U.S. Financial Wellness Benefits Market – Industry Outlook & Forecast 2024-2029

INDUSTRY OVERVIEW

The U.S. financial wellness benefits market size was valued at USD 587.02 million in 2023 and is expected to reach USD 1.21 billion by 2029, growing at a CAGR of 12.91% during the forecast period. The concept of financial wellness is evolving beyond traditional retirement plans and benefit notices. As employees increasingly seek unique benefits, financial wellness offerings are becoming more prevalent, with 86% of employers providing these programs. This places financial wellness just behind physical well-being, 94%, and mental health programs, 89%, in terms of employer-provided benefits. More employers are extending beyond retirement plans to include debt management, budgeting, investing, and financial planning services, providing lucrative opportunities for the U.S. financial wellness benefits market. These financial wellness benefits aim to help employees develop strong financial habits, including following a spending plan, maintaining a low debt level, having active savings & retirement plans, and being protected against significant financial risks.

Financial wellness benefits have a broad range of definitions as it is a multi-faceted concept based on an employee's goals, attitudes, financial knowledge, environment, and circumstances. However, on the surface, they are generally benefits delivered through education & retirement planning and wellness assessment tools that can aid the workforce in gaining confidence, control, and responsibility for day-to-day financial decisions, overall well-being, the ability to manage unplanned expenses and have the finances to meet future milestones. From a larger perspective, the U.S. financial wellness benefits market has helped to drive more productivity and engagement. Moreover, the count of financial strain extends to the workplace, resulting in decreased productivity, absenteeism, and diminished employee job satisfaction. Recognizing these interconnected dynamics, forward-thinking companies prioritize implementing holistic solutions to address financial wellness comprehensively. Thus, by incorporating financial wellness services in employee benefits packages, organizations aim to provide valuable resources and support to help employees navigate financial challenges effectively. The U.S. financial wellness benefits market encompasses various services and initiatives, including financial education workshops, one-on-one financial coaching sessions, access to online financial tools and resources, and even employer-sponsored retirement plans and savings programs. Through these offerings, employees gain the knowledge, skills, and tools necessary to manage their finances prudently, plan for the future, and mitigate financial stress.

MARKET TRENDS & OPPORTUNITIES

Growing Role of Wellness Champions

Wellness champions are playing a growing role in the success of wellness programs. This is because they are rooted in the idea that people are more likely to be influenced by the healthy behavior demonstrated by social influencers, which includes their family, friends, and colleagues. This position is based on motivating employees to compete and ensure their well-being collectively, and the trend is playing out in two ways:

1. These wellness champions act within a professional wellness program's pre-existing framework and rules.
2. Others work with the wellness champions to help create initiatives and programs.

Companies such as Alyfe and EXOS work on finding these champions and creating customized cultures for better outcomes. Many of these vendors have found that wellness programs would be more effective if 1%-4% of the workplace population served as champions. Vendors seeking to harness this trend can collaborate with established groups within the employee population to improve awareness and engagement in wellness programs and seek feedback regarding program offerings and implementation.

Employers Take Onus for Employee Financial Wellness

According to the Bank of America survey, almost 4 out of every 10 employees feel financially ill. Historically, personal finance has been considered peripheral to an individual's wellness. However, it is becoming a core element of overall well-being. Employees no longer trust public social safety nets, so the private sector is stepping in to play a bigger role in financial wellness. Employees are optimistic because they believe they do not have to resolve their financial issues alone. Employees are looking at employers as a potential source of financial aid beyond retirement, as opposed to the family. Employers couldn't agree less; they are more aware of their role in investing in their employees' financial wellness and prompt employers to support them.

INDUSTRY RESTRAINTS

Misalignment in Financial Wellness Offerings

While employers are interested in taking care of their employees' financial well-being, they contribute to personal financial nervousness by eliminating safety nets. In addition, the base wages are kept to a minimum as employers reward their best-performing employees and do away with final salary pension schemes. However, they must align their programs with employee motivations and what they place a higher degree of value. Also, since budgets and funding are limited, a lot of work on financial wellness programs and their implementation has been conducted by market players, thought leaders who advocate for them, those with a direct stake in the outcome, and onsite workers. Employees are largely left out. This often leads to bias and can result in a larger number of instances where employers are simply shooting in the dark. Thus, there is a gap between the financial wellness benefits delivered as being in employees' best interests and what employees want. Also, the impact of these programs on employees who often switch companies is under question.

SEGMENTATION INSIGHTS

INSIGHTS BY PROGRAM

The U.S. financial wellness benefits market by program is segmented into financial planning, financial education and planning, retirement planning, debt management, and others. Financial planning holds the largest share of the U.S. financial wellness benefits market, followed by financial education and retirement planning. Employers can be pivotal in encouraging employees to utilize these beneficial programs, leading to more proactive and positive outcomes. Vendors can collaborate with top management in companies to implement changes, such as integrating referrals to financial counselors into HR processes, serving as a nudge to maximize the benefits offered. Financial wellness needs to be a way of life for ultimate financial security. Still, for most workers in the U.S., financial challenges are not expected to go away anytime soon, making this market a lucrative one.

