If you’re an HR or company leader, chances are you’re thinking about your diversity, equity, and inclusion (DEI) strategy for next year. While there are many ways to approach this topic, we want to introduce a critical but frequently overlooked area of DEI for you to consider—and that’s financial wellness.
This is an important issue to pay attention to because studies show that employees of color are more likely to experience high levels of financial stress, carry more debt, and are less likely to have basic estate planning in place. Unaddressed, these barriers will only continue to perpetuate the cycle of financial inequality that’s prevalent in our society.
But there's good news: you, as an employer, have the unique opportunity to directly address your employees’ financial needs. This post will explain why DEI is important, what role you play, and how you can further your efforts with financial wellness benefits.
Want to dive deeper? Download our free eBook “Delivering Through DEI: How Financial Wellness Can Help Your Diversity, Equity, and Inclusion Strategy”
What is DEI, and why does it matter to your employees?
Before we get started, let’s break down the definitions of diversity, equity, and inclusion:
- Diversity: Refers to differences within a given setting—whether that’s differences in thought, gender, age, sexual orientation, or any other identifier.
- Equity: Acknowledges that everyone has different needs, experiences, and opportunities. This is different from equality, which is about treating everyone the same, regardless of their individual needs.
- Inclusion: Understanding what people need to feel valued and included. Inclusion can be baked into anything from policies to physical spaces to products.
To craft an effective DEI strategy, it can be helpful to pause and reflect on why nearly 80% of employees say they want to work for a company that values DEI issues. There are a few factors to consider.
First, research shows that belonging at work is the most important contributor to happiness. People want to join a company where everyone has a chance to have their voice heard and where they feel supported. And DEI initiatives can be the driving force to help organizations cultivate this type of culture.
What is HR’s role in building a benefits plan to support DEI?
When it comes to building a culture of DEI at an organization, assessing your benefits plan is a great place to start.
Benefits set the tone for your company culture because they reflect your level of investment in your employees, as well as the issues that you prioritize. Since benefits are available to most people at the organization, they also provide the most direct way to support your employees.
This is where HR plays a critical role. As the gatekeepers to the compensation and benefits of their employees, HR teams are responsible for designing the benefits package. You may not have thought about it, but a financial wellness program is an effective way to boost your DEI efforts.
Ways financial wellness programs support DEI
A holistic financial wellness program helps your employees understand, manage, and take action on their finances. But how does any of this relate to your DEI goals? The right financial wellness program can help you:
1. Reduce financial stress
Financial stress takes a huge toll on your employees. Specifically, it can result in poor decision-making when it comes to spending and saving, have a negative impact on health, and cause distractions at work. Employees of color are more likely to experience high levels of financial stress and are already negatively impacted by racial wage gaps.
Financial wellness programs are an effective way to help break the cycle: 53% of employees said they would feel less stressed about their overall financial situation if they had access to financial wellness benefits.
2. Educate your employees
Financial education leads to better decisions that generate wealth. Unfortunately, this isn’t built into our education system. NextGen Personal Finance found that less than 12% of students are required to take a personal finance course to graduate high school. And this number is even lower for students of color—only 7.4% of Black and Brown students and 7.8% of low-income students are required to take a personal finance course to graduate.
Financial wellness benefits offer employees the opportunity to learn more about budgeting, investing, and basic money management. This, in turn, can empower them to reach their financial goals, whether that’s building wealth or purchasing their first home.
3. Offer personalized guidance
Finally, everyone’s financial situations are unique and should be treated as such. In an ideal world, everyone would have a financial advisor to give them personalized guidance. But these services are out of reach for many people, which is why 99% of Americans don’t use one.
Rather than assuming every employee is starting from a place of wealth and privilege, a comprehensive financial wellness platform assesses all areas of a person's financial life and provides guidance that addresses where they are currently and where they eventually want to be.
Action plan: How to evaluate and implement a financial wellness program
If you’re unsure where to start with your benefits, we encourage you to consider investing in a holistic financial wellness platform first. Unlike a separate budgeting app or investment tool, a financial wellness platform consolidates all your employee’s financial information into one place.
When you’re vetting potential benefits partners, here are a few questions to ask about their platform:
- Does your platform offer personalized, 1-on-1 guidance?
- How do you approach providing our employees with financial education?
- Is your platform capable of supporting a global workforce?
It’s common for financial wellness platforms to give your employees access to financial professionals. Keep these questions in mind when assessing the quality of a vendor’s financial advisors:
- Do you offer our employees access to certified financial experts, such as CFP® professionals?
- Are your financial professionals held to the fiduciary standard?
- How do you source financial professionals for your network?
Finally, you want to assess whether the financial wellness platform you’re choosing is aligned with your organization’s DEI goals. This is important to consider because your employees of color may be reluctant to seek help when they don’t have access to diverse financial advisors who understand them on a personal and professional level. Here are a few questions to ask:
- Do you have a diverse network of financial professionals who specialize in advising employees who are BIPOC, LGBTQIA+, veterans, and women?
- What is your company doing to help break down barriers regarding the lack of diversity and representation in the financial industry?
We’re optimistic that more HR and company leaders will recognize the important role that financial wellness plays in their DEI strategies. By supporting the financial health of your employees, you can help level the playing field and create a stronger foundation for all your other DEI efforts. If you want to learn more about how to integrate financial wellness into your DEI strategy, download our eBook.