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Schwab Corporate Services

Bringing financial wellness to workWhy action-oriented employee support matters

Schwab Corporate Services 2

Contents

01 Executive summary

02 Financial wellness: What is it and why does it matter?

03 Driving outcomes: Why is an action-oriented approach important?

04 Key considerations: What should workplace financial wellness support include?

05 Integrated, actionable financial wellness support can help you and your employees


“We believe that, for many Americans, the road to financial wellness begins at work. People see their employer as more than just a paycheck. Often, they view their employer as a trusted resource for information and guidance.”

— Catherine Golladay President Schwab Retirement Plan Services


Executive summaryHow people feel about their finances can have a ripple effect on every part of their lives—whether that’s their ability to prepare for a financial emergency, to save for the future, or to be truly present at work. Yet financial services institutions, benefits administrators, and employers have only recently started prioritizing these issues in the workplace.

Financial wellness is more than a buzzword

The terms financial wellness, financial health, and financial well-being have become more and more common in everyday benefits conversations. At its most basic level, financial wellness begins when a person takes control of their finances, understands their financial goals, and has confidence that they can reach them.

No matter what you call it, providing workplace support that helps people improve their financial situations isn’t just a trend—this benefit is here to stay.

Financial wellness support is in demand

The popularity of workplace financial wellness benefits has been driven in part by employee demand—especially concerns about retirement preparedness. In fact, more than one-third of retirement plan participants surveyed say that saving enough money for a comfortable retirement is their top source of financial stress.1

But this shift has also been spurred on by greater recognition of the effects of financial stress on employee productivity and research that shows that many people lack the basic foundation to meet their financial needs. According to a recent survey of 1,000 Americans, 59% are living paycheck to paycheck, and 39% don’t have an emergency fund.2

The positive impacts of offering workplace financial wellness support extend beyond employees’ personal financial health. These benefits can also encourage employees to engage more with their core benefits, help employers attract and retain talent, and remove barriers to retirement readiness.

Financial wellness takes more than a reading list

Financial education is essential, but it doesn’t push most people to act. Sometimes they don’t know what to do with the education they receive. Sometimes they interact with educational materials but don’t apply the principles to their lives.

Financial wellness support should focus on pairing education with opportunities for people to take action. Showing employees their next best steps—and giving them ways to take those steps—can help them move forward on their paths to financial wellness.

What we’ll cover

As the topic of financial wellness continues to gain traction, you may be wondering what your company can do to support your own employees. In this paper, we’ll discuss what financial wellness is, why workplace financial wellness support that drives action is crucial, and how companies can use an integrated approach to financial wellness to refine the benefits they offer.


“Whether it’s a professional plan or a more informal understanding of their financial life, having a big-picture view of their financial situation can actually help people achieve their biggest goals more quickly.”

— Carrie Schwab-Pomerantz Chair and President Charles Schwab Foundation


Financial wellness: What is it and why does it matter?Determining where to begin can be difficult, because there hasn’t been a clear, standardized definition of financial wellness, even among financial services providers and professionals. So what is financial wellness?

Financial wellness is personal for each individual

Think of an employee’s financial situation as a journey with different stages. Their unique needs, goals, and concerns, which often shift over time, can affect how they move within these stages. This journey isn’t always a straight path. People sometimes move back to previous stages based on their level of experience with a given financial topic or a change in their financial circumstances.

Everyone has financial challenges and aspirations, many of which can be complex or conflicting. Employees could be managing medical debt while saving for retirement, or paying college tuition while supporting aging parents. But we believe that when people take ownership of their finances—when they can understand their financial goals and have the confidence that they can invest in and reach those goals—they can achieve financial wellness. Ultimately, offering workplace support to address employees’ financial concerns may help guide them toward financial ownership.

Making money but focused on meeting their month-to-month expenses

Participating in their workplace financial benefits and starting to think about future goals

Invested in their financial plan and actively working toward specific goals, in and beyond their workplace plan

Leading their financial journey: reviewing, refining, and adjusting their plan as life happens

Earner InvestorSaver Owner

Employee financial wellness: The journey to ownership


Financial wellness isn’t just about wealth or life stage

A person’s financial health isn’t determined by how much money they make. Anyone, at any income level, can have financial struggles. In fact, according to the Financial Health Network (formerly the Center for Financial Services Innovation), 52% of workers whose households earn more than $100,000 say their finances cause them stress.3

Beyond income, factors such as debt, money management, savings, short-term and long-term expenses, and increasing costs of living all play roles in employee financial wellness.

