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Financial Wellness and Productivity: Alarming Concerns for 401(k) Plan Sponsors

Financial Wellness and Productivity: Alarming Concerns for 401(k) Plan Sponsors

New insights show that if your employees are worried about personal finances — and they are — you’re losing productivity and risking higher turnover.

Employees worried about their personal finances are less productive, more distracted and are easier targets for poachers. While none of that is a revelation, a recent nationwide survey showed just how pervasive financial insecurity is in the workforce and how large the losses and potential risks are for employers at every level. When asked what they feel stressed about, 46% of respondents said personal finances were their No. 1 concern. Other familiar stressors paled in comparison — “my job” at 17%, “relationships” at 15% and “health” at just 14%. 

If you have a 401(k) plan advisor or retirement planning professionals who work with your employees, that’s a good start, but the study shows the problem — and effective solutions — go much deeper.

Who’s at Risk?

Not surprisingly, younger, lower earning employees feel stressed about their finances. But that concern extends all the way up the income ladder and across all generations. In fact, among those who feel financial stress, 44% are GenX employees, 35% are Millennials and 21% are Baby Boomers. Annual earnings have a significant impact on stress:


Employees Reporting Financial Stress by Income

Employee Concern

Earn < $75,000

Earn > $75,000

Not enough emergency savings



Not being able to retire



Being laid off




Effects of Financial Stress


Those who say they’re stressed

Those who say they aren’t stressed

Financial stress has been a distraction at work



Spend > 3 hours a week at work dealing with personal finances



Spend > 5 hours a week at work dealing with personal finances



Health impacted by financial worries



Relationship impacted by financial worries




How Are They —  and you — Affected?

From dealing with personal financial matters at work to distraction to absenteeism, employees say financial stress makes them less productive, less healthy and less happy:

The study estimates that productivity losses due to employees distracted by financial stress in a company with 10,000 skilled workers (earning an average of $17.24/hour) would be approximately $3.3 million/year.

In addition, 76% of those who said they were stressed would be attracted to another employer that cared more about their financial well-being, while only 50% of those who weren’t stressed said they’d be tempted to switch jobs.


401(k) Plan Advisors’ Impact on Financial Wellness

For companies concerned about a stressed workforce, financial wellness goes beyond having a 401(k) plan advisor inform employees about their options and basic financial literacy. Formal coaching on handling personal finances can lower stress, boost productivity and increase retention. Employees who participated in a formal financial wellness plan at work say that it helped them control spending (52%), prepare for retirement (43%), pay off debt (41%), save for their goals (36%) and better manage their investments (25%).

Demonstrating concern for employees’ financial health could also reduce the allure of jumping ship if they feel that your company cares and is taking steps to help them.


Changes, and Not Just in Attitudes

Organizations, like the ones Fiduciary First services, where 401(k) plan advisors offer robust financial wellness programs aren’t just engaging in self-interested risk abatement. They’re signaling to employees that they understand our economic system is undergoing rapid and significant change. The 20th century paradigm of locking into a lifetime profession with a gold watch and a pension at the end have been replaced by seismic shifts and massive uncertainty. Companies that offer employees effective help in navigating the new economy stand to benefit from a workforce that is not only more productive, but one that’s more loyal and committed as well.

We welcome the opportunity to discuss ways to improve the financial health of your employees.



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