Boosting employee financial wellness can attract top talent without draining your resources. Discover practical strategies for small businesses to support their team's financial health effectively.
Creating an environment where employees can thrive both professionally and personally is essential for small business owners. But how can you foster this growth while keeping costs manageable?
A recent survey revealed that many small and midsized business owners underestimate the importance of financial wellness programs. While 77% of employees view financial health as vital, only 69% of these businesses recognize its significance. This gap often stems from misconceptions about costs and concerns regarding the feasibility of such programs.
Many small business owners overestimate the expenses associated with benefits. Research shows that they often think the costs are up to five times higher than reality.* The truth is, financial wellness initiatives can be both impactful and budget-friendly, regardless of your team size.
Financial Wellness: Essential for Retaining Talent
As large corporations offer enticing perks like flexible schedules and unlimited vacation time, small businesses face increasing pressure to attract and keep skilled employees. A financial wellness program has shifted from being a bonus to a necessity, notes a certified financial planner.
“Many small business owners view these programs as expenses, which is a narrow perspective. They are investments in your workforce and reflect your commitment to their well-being,” the planner explains. “The competition will only intensify, and finding top talent won’t get easier.”
Small Businesses Can Compete Effectively
Even with a small team, delaying benefits implementation is a mistake, according to experts. “If you aspire to grow to 50 employees, set up your benefits now to facilitate that growth,” a workplace benefits leader suggests.
Small businesses often treat employees like family. This close relationship allows for tailored benefits that genuinely address employee needs, providing a competitive edge over larger firms in attracting talent.
Less Stress Equals Higher Retention Rates
In addition to overestimating costs, many small business owners also underestimate the return on investment. Over 70% of business owners report that their employee benefits help them attract necessary talent.**
One significant factor? Employees who feel supported experience lower stress levels. This leads to happier, more productive workers eager to grow within the company. “If personal life stressors weigh on an employee, they can’t simply ignore them at work,” one planner notes.
“I recall a colleague receiving debt collection calls during work hours, which disrupted everyone,” says another financial planner. “Any support you provide to help employees manage their finances will positively impact your company’s performance.”
Start with an Employer-Sponsored Retirement Plan
“If you haven’t set up a retirement plan, like a 401(k), now's the time to do so,” advises a financial planner. For those already offering a plan, consider enhancing it by auto-enrolling new hires at a contribution level around 10% instead of the standard 3%. Implementing annual auto-escalation can also encourage higher savings rates.
Many employees are unsure of how much they should contribute. Engaging a financial advisor for individual sessions can be far more effective than generic seminars, which might deter personal inquiries.
Additionally, during bonus distributions, encourage employees to contribute a portion of their bonuses to their 401(k). Since employees typically live off their salaries, they may find it easier to save more during these bonus periods.
Identify a Financial Wellness Program That Fits
Wondering where to begin? Start by asking your employees about their needs and preferences, as this ensures that any program implemented will be valuable. Connect with other business owners to learn about their successful initiatives and seek guidance from your CPA or attorney for potential resources.
Lastly, check if your existing relationships with financial services providers or insurers offer financial wellness programs as part of your current offerings. “It’s possible that there may be no extra fees involved, making it simply a matter of promoting the program to your team,” an expert adds.
For additional insights on empowering your employees to reach their financial goals, visit this resource.
This article was sponsored by a financial services provider.
*Data from a 2019 survey.
**Insight from a 2024 business owner report.
