Bank of America announced findings from its 12th annual Workplace Benefits Report, “Navigating a New Era of Financial Wellness.” The report revealed that 84% of employers now say that offering financial wellness tools can help reduce employee attrition, and 81% say wellness tools help attract higher quality employees. This is critical to employers, as 46% have seen an increase in resignations over the past year. In addition, approximately one in three employees have switched jobs or thought about switching jobs in the past year.
The report also explored the impact of the current economic and inflationary environment on employees’ financial wellness, revealing that 62% of employees are stressed about their finances. In addition, 80% of employees are concerned about inflation, and 71% feel the cost of living is outpacing growth in their salary or wages. This is having an impact on employees overall feeling of financial wellness. After the percentage of employees who feel financially well bounced above pre-pandemic levels in February 2022 (57% .vs 55% in 2019), the percentage dropped to a 5-year low of 44% in July 2022.
“Offering comprehensive benefits and wellness programs can be critical for employers looking to reduce attrition, can empower employees to take control of their personal finances, and improve employee satisfaction,” said Lorna Sabbia, Head of Retirement and Personal Wealth Solutions at Bank of America. “We are committed to partnering with employers to provide financial wellness solutions through a holistic and integrated approach that’s actionable for every employee.”
Based on a nationwide survey of 824 employees and 846 employers conducted in February, and a second survey of 478 employees conducted in July, the Workplace Benefits Report examines trends related to workplace financial benefits and wellness programs.
Employers are embracing financial wellness programs and expanding support
In response to increased stress about financial wellness, employers continue to embrace programs to expand support for their employees. For example, 91% of employers see higher employee satisfaction when they offer resources to manage overall wellbeing. Other top employer findings include:
- Employers feel an increased sense of responsibility for the financial wellness of employees. 97% of employers feel responsible for employee financial wellness (up from 95% in 2021, and from 41% in 2013) – with two-thirds (62%) going as far to say they feel extremely responsible (up from 56% in 2021). Employees agree with this sentiment, as 82% say employers should play a role in supporting their financial wellness.
- Wellness programs result in tangible benefits for employers and employees. 80% of employers agree that offering financial wellness support can result in more satisfied, loyal, engaged and productive employees. Employers who take it a step further and broaden their wellness programs to include mental and physical wellness resources are seeing noticeable improvements in productivity (50%), employee stress (43%), employee morale (41%) and employee creativity and innovation (36%).
- Equity grants are powerful recruitment and retention incentives. 76% of employers believe equity compensation is a differentiator for employee recruitment and retention, and 44% of employees who participate in equity compensation plans say it was an important reason for accepting the job.
- Health care remains an opportunity. 84% of employers feel very responsible for their employees’ understanding of retirement healthcare needs and costs, and 89% of employers who offer Health Savings Accounts (HSAs) contribute to their employees’ savings. Healthcare education is an opportunity, with only 54% of employers communicating about these topics at least once a year.
- Access to investment advice. With four-in-ten employees saying they want access to advice from an investment professional, 62% of employers are now offering employees access to investment advice services (up from 55% in 2021).
- Heightened focus on D&I programs. 74% of employers believe that diversity and inclusion programs are important for retaining talent, and half (50%) of employers currently offer diversity and inclusion programs.
Employees seeking programs to help alleviate financial strain and plan for the future
Employees express uncertainty about current economic conditions and are taking actions to relieve financial strain:
- Employees are dipping into savings due to financial strain. Half of employees have taken action in the last six months due to financial strain, including tapping into emergency savings (21%), working additional hours (21%), looking for higher paying jobs (20%) and taking out a 401(k) hardship withdrawal (6%).
- Retirement remains a top concern, driving action. As of July 2022, 56% of employees are confident they will reach their retirement goals, down from 69% in February 2022. Seventy-four percent say investing in their 401(k) and other accounts will help them build a retirement nest egg, and 61% are contributing enough to maximize their employer match.
- Education about Social Security is an opportunity. Only 38% of employees say they understand social security benefits. Even among Baby Boomers, 41% still do not understand social security. While 48% of employees indicate they are not getting enough education about the program, only 40% of employers offer employees social security support and education.
- Employees are more optimistic about their intermediate, longer term future. When looking at the next 2-3 years, most employees said they felt optimistic about their financial (56%), social (60%), and mental (62%) well-being.
- Digital tools play a key role in driving employee engagement. Employees are seeking out digital tools that offer personalized support, and employees find tools that can provide streamlined information and help track and set financial goals most useful. Fifty-two percent of employees prefer to use a digital app to manage their finances.
Financial wellness levels vary based on employees’ ethnicity, gender and generation
Employees continue to show differences in financial wellness when viewed by gender, ethnicity or generation. Though the financial wellness gap has closed for women, it has expanded for minorities since February. Top findings include:
- Women lag men but are closing the gap when planning for long-term goals.Women continue to trail men in their feelings about financial wellness and preparedness. For example, 54% of men and 69% of women do not understand social security benefits. Despite this, the financial wellness gender gap is closing. As of July 2022, women were less likely to feel financially well than men by five percentage points (42% of women .vs 47% of men), down from 10 percentage points in 2021 (47% of women .vs 57% of men) and 17 percentage points in 2020 (41% of women .vs 58% of men).
- Minorities have seen a greater negative impact to their feelings of financial wellness. Employees across various ethnicities reported significant drops in their perceptions of financial wellness, with minorities reporting more significant declines. For example, 49% of White/Caucasian employees feel financially well (compared with 56% in February), followed by 37% of Asian employees (67% in February), 33% of Hispanic/Latino employees (47% in February) and 32% of Black/African American employees (50% in February).
- Feelings of financial wellness have declined across generations this year. Since February, feelings of financial wellness have declined significantly across generations, with Gen Z/Millennials at -15%, Gen Xers at -14% and Baby Boomers/Silent Generation at -10%.
Bank of America’s Retirement & Personal Wealth Solutions organization serves more than 26,000 companies of all sizes and more than 5.9 million employees as of December 31, 20211. Bank of America offers institutional client employees a range of financial benefit programs and solutions to help them pursue their financial future.
More findings, including action steps for employers, are available in the Bank of America 2022 Workplace Benefits Report.
Workplace Benefits Report Methodology
Escalent surveyed a national sample of 834 employees who are working full-time and participate in 401(k) plans, and 846 employers who offer both a 401(k) plan and have sole or shared responsibility for decisions made in the plan. The survey was conducted between February 3, 2022 and February 28, 2022. To qualify for the survey, employees had to be current participants of a 401(k) plan and employers had to offer a 401(k) plan option. Neither was required to work with Bank of America. Bank of America was not identified as the sponsor of the study. Bank of America Retirement & Personal Wealth Solutions help employers and employees to take action and work toward their financial goals today and into retirement.
July 2022 Pulse Study Methodology
Escalent surveyed a national sample of 478 employees who are working full-time and participate in 401(k) plans. The survey was conducted between July 5, 2022 and July 19, 2022. To qualify for the survey, employees had to be current participants of a 401(k) plan. They weren’t required to work with Bank of America. Bank of America was not identified as the sponsor of the study. Bank of America Retirement and Personal Wealth Solutions help employers and employees to take action and work toward their financial goals today and into retirement.
Source: Bank of America