instead charge a flat fee or advance.

At the very least, be a little honest when creating your financial health plan. Is your financial situation hurting your ability to be productive? If so, ask for some help. It never hurts to ask.

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