In times of crisis, banks must also look after their own
It’s clear people are under stress, but even before the coronavirus pandemic created global economic uncertainty, most average Americans were living paycheck to paycheck.
In fact, about 30% of American workers said an unforeseen expense of less than $ 500 would prevent them from meeting their financial obligations, according to an internal Ceridian survey.
According to a study by the Center on Budget and Policy Priorities, increasing income inequality in recent years has largely contributed to this financial pressure. A number of factors have exacerbated this problem, including the exorbitant costs of health care which exceeded inflation for many years; greater adoption of automation and outsourcing; a tax system that favors investment income more than salary income; and the slow erosion of defined benefit plans offered by employers.
However, there is an opportunity waiting for the financial services industry.
Access to quality talent is essential for the long-term success of many companies in the industry, and attracting and retaining talent becomes increasingly difficult as the new skills in demand are relatively scarce.
Leading from a financial well-being perspective is one area where financial institutions can gain an edge over their competitors in other industries from a talent perspective.
By definition, financial services companies are experts in providing the products and services that people need for financial stability. Extending this expertise into their talent acquisition strategies – and marketing it well – can give the industry a hiring advantage. Here are a few examples already within reach of the industry.
Banks may offer loan consolidation and forgiveness programs similar to those they already offer to customers. For example, allow employees to transfer portions of recurring credit card balances that accumulate at a high interest rate into lower cost employer-sponsored personal loans with single-digit rates. These could also have a matching function with the employer, which would resonate with many workers and lead to significant savings.
Financial companies can also offer an on-demand compensation solution that gives employees immediate access to wages earned anytime during the payroll period through a digital account on their mobile device, with little or no additional fees.
The flexibility of employees being able to access earned wages before the next payday with an on-demand pay solution means workers can better respond to unforeseen circumstances, reduce reliance on high-cost payday loans, and gain more control and control. monitoring on personal finances.
For employers, an on-demand payroll solution creates minimal disruption to the existing payroll process and cash flow, while supporting the financial well-being of employees. It also improves the perception of the employer brand.
Another example is the addition of the concept of robo-adviser to open registration. Using robotic advisers is an emerging way to efficiently and profitably manage investment portfolios, but it is often only a limited view of a person’s overall financial health.
He has no visibility into debt levels or medical costs, and a limited understanding of the tax situation. A robo advisor optimizes the allocations and the risk / reward profile of the money set aside in the portfolio, but cannot advise on how much should be placed in the investment account in the first place.
Using an employee assistance program from a third-party fiduciary advisor to help navigate open enrollment, coupled with a downstream robotic advisor to help allocate dollars allocated to pension plans, would provide a semblance financial plan that is otherwise non-existent for the majority of Americans.
This concept will likely emerge as a standard or optional offering as part of a global open enrollment program. Such a program provides a holistic view of an employee’s tax, retirement, medical and financial matters, and makes artificial intelligence-based recommendations accordingly for all benefit choices.
Financial stress impacts the workforce in several important ways: from the daily anxiety carried by workers themselves to the impact it has on productivity, engagement and the bottom line of companies. employers.
As such, financial wellness programs and benefits should be a priority for employers looking to attract the best and brightest. And financial services companies should take note. This is a huge opportunity for the sector to gain an advantage in attracting talent.