Differentiating Your Company with a Robust Financial Benefits Package
Nate Moody, CPFA – RETIREMENT ADVISOR, PARTNER
November 2024
In today’s competitive job market, employers must go beyond traditional compensation and offer financial benefits that meet the growing financial challenges and aspirations of their workforce. A carefully designed financial benefits package that supports employees’ financial well-being can set your company apart as a top employer.
This guide explores some of the fastest-growing financial benefit programs, how they work, how to select the right vendors, and how to implement and educate employees on these programs. Finance and Human Resources professionals can use this guide to differentiate their benefits strategy and drive greater employee engagement.
Emerging Financial Benefit Programs
Offering financial benefits that extend beyond the standard salary and 401(k) plans can significantly impact an employee’s well-being and loyalty to your company. Let’s explore the financial benefits gaining rapid traction:
Student Loan Reimbursement
Student loan debt has become one of the biggest financial burdens facing today’s workforce. Companies offering student loan repayment assistance are highly attractive to job seekers, particularly younger employees.
How it works: Employers contribute to employees’ student loans, either as a monthly payment or an annual lump sum. The amount typically ranges from $1,000 to $5,000 annually, though some companies may offer more generous packages.
Why it’s popular: The average student loan debt for 2024 graduates was approximately $38,0001 with 24.6% of federal student loan debt from borrowers aged 50 or older. Companies that offer this benefit help employees address a significant financial concern.
8% of U.S. employers offered student loan repayment programs in 2022, but demand for this benefit continues to rise, particularly among younger generations2. Offering such a benefit can help employers attract top talent, especially among millennials and Gen Z.
Non-Qualified Deferred Compensation (NQDC) Plans
NQDC plans allow high-earning employees to defer a portion of their income, providing a strategic way to manage taxes and retirement planning.
Why it’s popular: NQDC plans provide an additional layer of tax-deferred growth, making them a valuable tool for wealth-building, especially for those in high tax brackets.
How it works: Employees defer a portion of their salary into a non-qualified plan, where it grows tax-deferred until the individual leaves the company or retires. This option is most often utilized by executives and high earners who have maxed out their qualified plan contributions.
Plan Sponsor Council of America’s (PSCA) 2023 NQDC Plan Survey found that 80% of employers offer some form of NQDC plan to make their benefits package more competitive when recruiting key employees. These plans are becoming an essential component of executive compensation packages as companies aim to retain top talent3.
Financial Wellness Programs
Financial wellness programs are designed to help employees improve their financial literacy and make informed financial decisions.
Why it’s popular: A PwC study found that 57% of employees are stressed about their finances, with 33% distracted by their financial worries at work. Financial wellness programs directly address these concerns, improving productivity and employee well-being4.
How it works: These programs often include budgeting tools, workshops, webinars, and personalized financial coaching. Topics covered range from managing credit card debt to planning for retirement.
According to a 2021 Bank of America Workplace Benefits Report, 84% of employers now say that offering financial wellness tools can help reduce employee attrition, and 81% say wellness tools help attract higher quality employees5.
Employer-Sponsored Financial Planning
Offering access to personalized financial planning as a benefit helps employees navigate complex financial decisions, such as retirement planning, investment strategies, and tax optimization.
Why it’s popular: Personalized financial planning helps employees feel more confident in managing their finances, and access to such services has traditionally been limited to high-net-worth individuals.
How it works: Companies partner with financial advisory firms to offer employees one-on-one consultations with certified financial planners. This benefit may cover topics like budgeting, investment planning, estate planning, and debt management.
A 2021 Financial Wellness Study by Morgan Stanley found that 89% of employees are more likely to stay with a company that offers financial planning benefits, and 75% of employees believe financial benefits are essential to meet their financial goals and would be interested in working elsewhere to have those benefits provided6.
Selecting the Right Financial Benefit Vendor
Choosing the right vendor for financial benefits is crucial to the success of your program. Here’s how to select the best vendor for your organization:
Assess Employee Financial Needs
- Survey your employees to identify the financial challenges they face. Some may prioritize student loan repayment, while others might be more concerned about saving for retirement or dealing with immediate financial stress.
