In recent years, there has been a growing awareness among plan sponsors regarding the importance of employee financial wellness. It’s no secret that personal financial stress can negatively impact an employee’s work performance and overall well-being. Therefore, many companies are realizing that they have a greater role to play in ensuring that their employees are financially stable. In this article, Zorayr Manukyan will dive into the reasons why plan sponsors are feeling more responsible for employee financial wellness.
Zorayr Manukyan On Why Plan Sponsors Are Feeling More Responsible For Employee Financial Wellness
Firstly, companies realize that employee financial wellness is directly tied to job satisfaction and productivity, says Zorayr Manukyan. When employees are financially stable, they are less likely to experience stress related to their personal finances, which in turn can reduce employee absenteeism, presenteeism, and turnover rates. A study conducted by PwC found that 53% of employees who are stressed about their finances report that financial stress impacts their health, and 46% say it affects their relationships. These negative effects can ultimately impact employee productivity and, in turn, the company’s bottom line.
Secondly, many plan sponsors are acknowledging the role they play in improving the financial literacy of their employees. The majority of Americans are not financially literate, which can lead to a significant lack of understanding when it comes to managing their finances. By providing education and resources on financial literacy topics, such as budgeting, saving, and investing, plan sponsors can help their employees become more financially savvy. This knowledge, in turn, can help employees make better financial decisions, reducing the likelihood of financial stress.
Thirdly, plan sponsors are realizing that employee financial wellness programs can provide a competitive advantage in terms of recruitment and retention. Offering financial wellness programs can attract potential employees who are looking for companies that prioritize their employees’ well-being. Additionally, these programs can help retain existing employees by offering them a valuable benefit that can improve their lives outside of work.
Finally, regulatory changes are also playing a role in the increased responsibility plan sponsors are feeling for employee financial wellness. In particular, the Department of Labor’s (DOL) Fiduciary Rule, which requires investment advisors to act in the best interest of their clients, has brought the issue of fiduciary responsibility to the forefront of the retirement industry. According to Zorayr Manukyan, the rule is designed to ensure that plan sponsors and their advisors are transparent and act in the best interests of the plan participants. As a result, plan sponsors are taking a closer look at their plans and the services provided to ensure that they are meeting their fiduciary obligations.
Zorayr Manukyan’s Concluding Thoughts
In conclusion, it’s clear that plan sponsors are becoming more aware of their responsibility for their employees’ financial wellness. According to Zorayr Manukyan, by offering financial literacy education, wellness programs, and support, companies are helping employees to become more financially stable and reducing the negative effects that financial stress can have on employee health and productivity. With regulatory changes also making fiduciary obligations more transparent, plan sponsors are taking a closer look at their plans and taking steps to ensure their employees’ financial wellness. Ultimately, companies that prioritize their employees’ financial wellness will not only benefit their employees but also stand to gain a competitive advantage in terms of recruitment and retention.