Supporting employee financial wellbeing and return on investment
As we write this Fall edition of GO with Eckler, summer has come to a close, and, for some Canadians, back-to-school season is upon us. Whether a trip to load up on paper, binders and pencil crayons, or the first installment of college or university tuition, summer’s end can take a toll on the wallet – and on the mind! According to the latest results of the Canadian Social Survey, a quarterly study by Statistics Canada that tracks key quality-of-life indicators across the country, 26.8 per cent of Canadians reported that meeting financial needs had been difficult or very difficult in the last 12 months. For those with school aged children, over half the respondents reported that rising prices were greatly affecting their ability to meet day-to-day expenses.
Financial support and education at work. What’s the ROI?
Regular readers of this newsletter will recognize our regular refrain: financial stress is not an isolated event. It can impact many aspects of a person’s life, including overall mental health and, in turn, their performance at work.
The average Canadian is responsible for making a host of financial decisions about their workplace pensions, or personal savings plans, and must bear the consequences of those decisions. While the financial industry is awash with “free” online calculators and advice, deciphering the many acronyms, navigating the maze of financial professionals, and avoiding the “upsell” by those who are compensated based on where and how much money is invested, can be overwhelming for even the most financially savvy among us. The good news is employers are in an ideal position to provide unbiased education and support.
Canadians want – and trust – financial support and education offered at work. While most employers want to help and intuitively understand that workplace benefits and other initiatives provide valuable support, we are often asked: “What’s the ROI?” That’s an important question and while hard to quantify, it shows up in longer term impacts such as the following:
Attraction and retention
Many moons ago, health and retirement benefits were considered the “full package” when it came to workplace benefits. That’s no longer the case – especially in a tight labour market. According to recent research by McKinsey Global Institute1, labor markets are currently among the tightest in two decades and that trend is expected to continue as workforces age and population growth decelerates.
Workplace benefits are an important and complex part of your organization’s total rewards package. Employees are increasingly tuned into – and are demanding of – the types of benefits that mean the most to them. Providing workplace financial wellness resources speaks volumes about how you support your employees and plays a significant role in your workplace culture – and reputation.
When competition for talent is tough, keeping employees healthy and engaged should be a top priority. In fact, in a survey of employees whose financial stress had been impacted by the Covid-19 pandemic, 72% said they would be attracted to another company that cares more about financial well-being.2 Providing the kinds of workplace benefits and supports that employees need – and want – will be critical to attracting and retaining the talent you need.
Absenteeism and productivity
The 2024 Financial Stress Index shows that money continues to be the top stressor for 44% of Canadians – increasing steadily from 2023 (40%) and 2022 (38%). When it comes to younger generations, the news is even more disheartening with 50% under the age of 35 citing money as a top stressor. The survey also revealed that financial stress weighs more heavily on the minds of younger Canadians with three-quarters stating that financial stress has had at least one negative impact on their lives compared to less than half of Canadians over the age of 35. This cohort is also 50% more likely to say that they’ve experienced anxiety, depression, and mental health challenges due to financial stress than those over the age of 35.
How is all this stress impacting the workplace? According to statistics cited in a recent CAMH publication3, every week at least 500,000 Canadians miss work due to poor mental health and people dealing with financial stress are twice as likely to report overall poor health. Thirty percent of disability claims in Canada are due to mental illness and 70% of all disability costs are due to mental illness. The Financial Consumer Agency of Canada estimates employee financial stress costs employers an average of $1,000 per employee per year.
Retirement readiness
Canadians are thinking about their retirement – more specifically, not having enough money for retirement – a lot! Research by the National Institute on Aging revealed that only 35 per cent of working Canadians 50 and older say they are in the financial position to retire when they want and almost 40 per cent said they can’t afford to retire at all. According to a recent retirement survey commissioned by the Healthcare of Ontario Pension Plan (HOOPP) almost half, 44 per cent, of Canadians did not set aside any money in the past year and 44 per cent of the 55-64 age group reported having less than $5,000 in savings.
Working longer than you want to because you can’t afford otherwise is neither good for employees nor their employers. Lack of focus at work, increasing amounts of time spent managing personal finances, and increased use of employee benefit plans to manage stress-related illnesses are certainly not isolated to older workers but each of these things can be exacerbated when you’re working longer than you wanted to because you can’t afford to retire.
So, what is the ROI?
And now to the heart of the matter…what’s the employer ROI? Each organization’s return on investment will be unique based on the specific organizational goals, long-term measures (such as those above) and initiatives. While a universal ROI can be difficult, one estimate that appears in several studies found that organizations saved $3 for every $1 that they invested in employee financial education programs.4
Understanding and managing multiple financial assets and obligations is a complex and daunting task that can contribute to significant stress, impact work performance, and delay retirement. Online calculators and educational resources do a good job of providing Canadians with data and information, but more is needed to make the numbers personal so they relate to each person’s unique financial circumstances and life goals and take action.
Whether through group sessions or one-to-one coaching with an accredited financial wellness professional, providing employees with the information and confidence they need to make critical financial decisions helps them focus on the future, ease daily financial stress, and be more engaged in the workplace – that’s good for employees and their employers.
GO with Eckler is a quarterly newsletter to help employers and plan sponsors support financial wellness for their employees and plan members. If you would like to learn more about how to support employee financial wellness at work, please contact your Eckler consultant if you would like to learn more about supporting financial.
Please contact your Eckler consultant if you would like to learn more about supporting finances.
1McKinsey Global Institute. Help wanted: Charting the challenge of tight labor markets in advanced economies. August 2024
22021 PWC Employee Financial Wellness Survey
3CAMH Workplace Mental Health – A Review and Recommendations
4Financial Consumer Agency of Canada