Sponsoring Financial Security

Uncertainty about retirement security has employees looking to the worksite for help

by Meredith Ryan-Reid

Financial concerns among employees are rising, which may not come as a surprise given current economic conditions, rising debt loads and the need to make every dollar earned stretch further than ever before.

MetLife’s 14th Annual Employee Benefit Trends Study (EBTS) found that just 46 percent of all employees expect their personal financial situation to get better in the next year, compared to over half (52 percent) in 2014. To make matters worse, concerns about meeting monthly living expenses has increased by nearly 15 percent over the past few years, up from 39 percent in 2012, to more than half of employees (53 percent) in 2015.

To address these rising concerns, employees are increasingly turning to the workplace for education and support to meet their financial needs. The study found that the majority of employees (65 percent) said that their employers have a responsibility for the financial well-being of their employees, and nearly two-thirds (62%) of employees said they’re looking to their employer for more help in achieving financial security through employee benefits, compared to 49% in 2011.

For brokers, these findings create a massive opportunity to educate employers about the importance of benefits and how they can be used to address employees’ financial concerns. Doing so will help employers to strengthen their relationships with their employees and as a result, boost their role as a client partner and trusted advisor.

To achieve success, however, it’s important that brokers recommend benefits strategies that address employees’ financial concerns and benefits needs. MetLife’s study suggests three key take-aways for brokers:

Help Employers to Clearly Explain the Value of Benefits

Employers have a significant opportunity to educate employees on traditional and voluntary benefits and how they can be used to address financial concerns.

There’s a real need for this education, especially among younger workers. The study revealed that among millennials, confusion reigns: only 52 percent had an understanding of life insurance, compared to 69 percent of boomers; similarly, only 38 percent of millennials had an understanding of long term disability insurance, compared to 57 percent of boomers.

Employees are also unclear as to the practical and financial value of voluntary benefits, with only 47 percent of employees agreeing that non-medical benefits can help them limit their out-of-pocket medical expenses, whereas 74 percent of employers believe they can. For employees without a savings cushion of three months – including approximately 65 percent of millennials – these expenses could lead to a financial drain.

For brokers, this presents a key opportunity to help employers put processes in place to better communicate their offerings and explain how benefits can address their employees’ financial concerns. While many companies have benefits brochures or websites for their employees, this is not enough. Brokers should advise employers on the importance of learning how their employees want to be communicated with and what makes the most sense for their organizations’ culture.

Why is this important? Only one-third (37 percent) of employees found their company’s benefit communications easy to understand, according the MetLife’s study.

Advise Employers on the Creation of Optimal Enrollment Conditions

Brokers should advise employers on the importance of optimal enrollment conditions: clear communication (as mentioned above) and a variety of decision-support resources and personalized offerings to help employees understand how benefits can make a difference. Tools could include myriad ways to explain benefits options, such as a benefits website, mobile app, brochure, text message or one-on-one consultations with enrollment firms.

Providing choice and personalized conditions is especially important for millennials: compared to their older counterparts, younger employees felt the least confident in their benefits decisions. Only 44 percent of millennials said that they were confident in the decisions they made at last annual enrollment, compared to 57% of boomers.

To address this confusion, MetLife’s study found that the most effective resource to understanding benefits was one-on-one consultations. Despite popular perception that younger adults prefer technology over one-on-one interaction, the study found that 68 percent of millennials value one-on-one consultations with a non-sales benefits expert, compared to 62 percent of Gen X and 57 percent of boomers. A mobile app followed with 49 percent of all employees saying they would be interested in this option for managing their benefits.

Brokers should equip themselves with this information and counsel employers accordingly. If optimal enrollment conditions are successfully put in place, employees will fully understand their benefits options, make better purchasing decisions and in turn, decrease their financial stress. Employers may also see positive returns. In fact, nearly two-thirds (59 percent) of employers strongly agree that employees are less productive at work when worried about personal finance problems.

Educate Employers on What Benefits can do for their Business

Lastly, brokers have a vast opportunity to educate employers on the advantages of offering benefits. What many employers may not realize is that benefits are key to attracting, retaining and driving loyalty among their employees.

When it comes to attracting talent, benefits matter. According to a 2014 study from the Employee Benefit Research Institute, 76 percent of employees state that benefits are a very or extremely important factor in their decision to accept or reject a job offer.

Similarly, MetLife’s study found that nearly two-thirds (59 percent) of employees said they chose to work for their employer because of the benefits offered to them, showing the opportunity to use benefits as a key attraction tool.
Additionally, when it comes to retention, employers should take note that employees want programs and initiatives to meet their financial needs. According to MetLife’s study, over half (53 percent) of employees believe financial education workshops are valuable for helping them to understand their financial needs, options and solutions, yet just over a third (38 percent) of employers offer these programs.

MetLife’s study also found that employees want choice in their benefits and the ability to customize their benefit selections to address specific life events, such as marriage, a first child, the potential loss of income or retirement. This is becoming increasingly important to employees: 70 percent said that having benefits customized to meet their needs would increase their loyalty to their employer, a rise from 65 percent in 2014.

Ultimately, brokers that arm themselves with this information will gain a competitive advantage. By helping employers reap the benefits of benefits, brokers will not only help employers engender loyalty and build stronger employee relationships, but in turn, they will strengthen their client relationships as well. ◊