Employers are investing in workplace financial wellness, but not how employees want it

The importance of workplace financial wellbeing plans is often noted, but a new report suggests that more could be achieved through better alignment of supply and demand.

It found that what employers think their employees want and what those workers actually want are frequently different, meaning firms are investing unwisely while employees are missing out on the support they need.

The research from Payroll Integrations and Dynata found that 49% of employers who took part believe they are completely supporting employees’ financial wellness, but only 28% of employees agree. And while employers intend that their support offsets the effects of the unpredictable economy, almost two thirds of employees still say they don’t feel financially well.

“Employees are feeling the financial pressure from inflation, higher costs of living and the rise of insurance costs and now, more than ever, employers feel a responsibility to step in to help support their financial wellbeing,” said Doug Sabella, CEO of Payroll Integrations. “But, there’s a clear disconnect between what employers think employees want in terms of financial wellness offerings and benefit programs–and what employees feel they need to make a difference.”

Among the four adult cohorts surveyed, millennials have the highest sense of financial well-being with 65% saying they are completely in control of their finances compared to 54% of Gen Xers, 38% of Boomers, and 33% of Gen Zs. Millennials also feel the most financially stable.

A recent Bank of America report found that 48% of adults feel financially well, an improvement on 2023 stats.

GETTING IT WRONG, MAKING IT RIGHT

Payroll Solutions’ new 2024 State of Employee Financial Wellness Report polled HR leaders and employees and also discovered that although 95% of employers believe they have a responsibility to support employees’ financial well-being, only 36% of employees say they feel completely financially stable.

A key example of the misalignment of employers and employees is on financial education and planning with 41% of HR leaders saying they plan to spend even more on this next year than they are now However, just only 18% of employees are interested in the programs they’re currently investing in.

Employees would prefer the investment was made in health insurance (54%) and retirement plans (43%). 

But getting consensus in multigenerational workplaces may be an extra challenge for employers, although retirement (73%) and healthcare (72%) are good bets as all four generations agree that those are the benefits they say are most important to their financial well-being with most stating these are deal-breakers when deciding on a new job offer. Employers agree this is key for recruitment and retention.

Beyond that, 44% of Boomers say pensions are most important, 46% of Gen X and Y workers say additional compensation, 31% of Millennials say Health Savings Accounts (HSA/FSA) and 38% of Gen Z employees say lifestyle compensation (ages 18-26).

“Employers need to reassess how they’re providing financial wellness support to their employees. It’s clear they want to support employees’ financial well-being, but they’re not aligned on what matters most to help them do so,” Sabella continued. “It’s up to employers to determine where to best put their resources to better support employees on their financial wellness journey.”