Why Financial Health Matters

posted in: Blog | 0

In today’s market, employers are competing for talent and offering benefits to enhance financial wellness. In 2015 a whopping 93% of companies had plans to increase their financial wellness program offerings beyond 401(k) retirement plans. There are many exciting tools available to employers.

However, retirement decisions remain a very important employee benefit and a critical part of financial health. While the share of small businesses offering 401(k) plans has picked up since 2008 — when just one out of every 10 small businesses offered the benefit — 401(k) plans are still the exception rather than the rule at small companies. The majority of workers at small businesses don’t have access to a retirement savings plan at work. The simple act of offering a plan can have an outsized impact on improving employee financial health. Calculations from the Employee Benefit Research Institute find that employees earning between $30,000 and $50,000 per year are 16.4 times more likely to save for retirement if they had access to a workplace retirement plan.

At HIP Investor, we advise small businesses on how to set up retirement plans that match their company’s missions. While on the surface this sounds like a luxury that is not afforded to most businesses, our clients have shown that this is a great way to engage employees and bring people of all income levels into a conversation about finance. When HIP advises on 401(k)s, we educate employees about more than just traditional financial metrics. HIP’s impact-focused ratings speak to all savers and investors in a way that resonates with everyone, regardless of financial experience. For example, a leading indicator like the number of women on the board is a more compelling way to understand companies who are leaders, than are backward looking metrics like historical risk-return or Sharpe ratios.

The conversation of financial health can involve all stakeholders from financial institutions to customers that are using their products. The employee who is saving for their retirement should not be intimidated from participating in the discussion about their financial future. Our long-term vision is to move beyond narrow measurement tools such as straightforward contribution rates and net worth in order to gain a holistic understanding of our client’s financial health.

An exciting example is stok, a small business with 27 employees. They are an environmental building strategies company with a mission to catalyze an environmentally restorative and socially equitable world. Stok advises large companies on how to implement green real estate and healthy workplaces. When HIP added our push-button fossil-fuel -free portfolios to their plan options, the contribution rates of employees increased from low single digits to high single digits and their participation skyrocketed from14% to 95% and eventually 100%.

Investing in the future is essential to financial health. At HIP, we help employees get excited to learn what is inside their portfolios and become more inclined to invest. Half of the US workforce is made of small and mid sized businesses, and those employees are looking to business owners to provide financial education. Technology has expanded the number of options available to working people of all income levels. Companies like DoubleNet Pay and PayActiv, are using technology to help employee financial health in a way that was previously only available to those in the highest income brackets. We are working hard to also make values-aligned investing available to everyone, and not just only available to those with the highest compensation levels.


Megan Morrice
Follow Megan Morrice:

MBA, Series 65 Investment Adviser; Client and Partnership Development

Megan leads Client and Partnership Development at HIP Investor, where she identifies and creates partnerships with like-minded brands and educates clients on how HIP’s offerings can help them make more money and have a greater impact. Megan also is engaged with portfolio development and the publishing of the results of HIP partnerships. She has experienced firsthand the positive impact that companies have when investing where their values are. Her financial services background working as a Financial Advisor for Metlife and as a wholesaler for Leisure, Werden & Terry Agency allowed her to work with clients and understand the internal challenges faced in the financial services industry. In 2015, she did a fellowship at Confluence Philanthropy, an international network that helps move philanthropic capital in the direction of mission-aligned investing. She holds an MBA in Sustainable Management from Presidio Graduate School. Megan is passionate about helping individuals and organizations understand their financial options, align their money with their values, and create financial products that best serve the needs of people.

Leave a Reply