A recent report by Bank of America Merrill Lynch discusses how American employers are significantly changing how they offer financial benefits to their employees. While part of the report focuses on retirement plans and health insurance (both important issues), there were also a number of great findings about how and why employers increasingly offer education and guidance on a range of other financial wellness topics. Let’s take a quick look at some of these:
So far so good, but what about the many employees who don’t have access to retirement plans (or healthcare insurance) through their work? And let’s also acknowledge that for many employees, retirement planning is something that doesn’t seem very real or relevant to them – they are struggling with day-to-day issues around credit, debt, financial stress, and the costs of living, especially in an expensive city like San Francisco. Well, there are some encouraging signs in the report that employer thinking is evolving toward a more holistic picture of financial wellbeing.
For example, here’s a quick “infographic” from the report about what employees are asking for help with:
So we can see budgeting and managing debt added to the picture. And here’s another graphic showing what some leading companies are doing:
Now we have indication that at least some businesses are offering a variety of financial wellness supports to their employees. Indeed, the report goes on to say that “leading edge” employers have started to implement financial wellness programs that include things like financial education workshops/seminars, online financial advice, access to a financial advisor, and other “holistic” tools to increase financial literacy and wellbeing. This is great to see, and I was especially impressed that among employers who make at least some financial education available, 77% give employees time during work hours to receive education and guidance on financial matters. That’s huge – employees are much more likely to take advantage of these tools on paid time rather than staying late or sacrificing pay.
But at the SF Office of Financial Empowerment, we still feel that something is missing. More than 18% of households in the Bay Area are either unbanked and underbanked, and the use of fringe financial services like check cashers and payday lenders continues to be a big problem for household finances. We’ve found that among low-income working households in San Francisco, roughly 70% do not get paid by direct deposit – another sign that many thousands of employers are taking their check to the check casher to access their money, at a cost of $700 to $1,000 or more per year. This is hard-earned money that should be going toward basic needs (and back into the local community) instead of being wasted on high-priced fringe financial services.
We are asking our local employers to join us in the CurrenC SF initiative and make sure that all employees have basic financial access that is safe, affordable, and convenient. Yes, we need to offer financial education and talk about retirement savings, but first things first: let’s build a foundation by helping employees get a checking or savings account, and enroll in direct deposit. Then we’ll work together on plans for workplace-based financial education. In fact, we are partnering with Mission Economic Development Agency (MEDA) to pilot a workplace financial education program at six area hotels over the next couple of years.
Let me close with one more graphic that we agree with, and that we hope employers increasingly are agreeing with as well. Focusing on financial wellness for your employees not only makes their lives easier, it has benefits for your company:
Take the first step today by joining CurrenC SF and working in partnership with the City of San Francisco to build financial wellness for your employees.