Do Financially Educated Employees Perform Better?

MetLife’s 9^th Annual Study of Employee Benefits Trends found 78% of respondents said concerns over financial problems while at work can have a negative impact on employee productivity. In conjunction with the study, MetLife also released a white paper with the Boston College Center for Work & Family, titled “The MetLife Study of Financial Wellness Across the Globe.” 

The white paper includes case studies of multinational corporations American Express and EMC, focusing on their financial wellness programs at sites in Hong Kong, India, Ireland, Mexico and the U.S. The paper reveals how government provisions and cultural variations in different countries impact company decisions regarding benefit allocation as well as financial training. The study looks at the specific steps employers have taken to enhance their employees’ financial wellness to attain solutions that fit business and employee needs.  

Key findings from the survey include:

•  A majority of consumers worldwide (90%) want to become better at managing money;

•  Fifty-eight percent of employees in the U.S. would like their employer to provide access to financial planners to help them make decisions about financial needs;

•  Seventy-four percent of consumers worldwide expect ill health to be a significant, or quite an impact on their finances; and 

•  Seventy percent of financially literate people save for old age, while only 47% of those with poor financial knowledge save for old age.  

MetLife says there is evidence financial distress may have a direct impact on employee health and well-being, which can reduce worker productivity and increase absenteeism. Carried out correctly, financial education can have a benefit effect on employee wellness; financial education programs have the potential to lower financial stress, reduce absenteeism, increase productivity and lead to a more loyal workforce.

Consumers are generally poorly prepared to make good investment choices, according to MetLife. Consumer financial illiteracy is widespread globally and consumers are not sufficiently committed to their own financial well-being. While most people recognize the government will not provide them with an adequate retirement income, this realization does not translate into increased savings or investments. 

Global programs often require local adaptation. Companies are stepping up their efforts to provide employees with both competitive benefits and financial education. While a company may have a global financial wellness program, such a program must be adapted to local needs. 

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MetLife also discusses how governmental provisions can have a large impact on employer-provided benefits. Governments differ widely in the extent to which they support people with social welfare provisions; such funds are coming under increased pressure due to an aging population and global economic challenges.

Cultural differences regarding financial education are significant as well. The amount and type of financial education as provided by employers varies from one country to another. There are cross-cultural differences regarding general level of financial literacy, attitudes towards retirement, wealth and risk; as well as expectations regarding employer involvement in the field of financial wellness.

ROI may not be the best measure of financial wellness programs. The companies interviewed saw a clear connection between financial well-being and the work they are doing to proactively improve employee health and wellness. They believe financial stress has a negative impact on productivity even if it is difficult to measure directly through return-on-investment calculations. They are using participation measures and metrics that evaluate changes in behaviors to determine the success of their efforts.

Interviews for the study were conducted from March-July 2011 with global benefits executives in China, Hong Kong, India, Ireland, Japan, Mexico, the Netherlands, the U.S. and Singapore. Secondary research was conducted on prior financial wellness studies and also of government policies that have a bearing on financial wellness.