Bank of America Merrill Lynch Study

Employers Offering Financial Wellness Programs Becoming the New Normal

A Sense of Responsibility for Employees’ Financial Well-being 

April 16, 2015 — NEW YORK–(BUSINESS WIRE)–The vast majority of companies (83 percent) today feel a sense of responsibility for the financial wellness of their employees, impacting the benefits, resources and financial education they offer, according to the latest Bank of America Merrill Lynch Workplace Benefits Report.

“Today’s plan sponsor must look beyond 401(k) enrollment and participation. As the survey underscores, there is a growing need for companies to consider their benefits offering more holistically and provide more comprehensive financial education and solutions that can address today’s challenges, such as managing rising health care costs,” said David Tyrie, head of retirement and personal wealth solutions for Bank of America Merrill Lynch. “We work with employers to create workplace financial solutions with tools and resources to empower employees to live their best financial lives.”

Based on a nationwide survey of 1,020 companies of all sizes, key insights from the annual report include:

  • Nearly three-quarters of plan sponsors surveyed, including 90 percent of large companies (defined as those with $100 million or more in 401(k) plan assets), believe that financial wellness solutions will be standard elements of benefits packages in the future, with large companies leading the way in implementing programs.
  • In the past year, the number of large companies offering employees financial education on topics including budgeting, planning for health care costs and managing debt has significantly increased.
  • While most plan sponsors recognize the differing generational needs of their employee base, only a fraction have made an effort to communicate and engage with generations, particularly millennials, differently.
  • Eighty-three percent of employers have experienced a rise in health care costs over the past two years, forcing them to make tough decisions about how to spend their benefit dollars.


Financial wellness becoming the new normal

Given the overwhelming sense of responsibilities felt by employers, it is not surprising that financial wellness, offering financial resources and education to foster the financial well-being of an employee population, is evolving from a “nice-to-have” into a “must-have” feature.

Nearly three-quarters of respondents anticipate that financial wellness programs will be standard elements of benefits packages in 10 years. Today, nearly one-quarter of plan sponsors have a strategy in place to help employees improve their financial wellness, with more intending to add it in the next two years. Adoption of financial wellness programs is most notable among large firms where nearly half (48 percent) of those surveyed have one, up from 35 percent in 2013.

Plan sponsors believe utilizing financial wellness programs also makes good business sense, as those employees who use the programs become more satisfied (78 percent), loyal (70 percent), engaged (68 percent) and productive (57 percent). However, only one out of seven employers indicated they offer or are considering offering incentives to employees to take advantage of the financial wellness programs they provide.

Expanding education and accessibility

In light of the increasing emphasis on employees’ financial wellness, companies are expanding educational resources and making broader financial education and tools more accessible. The majority (70 percent) of plan sponsors offer employees resources and educational tools on saving for retirement, and four in 10 offer guidance on planning for health care costs.

While fewer plan sponsors provide information on other financial management topics, large firms have significantly increased their offering in many areas since the last survey was conducted:

                                                         2013 Report          2015 Report
Planning for health care costs          46 percent             64 percent
Budgeting                                         21 percent             40 percent
Managing debt                                  22 percent            43 percent

To access resources, employees are most commonly utilizing online tools to see their full financial picture (49 percent), followed by a one-on-one relationship with a financial advisor (46 percent) and relevant research or literature to help with investment decisions (45 percent).

Additionally, eight in 10 plan sponsors believe providing access to one-on-one guidance from a financial professional can have a positive impact on the amount of money employees save for retirement. In line with the high adoption of online tools, nearly four in 10 plan sponsors have a total rewards, portal style of integrated benefits management for employees. Of those, 72 percent believe that employees understand how this information works to maximize the value of their integrated benefits. Nearly one-quarter believe that employees’ overall engagement with their benefits has increased since implementation.

financial wellness... is evolving from a “nice-to-have” into a “must-have” feature

“More personalized guidance and education about an individual’s entire financial picture, including savings and health care costs can have a meaningful impact on a person’s long-term financial health,” said Kim Kasin, managing director, Financial Guidance executive at Bank of America Merrill Lynch. “Helping employees with their financial life management can be positive for both employees and employers. For employees, it helps to reduce financial stress; and for companies, it makes good business sense because it helps employees be more focused and productive at work.”

Millennials value benefits differently, but aren’t communicated to differently

Benefits and resources, as well as how they are communicated, are not one size fits all. Half (52 percent) of plan sponsors with millennial employees believe millennials view benefits differently than other generations.

For example, 38 percent say millennial employees value equity compensation more than other employees, and nearly half (49 percent) of respondents also noted that millennials prefer to invest on their own.

Despite these differences, only 12 percent of plan sponsors with millennial employees have made an effort to use different technologies or channels to communicate with and motivate millennials to become more engaged with their benefits. Of those who are using different technologies or channels to communicate with and motivate millennials, texting (49 percent), LinkedIn (41 percent) and Facebook (38 percent) are the most popular channels. Additionally, more than half (54 percent) of employers with millennial employees cite that millennials can access their human resources or benefits website via their smartphone.

The ripple effect of rising health care costs

Eighty-three percent of employers have experienced a rise in health care costs over the past two years, on average by 11 percent. Among companies that have experienced an increase, 60 percent have passed along at least a portion to employees. While reporting the highest increase in health care costs, small companies (less than $5 million in 401(k) plan assets) were the least likely to pass along the additional cost to employees.

With 80 percent of employers absorbing at least half, if not all, of health care cost increases, HR professionals are faced with tough decisions about how to spend their benefit dollars. Half reported a significant to moderate impact on other benefits with 55 percent reducing spending as a result. Among those that reduced spending, it was most commonly on:

  • 401(k) plans and pension plans: 56 percent
  • Employee education: 40 percent
  • Equity compensation: 36 percent
  • Non-qualified deferred compensation: 34 percent

One of the ways employers and employees are adapting is by increasingly offering and utilizing health spending accounts (HSAs), a tax-advantaged medical savings account, which can be used if it is paired with a high-deductible health plan offering. However, HSAs are not being leveraged to their fullest potential. Eight in 10 report that they believe their employees view the accounts mainly as near-term spending accounts rather than long-term retirement savings vehicles.

In light of the changing landscape, most (74 percent) plan sponsors feel they need to become more of an expert on health care and retirement issues in order to do their job effectively. Six in 10 sponsors are spending more time on health care, while approximately one-third are spending more time on the 401(k) plan, hiring and firing and employee education. For more findings from the Bank of America Merrill Lynch Workplace Benefits Report and actionable advice for plan sponsors, click here.


Workplace Benefits Report Methodology
Boston Research Technologies completed a nationwide survey of 1,020 sponsors from companies of all sizes from October 14 through December 4, 2014 on behalf of Bank of America Merrill Lynch. To qualify for the online survey, financial benefit plan sponsor companies had to offer a 401(k) plan ranging from: Small (less than $5 million in plan assets); Core ($5 million to less than $100 million in plan assets); and Mega ($100 million or more in plan assets). Quotas were set to insure sufficient “Core” and “Mega” completes for analysis purposes. The final sample was weighted back to representative proportions based on plan size.

Bank of America
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