Better than a raise: How companies are giving employees more money

Many of America's workers are in ill health these days — at least financially.

And that has ramifications for employers as well as employees.

Distraction stemming from debt and other money issues can lead to lower productivity; poor retirement planning can mean workers hanging on to jobs long past peak productivity to build up their nest egg just a bit more before retiring.

You might ask if employers shouldn't simply give their employees a raise, to help them get to retirement. But debt problems and a lack of retirement savings are seen across wide ranges of income. It's not typically the amount of income that's the culprit, but rather the lack of savvy on saving and budgeting.

After all, financial literacy is rarely taught in school, and most people keep their money affairs entirely private. So by the time employees figure out they are in poor shape for retirement, it's too late to do much about it.

Perhaps it should be little surprise, then, that organizations are developing and expanding what has become known as financial wellness programs. According to a new study from Fidelity Investments (: ) and the National Business Group on Health, some 76 percent of organizations polled now offer some sort of financial health program, which can take many different forms.

Financial wellness plans are a growing business themselves, too. In a poll conducted last year by Towers Watson & Co and the National Business Group on Health, 47 percent of the large employers surveyed incorporate a program into their employee benefits packages. Another 33 percent are contemplating doing so by 2018.

Financial wellness programs follow in the footsteps of physical wellness programs. They often consist of a menu of assistance, such as retirement planning help; health care cost planning; employee self-assessments; investment planning programs; guides for saving for college; and advice on privacy, security, fraud protection and identity theft.

Even basic day-to-day budgeting and debt management advice — including student-loan-repayment assistance —may be part of the program nowadays, especially given how financial literacy is not a priority in many secondary school curriculums.

For example, many employees are unaware that the biggest threat facing their finances is potential out-of-pocket medical expenses that could be incurred today in a health-care crisis. Planning ahead for this by building an emergency fund could help stop employees from using usurious credit cards, taking out high-interest loans or borrowing from their retirement plan.

Regarding content delivery, organizations might offer tech-based outside resources, such as financial planning diagnostics, tracking tools or virtual-reality programs that show, perhaps, how to run a small business in retirement. They might also bring in outside counselors, planners and coaches on site; there are several organizations that provide online and/or on-site outsourcing of financial wellness services to organizations.

The cost? Employers usually pay the fees for these services in full or in part. Many also offer participation rewards and incentives. Some incentives are tied to health-care benefits (e.g. earn points to lower healthcare premium) since lack of financial wellness often leads to physical stress and other health issues

Financial wellness programs aren't just a frill or a perquisite for the few, either; organizations and their employees need them en masse. Indeed, a study by American Psychological Association last year found that 70 percent of workers polled were seriously concerned or worried about their finances. And in a 2015 survey by PwC, 20 percent of employees in the study said their financial situation drains their attention during work. Moreover, in an age of new and expanding compensation models, such as equity options and restricted stock, even well-educated and seemingly well-heeled employees may need education about issues, such as liquidity and lock up periods.

Some companies also have ventured into messages targeted at employees believed to be in need of financial guidance. Employees, however, are apt to find this practice invasive. In fact, the Towers Watson & Co. study stated that 41 percent of workers do not want their employer to take an active role in their finances; only 30 percent said employers should use targeted messages.

Employees should avail themselves of the services provided, which often include incentives for participation. Employees should make sure they read e-mails, announcements posted on bulletin boards, the organization's intranet, and any other venue the employer uses to communicate benefits. If employees don't think their employer offers a financial wellness program and are interested in having one available, they should contact their HR department to inform them of their interest. It may be that HR has been looking at programs but trying to determine if there is interest.

Commentary by Mark Dixon and Susan Shoemaker are partners at Plante Moran Financial Advisors. Mark leads the Institutional Investment Consulting practice, and Susan leads the Qualified Plans practice.

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