Finding Financial Wellness: How to Create a Blueprint for Employees in Need
As HR Leaders, our employees go through phases of ups and downs just like everyone else. These moments in time or “Eras” are then categorized as “Fun”, “Growth”, “Successful”, etc.
Well, today a majority of employees would tell you that this current Era has been “Tough”. Some have labeled it “The Great Exhaustion”, and much of it has to do with the current economic environment, rising inflation, and the financial strain it has put on individuals. These distractions have spilled into the work day, pulling employees away from their responsibilities and hurting their productivity.
Many of the customers we speak with are focused on helping their employees stretch their financial dollar. The thought being that if they can help employees feel more financially secure through benefits and employee savings programs, employees will feel happier and more engaged at work, productivity goes up, and ultimately turnover rates go down. And while each benefit won’t necessarily fit each employee’s lifestyle or circumstances, the goal is to provide choice, and meet the needs of a unique and diverse population.
Financially distressed employees will typically fall into three (3) buckets:
- Inadequate Savings
- Unqualified for Affordable Lending
- Lack of Financial Guidance
We read all over that 60% of Americans are living paycheck to paycheck. Yes, and almost half of U.S. workers have less than $1,000 in their bank account at any given time. If something as silly as a dishwasher breaks, it could really hurt these individuals for months.
This is where an Employee Purchasing Program would come into play. Employees can make the needed purchase, and break the payroll-deducted payments up over time. This saves them from dipping into savings, taking out a high-interest loan, or hurting their credit. It relieves the financial stress of this particular situation. They can still bring their best selves to work, despite the minor headache and inconvenience at home.
Unqualified for Affordable Lending
Employees with subprime credit make up almost half of the working population. Access to traditional bank loans or credit cards are not an option for this group. They turn to predatory lenders where the average APR is well into the triple digits. Or, they borrow from their 401K and miss out on the opportunity to recognize compound gains from their investments. These paths not only hurt the employee for the short-term in the form of taxes and fees, but for the long-term as well.
Benefits teams have an opportunity to provide their employees the option of socially responsible low-cost credit through Employee Loan Benefits. Robust data from their employer helps the employee enhance their credit profile and receive access to more affordable loans. The guardrails are in place to ensure the loans are responsible, including limiting the number of loans and the dollar amount. Deducting through payroll ensures timely and reliable payments, ultimately boosting the credit profile of your employees.
Lack of Financial Guidance
Many times the cause of the two effects above is a lack of financial education or guidance. About two-thirds of Americans do not use a financial advisor, and about a quarter of the population say they don’t have anyone they trust to even ask about finances. Finding an advisor to trust with your finances can be stressful, and there is a cost associated with that relationship.
Through both the Employee Purchasing Program and Employee Loans, employees will receive Financial Coaching should they choose to partake. Help establishing a budget, planning for the future, and protecting their families among other topics that can give a baseline of education to be built on throughout their new financial journey.
How Do We Create Change?
Benefits are not a one-size fits-all, especially when it comes to finances. All we can do as benefits professionals is the proper due diligence on the products that are out there, and then provide employees a variety of quality and responsible options to choose from. Through benefits education, employees will understand the value of each and whether a particular product is a fit for their current situation, and can make an informed decision from there.
Either way, they’ll certainly appreciate the effort and support from you!
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