What’s more, people across generations feel that they would like help with their finances.4

Millennials(<38)

Gen Xers (38–53)

Boomers (54–72)

Would like help from a financial professional to develop a financial plan

79% 69% 68%

Would like personalized 401(k) investment advice 74% 68% 63%

Would like help calculating how much money to save for retirement

44% 41% 36%

Would like help managing debt 26% 20% 13%

Financial wellness: Enhancing the value of your benefits

Providing support that helps employees better understand their full financial pictures, address financial stress, and work toward their goals can also help them better understand and use their other benefits.

Employees think of financial wellness as an important and helpful workplace benefit.

Traditional workplace benefits alone don’t necessarily reduce employee financial stress. In fact, even though employees value benefits such as their 401(k) or health insurance, they’re still stressed about saving for retirement and medical expenses.

Top sources of financial stress for retirement plan participants:5

Saving enough money for a comfortable retirement

Paying off credit card debt

Keeping up with monthly expenses

Medical expenses

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Employees regard financial wellness support as most helpful for planning for retirement, developing a financial plan, and improving investing skills.7

77% of stock plan participants say financial wellness is an important workplace benefit.6


A financial plan is a critical component of financial wellness

When employees put their monthly expenses and savings goals—and their strategies for managing them—into writing, it can help them get on the right track toward financial wellness. In fact, people who have a written financial plan often maintain better saving and investing habits and feel more financially stable than those who don’t have a plan.8

Despite the benefits of financial planning, many people don’t have or understand the value of a written plan. Of the 72% of Americans who don’t have a written financial plan, nearly half say they don’t have enough money to need a plan.9

No matter where a person is on their journey, or how much money they have, a financial plan is an effective way to document short-term and long-term financial goals—and create a blueprint for achieving them. Even if someone doesn’t feel like they’re ready for a written plan, they likely still have financial goals in mind. Workplace financial wellness support can help them identify and take small steps toward those goals so that they can build momentum and confidence.

Non-planners

Planners

Pay bills and save each month78%

38%

Have an emergency fund 26%68%

Consider risk tolerance when investing 56%75%

Regularly rebalance portfolio 57%85%

Feel financially stable 33%63%


“Employers cannot take an ‘If you build it, they will come’ approach to financial wellness. People won’t engage unless the experience resonates with them.”

— Catherine Golladay President Schwab Retirement Plan Services


Driving outcomes: Why is an action-oriented approach important?Changing human behavior is difficult. This is particularly true when it comes to people’s perceptions and actions around their finances. There can be a big gap between what people want to achieve and what they actually do. Through behavioral economics—the intersection of psychology, neuroscience, and economics—we’ve learned a lot about the differences between intention and action.

Lessons from behavioral economics

Common barriers to action: Battling barriers to action:

Default bias: People tend to make the easiest possible choice—which often means doing nothing.

Make the right choice the easiest choice. When you remove extra steps, it pushes people toward the desired behavior.

Decision paralysis: When given too many choices, people often get overwhelmed and don’t choose at all.

Give people fewer options. With fewer options to choose from, they’ll be less overwhelmed and more likely to make a choice.

Decision fatigue: The more decisions people make, the less likely they are to make good ones.

Present important choices first. The sooner you ask people to take the action you want, the more likely you are to get positive results.

People’s actions, or lack thereof, confirm what behavioral science tells us. While many people may understand that they should play an active role in their finances, the data points to a different story.

Only 39% automatically put savings toward their long-term goals on a regular basis.10

52% of those who have an investment account either don’t rebalance their portfolio (31%) or let their account automatically rebalance itself (21%).11

More than half (53%) have not changed or have decreased their 401(k) contribution rate in the past two years.12

39% 52% 53%


Education isn’t enough to move people forward

As you’re considering how to support your employees’ financial needs, keep in mind that while financial education is essential, it doesn’t push most people to take action. It’s possible that they simply don’t know what to do with the education they receive or that they’re grappling with psychological barriers to action. Even if employees are engaging with educational materials, employers can’t assume they are applying the principles to their lives.

According to a recent Cerulli report, the success of financial wellness support is contingent on its ability to drive employee actions. The report adds that, although educational content is valuable, individuals must be motivated, or triggered, to enact changes that have a positive impact on their financial lives.13

These changes don’t need to be monumental to make a difference for employees. In fact, small, incremental changes can be a powerful tool for helping people.

For example, if you send an email prompting retirement plan participants to increase their contribution rates, including a link to the login page higher in the email can help them take that action sooner. And making financial wellness tools and content available to them as part of the messaging they see encourages them to learn and interact.


“Even if you feel confident in your financial knowledge and decision-making abilities, taking advantage of financial wellness offerings at work or getting advice from an advisor can help you formulate a solid plan and make the most of your benefits.”

— Amy Reback Vice President Schwab Stock Plan Services


Key considerations: What should workplace financial wellness support include?Your approach to financial wellness should address the topics and concerns on which your employees need the most guidance, help them overcome barriers to action, and make it easy for them to take their next best steps.

