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How to Think About Financial Wellness for employees

It’s natural for a chief financial officer to ask about the return on investment (ROI) from spending the organization’s money on a program that, at first glance, appears to only help employees with their lives outside work. But research finds a direct connection between employees feeling financially stressed and a decline in work productivity, an increase in health problems and a rise in job absenteeism—plus, a shortfall in retirement savings. According to a special report by PwC, 53% of full-time employed American adults say they’ve felt stressed dealing with their personal financial situation over the past five years.1 The same study finds that among financially worried Americans:

· 22% acknowledge that it affects their productivity at work

· 28% say it impacts their health

· 12% reveal that they miss work occasionally due to financial stress

· 62% say they’ll postpone retirement because they haven’t saved enough 1

You can think about financial wellness ROI in a couple of ways:

The Short-Term Return If your employees don’t feel financially stressed, they’re more productive in their job, miss work less, and have lower health-care expenses. This saves your company money, and the PwC paper offers a hypothetical illustration of how you can quantify that savings, using productivity as the example focus. Based on PwC’s survey, 30% of employees say they get distracted by their finances while at work, while 46% of the distracted employees say they spend three hours or more weekly at work dealing with personal-finance issues. 1

Using a 10,000-employee company as an example, the 30% stat means it has 3,000 distracted employees, while the 46% stat means that 1,380 of them spend three or more working hours weekly focused on their personal finances. Those 1,380 employees, losing three hours of productivity weekly and working an average of 46 weeks a year, account for 190,440 total hours of lost productivity annually for their company. Using the $17.24 average skilled worker hourly wage cited by PwC, this translates into a $3.3 million productivity cost impact in just one year for the employer. 1


The Long-Term Payoff You can also look at the financial wellness program ROI by thinking about how much more money it will cost your company if the employees don’t save enough and delay retirement. Prudential pegs the incremental cost of a one-year delay in retirement at more than $50,000 for a retirement-age employee. This is the cost differential between the retiring employee and a newly hired employee. A one-year increase in the workforce’s average retirement age translates into an incremental annual workforce cost of 1.0% to 1.5% for the entire workforce. 2


Research also finds that employees who have gone through a financial wellness program and feel less financially stressed are more apt to increase their deferrals to their retirement plans. A particular Financial Finesse paper gets specific about the increases in contribution rates seen when employees’ financial wellness scores rise.3 Those higher employee contributions will likely lead to more on-time retirements which, for an employer, means lower salary and benefits costs, among other plusses.

What’s the annual savings? When an organization with 10,000 employees sees overall financial wellness scores improve from 4.0 to 5.0 (on a 10-point scale), the study finds that company saves an estimated $6,570,593 by reducing delayed retirements. And when overall financial wellness scores improve from 4.0 to 6.0, the savings projection jumps to $12,914,642.


Hard numbers like these can get any business owners attention. At your next retirement plan committee meeting, present this information and then use your company's headcount to learn the potential bottom-line impact a financial wellness program could have within your company.


1 PwC, “Special Report: Financial stress and the bottom line,” September 2017.*

2 Prudential Financial, Inc., “Why Employers Should Care About the Cost of Delayed Retirements,” 2017.*

3 Financial Finesse, Inc., “2018 Special Report: The ROI of Improving Employee Retirement Preparedness,” October 2018.*



*More recent data may alter this assessment.



This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third party sources and is believed to be reliable; however, its accuracy is not guaranteed and should not be relied upon in any way, whatsoever. This presentation may not be construed as investment advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and are subject to change without notice. The views expressed are those of the author as of the date noted, are subject to change based on market and other various conditions. Material discussed is meant to provide general information and it is not to be construed as specific investment, tax or legal advice. Keep in mind that current and historical facts may not be indicative of future results. Certain risks exist with any type of investment and should be considered carefully before making any investment decisions. Keep in mind that current and historical facts may not be indicative of future results. The information provided is for educational purposes only and not intended to provide any investment, tax or legal advice. Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website.

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