Skip to main content

Assessing the Merits and Challenges of Financial Wellness


Financial wellness is an increasingly popular topic, but there is no consensus about their value. Financial wellness is achieved when people can confidently manage their daily finances (budgeting and debt elimination) while successfully meeting both short- and long-term savings goals (emergency reserves, specific purchase, college savings, and retirement). While clear advantages and perceived value have been identified, several obstacles remain.

In Assessing the Merits and Challenges of Financial Wellness, we evaluate whether financial wellness programs are a wise choice and welcome addition to the traditional employee benefits package.


Why is Financial Wellness Important to Plan Sponsors?


When designed properly, financial wellness programs can help employers enhance their benefits packages and realize significant cost savings by helping employees retire on time, be more productive, and enjoy better health.


  1. Recruitment and Retention - Employers are constantly competing to attract and retain talent. Employees, especially millennials, seek valued benefits from their employers. In a report by PricewaterhouseCoopers (PwC), a survey of 1,600 workers found that 76% of millennials say they have used and value the services their employer provides to assist them with their personal finances, and 62% say their loyalty to their company is influenced by how much the company cares about their financial well-being. Financial wellness programs are seen as a desirable benefit that can minimize turnover and foster loyalty. Many employers believe “it’s the right thing to do.” 

  2. Enhanced Productivity - Employees who are stressed about their finances are more likely to be distracted at work, spend time at work dealing with financial matters, and more likely to miss work on account of their personal financial issues. Research shows that financial stress can adversely affect physical health, as well as productivity. Not surprisingly, employees who are stressed about their finances are also more inclined to cite health issues caused by financial stress. Financial wellness programs can produce a more engaged, focused, and healthier workforce. 

  3. Retire on Time - Workforce management aims at preparing participants to retire on time. A lack of retirement readiness may cause some employees to “retire on the job” and become disengaged. Delayed retirement can also result in turnover among younger employees who are unable to realize career progression. Financial wellness programs can enhance retirement readiness and help organizations manage their pipeline of talent. 

  4. Cost Savings - Determining the true value of a financial wellness program can be elusive, but studies have shown that a well-constructed program may help reduce healthcare costs, expenses associated with delayed retirement, and costs associated with recruiting, retaining, and engaging employees. 



How Can HBS Help?


As a thought leader on financial wellness, we can help you determine if your organization would be a good candidate for a financial wellness program and help you navigate your options. Perhaps it makes sense for you to leverage the resources offered by your retirement plan record-keeper; or, perhaps you would be better served hiring an independent financial wellness vendor. We can share our expertise and guide you through the process of implementing and monitoring your financial wellness program.



To learn more about financial wellness, or to begin talking to a retirement plan advisor, please get in touch by email or by calling (800) 388-1963.

Popular posts from this blog

What are Alternative Investments? 4-Part Introduction

The market has seen a lot of uncertainty in recent years. Because of this, many organizations are looking for new ways to diversify their investment portfolios. Our best-kept “not-so-secret” secret: alternative investments. In this blog, we'll explore alternative investments with a focus on how they can potentially shield your portfolios from downside market volatility. In addition, we'll break down its benefits and risks and whether it could be a good fit for you. Part 1: What are alternative investments? Alternative investments may help diversify your investment portfolios through non-traditional investment strategies. Non-traditional investment options have varying liquidity ranges depending on the strategy and fund structure. Alternative investments are sometimes referred to as alternative assets. According to the Harvard Business School , the seven types of alternative investments are: private equity; private debt; hedge funds; real estate; commodities; collectibles; and s

Section 125 – Cafeteria Plans Overview

A Section 125 plan, or cafeteria plan , allows employees to pay for certain benefits on a pre-tax basis. Employers use these plans to provide their employees with a choice between cash and certain qualified benefits without adverse tax consequences. Paying for benefits on a pre-tax basis reduces the employee’s taxable income and, therefore, reduces both the employee’s and the employer’s tax liability. To receive these tax advantages, a cafeteria plan must comply with the rules of Section 125 of the Internal Revenue Code and related IRS regulations. Under these rules, a Section 125 plan must have a written plan document and can only offer certain qualified benefits on a tax-favored basis. Once an employee makes a Section 125 plan election, they may not change that election until the next plan year, unless the employee experiences a permitted election change event. Also, for highly compensated employees to receive the tax advantages associated with a Section 125 plan, the plan must pass

5 Top reasons to offer employee mental health benefits

In fast-paced and demanding work environments, the importance of employee mental health benefits cannot be overstated. Employees who are mentally well are more productive, engaged and satisfied with their jobs. Mental health treatment, including therapy, medication and self-care, can help people who are experiencing mental illness. However, taking that first step toward recovery or seeking help can be challenging. The National Alliance on Mental Illness’ Mental Health By the Numbers finds that the average delay between the onset of mental health symptoms and treatment is 11 years. Factors such as cost, access and stigma can hold workers back from receiving the mental health support and treatment they need. However, there are employer solutions that can help employees overcome these barriers, understand available treatment options and start their recovery journey. This article explores barriers to mental healthcare and ways employers can help break them down to support employees holist