Think about four key areas when determining what types of financial wellness support your employees need:

Digital engagementConnect with employees when and how they prefer with targeted messaging and tools to drive action.

Why it matters

• 82% of retirement plan participants would use online tools to help plan for retirement.14

• 61% of retirement plan participants who have used a retirement calculator have taken a positive next step, such as increasing their 401(k) contributions or changing their spending habits.15

• 64% of retirement plan participants say they prefer to receive financial information via email.16

What you might offer

• Online tools and calculators to help employees understand their current financial situations and make more confident decisions

• Communications in employees’ preferred engagement styles (digital, phone, in-person, etc.) to make it easier to take action in the moment

Financial coachingProvide personalized guidance to help address each employee’s unique financial situation.

Why it matters

• 52% of retirement plan participants believe that their current financial situation warrants advice.17

• 76% more participants say they would feel “very confident” in their ability to make the right 401(k) investment decisions with help from a financial professional versus on their own.18

• 77% of employees are “extremely confident” or “very confident” in their ability to make decisions about equity compensation with the help of an advisor.19


• Consultations with financial professionals to give employees guidance on their next best steps for working toward their goals

• Independent third-party advice to help employees with retirement planning or management of their retirement accounts


Educational resourcesHelp employees gain confidence and make more informed decisions through multimedia, multichannel content.

Why it matters

• 48% of retirement plan participants don’t know how much they should save for retirement.20

• Only 33% of employees understand how company stock purchased through their employee stock purchase plan fits into their total investment portfolio.21

• Only 42% of retirement plan participants feel knowledgeable about their finances.22


• Curated content including videos, articles, and tools to educate employees and inspire them to take action

• In-office workshops and live or pre-recorded webinars to support different learning styles

Flexible solutionsOffer options that meet employees where they are and help them move forward.

Why it matters

• Just 30% of retirement plan participants feel comfortable managing their money.23

• Of workers who chose to exercise or sell their equity compensation, 21% did so because they needed the money, and 13% did so because they were under financial stress.24

• 80% of retirement plan participants would be interested in retirement plan advice if it were offered by their employer.25


• Access to saving and investing products and services to help employees take control of their finances and develop strategies to suit their goals

• Automatic features built into a retirement plan to fight inertia and support positive outcomes for employees


Make financial wellness part of everyday work

Providing the tools, education, and support that employees need to be financially well doesn’t have to be daunting or require adding yet another provider. Consider your current financial benefits providers, and evaluate the types of support they offer. They may have services or resources included in the benefits that your employees are already using.

For example, digital resources, such as calculators or chat support, can be built into the employee experience through regular communications or as part of their retirement or stock plan participant websites. And account aggregation can make it simpler for them to see their accounts in one place and help them understand their full financial picture. This can help create a seamless experience and add even more value to your benefits program.

Another way to make financial wellness part of employees’ day-to-day conversations is for leaders to remind their teams about the support your company offers.

When employees receive bonuses or raises, remind them that they can defer a portion of the money to their savings or investment accounts or increase their retirement plan contribution rate. This can be accomplished through messaging from benefits providers, in-person conversations with human resources or direct managers, or via their preferred method of communication.

Making financial wellness a part of employees’ day-to-day interactions and compensation structure keeps it more top of mind, encourages accountability, and may help them build confidence.


Integrated, actionable financial wellness support can help you and your employeesEvery financial challenge that employees face—or financial achievement they want to pursue—contributes to whether or not they reach their goals. When you meet employees where they are with personal support that helps them find and take their next best steps, you have the opportunity to make a meaningful impact in their lives.

Already a Schwab client? Reach out to your Relationship Manager to find out how Schwab can support your company’s financial wellness needs.

Don’t work with Schwab?Visit schwab.com/financialwellness to find out more about our approach to supporting workplace financial wellness.

At Schwab, financial wellness is at the core of everything we do. And it always has been. We believe that bringing integrated, actionable financial wellness support to your company can help you ensure that your employees are happy, healthy, and productive.

As you consider your company’s approach to financial wellness, remember these key factors:

Financial wellness support should be integrated with your existing benefits program to make it easier for employees to take advantage of the offering—and make them want to use it.

Financial wellness support should not be one-size-fits-all. It should be built for the individual and tailored to meet different employee needs.

Financial wellness support should give employees ways to take action so that they can take control of their evolving financial situations.