Evaluate Vendor Expertise
- Partner with vendors who specialize in financial benefits like student loan assistance, NQDC plans, and financial wellness programs. Look for vendors with a strong track record and industry expertise.
Ensure Compliance
- Make sure your vendor is well-versed in the regulatory landscape, particularly regarding tax law and deferred compensation rules. Compliance with IRS guidelines is critical, especially for NQDC plans.
Compare Technology Platforms
- Choose a vendor whose platform integrates easily with your HR systems and payroll software. A seamless user experience will encourage higher employee participation.
Request Proposals and Demos
- Invite vendors to present live demonstrations and submit detailed proposals. Compare the level of employee support, administrative ease, and reporting tools.
Implementing Financial Benefits
A successful rollout of financial benefits involves careful planning and communication. Here’s how to implement these programs smoothly:
Pilot the Program
- Start with a small pilot group to test the program, gather feedback, and make adjustments before the company-wide launch.
Develop a Communication Strategy
- Craft a detailed communication plan that includes timelines, enrollment deadlines, and detailed explanations of the benefits offered. Use multiple communication channels, including emails, webinars, and in-person presentations.
Leverage Technology
- Ensure the enrollment process is simple and intuitive. Use an online benefits portal that allows employees to access resources, sign up for benefits, and manage their plans easily.
Educating Employees on Financial Benefits
Education is critical to ensure employees understand and take full advantage of financial benefits. Here’s how to engage your workforce effectively:
Host Financial Education Webinars
- Partner with your financial benefit vendors to offer workshops and webinars on relevant topics, such as student loan management, deferred compensation strategies, or retirement planning.
Develop Online Resources
- Create a comprehensive resource library that employees can access year-round. Include FAQs, step-by-step guides, and video tutorials to simplify complex financial concepts.
Personalize Communication
- Tailor messages to different employee demographics. Younger employees may be more interested in student loan repayment, while senior staff might prioritize retirement and tax planning.
Tips for Boosting Employee Engagement
Ensuring that employees engage with their financial benefits is critical for the success of the program. Here’s how to encourage participation:
Offer Incentives
- Provide incentives for participating in financial wellness programs, such as matching contributions to emergency savings accounts or providing bonuses for attending financial workshops.
Promote Benefits Year-Round
- Regularly highlight financial benefits throughout the year, tying communication to relevant events such as tax season or the end of student loan forbearance periods.
Use Analytics to Track Participation
- Leverage data from your vendor’s platform to track benefit usage. Use this information to refine communication strategies and promote underutilized benefits.
How Can Lebel & Harriman Help?
Offering robust financial benefits is a powerful tool for differentiating your company and supporting your workforce. By implementing programs such as student loan reimbursement, non-qualified deferred compensation, and financial wellness initiatives, you can improve employee satisfaction, reduce turnover, and boost productivity.
At Lebel & Harriman Retirement Advisors, we’re here to help you design a tailored financial benefits strategy that addresses the unique needs of your employees. Contact us to learn more about how we can help you stand out as an employer of choice.
Securities Disclosure: Securities offered through Valmark Securities, Inc. Member FINRA, SIPC. Investment Advisory Services offered through Valmark Advisers, Inc. a SEC Registered Investment Advisor. | 130 Springside Drive, Suite 300, Akron, OH 44333-2431 | Telephone: (800) 765-5201 | Lebel & Harriman, LLP and Lebel & Harriman Retirement Advisors are separate entities from Valmark Securities, Inc. and Valmark Advisers, Inc.
All information article is believed to be from reliable sources; however, no representation is made to its completeness or accuracy. The material is for informational purposes only and is not intended provide specific advice or recommendations for any individual nor does it take into account the particular investment objectives, financial situation, or needs of individual investors. This information is not intended for use as tax or legal advice. Persons should consult with their own tax or legal advisors for advice.
1 https://educationdata.org/average-student-loan-debt
3 https://www.asppa-net.org/news/2024/2/there-new-focus-non-qualified-deferred-compensation-plans/