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https://corporateservices.schwab.com/financial-wellness

1. 2019 401(k) Participant Survey, conducted by Logica Research for Schwab Retirement Plan Services, Inc., April 2019. This online survey of U.S. 401(k) participants was conducted by Logica Research for Schwab Retirement Plan Services, Inc. Logica Research is neither affiliated with, nor employed by, Schwab Retirement Plan Services, Inc. The survey is based on 1,000 interviews and has a 3% margin of error at the 95% confidence level. Survey respondents worked for companies with at least 25 employees, were current contributors to their 401(k) plans and were 25–70 years old. Survey respondents were not asked to indicate whether they had 401(k) accounts with Schwab Retirement Plan Services, Inc. All data was self-reported by study participants and was not verified or validated. Respondents participated in the study between March 19 and March 29, 2019. Detailed results can be found at aboutschwab.com/research.

2. “2019 Modern Wealth Index,” Schwab.com, Charles Schwab & Co. Inc. study, developed in partnership with Logica Research and the Schwab Center for Financial Research, May 2019. The online survey was conducted by Logica Research from February 8 to February 17, 2019, among a national sample of Americans aged 21–75 and an augment sample of 200 older Gen Zers aged 18–22 for generational comparisons. The national sample was balanced to be demographically representative. The margin of error for the national sample is three percentage points.

3. Better for Employees, Better for Business: The Case for Employers to Invest in Employee Financial Health, Financial Health Network (formerly Center for Financial Services Innovation), May 2019.

4–5. 2019 401(k) Participant Survey, conducted by Logica Research for Schwab Retirement Plan Services, Inc., April 2019.

6–7. 2019 Equity Compensation Plan Participant Survey, conducted by Logica Research for Schwab Stock Plan Services, July 2019. This online survey of equity compensation participants was conducted by Logica Research (formerly Koski Research) for Schwab Stock Plan Services. Logica is neither affiliated with, nor employed by, Schwab Stock Plan Services. The survey is based on 1,000 interviews and has a 3% margin of error at the 95% confidence level. Survey respondents worked for companies that offer equity compensation plans, are currently participating in an equity compensation plan, and were 18–75 years old. The average total value of respondents’ equity compensation was $149,835. Survey respondents were not asked to indicate whether their employer has accounts with Schwab Stock Plan Services. All data is self-reported by study participants and is not verified or validated. Respondents participated in the study between July 1 and July 16, 2019. For more information on the survey, please go to schwab.com/stockplansurvey.

8–11. “2019 Modern Wealth Index,” Schwab.com, Charles Schwab & Co. Inc. study, developed in partnership with Logica Research and the Schwab Center for Financial Research, May 2019.

12. 2019 401(k) Participant Survey, conducted by Logica Research for Schwab Retirement Plan Services, Inc., April 2019.

13. U.S. Retirement End-Investor 2019: Driving Participant Outcomes With Financial Wellness Programs, Cerulli Associates, June 2019.


16. NARPP 2019 Participant Trust Survey, Edition v6, 2019. The National Association of Retirement Plan Participants (NARPP) is not affiliated with Schwab Retirement Plan Services, Inc.


19. 2019 Equity Compensation Plan Participant Survey, conducted by Logica Research for Schwab Stock Plan Services, July 2019.

20. 2019 401(k) Participant Study, conducted by Logica Research for Schwab Retirement Plan Services, Inc., April 2019.


22–23. NARPP 2019 Participant Trust Study, Edition v6, 2019.


25. NARPP 2019 Participant Trust Study, Edition v6, 2019.

“Schwab” refers to The Charles Schwab Corporation.

Outcomes are not guaranteed.

Schwab Corporate Services refers to products and services offered through Schwab Retirement Plan Services, Inc.; Schwab Stock Plan Services; Schwab Designated Brokerage Services (DBS); and Schwab Compliance Technologies, Inc. (“SchwabCT”).

Schwab Retirement Plan Services, Inc. is a subsidiary of The Charles Schwab Corporation providing recordkeeping and related services with respect to retirement plans.

Schwab Stock Plan Services and Schwab Designated Brokerage Services are divisions of Charles Schwab & Co., Inc., respectively providing equity compensation plan services and brokerage solutions for corporate clients who monitor their employees’ securities activity.

Schwab Compliance Technologies, Inc. (“SchwabCT”), a wholly owned subsidiary of The Charles Schwab Corporation, provides technology solutions for corporate clients to help facilitate their compliance technology program implementation.

Through its operating subsidiaries, The Charles Schwab Corporation provides a full range of securities brokerage, banking, money management, and financial advisory services, as well as services to retirement and other benefit plans. Charles Schwab and Co., Inc. (Member SIPC) offers investment services and products. Charles Schwab Bank (Member FDIC and an Equal Housing Lender) and Charles Schwab Trust Bank (Member FDIC) provides trust, custody, deposit, and lending products and services. Schwab Retirement Technologies, Inc. (“Schwab RT”) is engaged in developing and licensing proprietary retirement plan recordkeeping systems to independent third-party administrators.

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