INSIGHTS BY END-USER

The U.S. financial wellness benefits market by end-user is segmented into large, medium-sized, and small-sized businesses. In 2023, large businesses held the largest share of the U.S. financial wellness benefits market. Large companies have long recognized the seriousness of financial anxiety and have historically been more invested in financial wellness. Recently, they have begun offering a more comprehensive set of voluntary financial wellness benefits, sometimes including discounts or cash incentives to assist employees with money management. Leading companies with diverse global workforces increasingly recognize the link between employees' financial well-being and productivity. As a result, nearly 40% of employers now offer financial wellness programs, with about 30% citing "differentiation from other employers" as a key motivator. These offerings are often provided in addition to existing services such as investment guidance, retirement planning, and insurance. Approximately 92% of large companies include financial wellness programs like budgeting and debt management, while around 76% offer stress management training. Major providers in this market include AYCO, Mercer, Fidelity, Prudential, Financial Finesse, and PwC, among others.

INSIGHTS BY DELIVERY

The U.S. financial wellness benefits market by delivery method is segmented into online, one-on-one, and group formats. The one-on-one segment accounted for the highest U.S. financial wellness benefits market share in 2023. Organizations use various channels to deliver financial wellness benefits, depending on factors such as the size of the employee population, available resources, employee preferences, the type of information or counseling, the components involved, workforce density at specific locations, and geographical dispersion. Further, these programs are delivered through in-person sessions, intranet, email, screens, or group sessions. Utilization of these services varies by delivery method, employee population, and income level. While low-income workers are less likely to use financial wellness benefits than higher-income workers, those experiencing significant financial stress are more inclined to use high-touch services such as financial coaching and payroll advances. Conversely, workers with less financial stress might prefer online tools like budgeting apps or direct deposits. Financial wellness programs are expected to become more comprehensive and interconnected, enhancing their effectiveness. However, financial wellness programs are expected to become more comprehensive and connected. For a long time, disconnected financial employee benefits and apps such as Acorns and Mint and lunch-n-learn programs have created a vague picture of each employee's financial situation.

INSIGHTS BY TYPE

The U.S. financial wellness benefits market by type is segmented into consumer tools and employer tools. The consumer tools segment is projected to account for the majority of market share by 2029, with a CAGR of around 12.5%. Consumer tools include resources that assist employees in developing financial action plans and budgets, games that encourage saving, and programs focused on debt management, budgeting, and bill payments. These tools help employees gain a comprehensive understanding of their financial situation. Further, technology is increasingly being used to optimize financial health holistically and seamlessly integrate it into the employee’s daily life and schedule. For instance, the LINK from Prudential offers a customized financial roadmap by allowing employees to choose what fits their needs and allows them to connect with advisors.

INSIGHTS BY INDUSTRY

The U.S. financial wellness benefits market by industry is segmented into healthcare, financial services, education, manufacturing, public sector, and others. In 2023, the healthcare industry accounted for the largest U.S. financial wellness benefits market share at approximately 14%. Financial wellness programs in healthcare companies and systems have been particularly robust, as the industry is highly susceptible to negative outcomes due to workforce volatility, where reliable and consistent care is crucial. Healthcare sector employers focus on addressing personal finance issues such as household finances and retirement readiness. This includes managing student debt loans and building financial resilience by encouraging savings for emergencies. Additionally, preparations for potential long-term care expenses, retiree medical care, and improving retirement savings are key components of these programs. The primary goals are to help employees achieve their financial objectives, establish financial wellness priorities, and improve their understanding of financial planning.

REGIONAL ANALYSIS

The need to manage workplace stressors such as long working hours, quality of work-life balance, and increasing workplace competition are primary drivers of health and well-being programs in the United States. Following a prolonged period of slow growth, the company's profits have risen, further fueling the adoption of stress management programs. This financial improvement allows employees to better allocate budgets for these programs, leading to anticipated growth in the U.S. workplace stress management market over the forecast period. Also, the U.S. workforce experiences higher health costs and potentially greater mortality from workplace stressors compared to workers in OECD countries in Europe. Increased awareness of the costs associated with workplace stress, the expansion of health insurance coverage, and the wider adoption of family-friendly work policies could significantly benefit U.S. workers. As a result, major U.S. financial wellness benefits market vendors are focusing on innovative ways to deliver financial wellness programs, leveraging digital technology to provide information through company portals and host virtual screenings.

The Southern region held the largest share of the U.S. financial wellness benefits market, accounting for over 34% in 2023. The Southern region consists of the following major states: Texas, Florida, Virginia, Georgia, and others. It has one of the largest numbers of companies and ranks the highest in terms of the number of employees in the United States. Moreover, for Southern people, work, money, and the economy are leading sources of stress. Owing to the significant presence of companies and an employee base, the region holds the highest market share for financial wellness benefits. Furthermore, Southern U.S. employees strongly believe that stress management is crucial and can impact a person’s health. Southerners acknowledge the role that financial wellness benefits programs can play in helping them manage stress and lifestyle or behavior changes.

COMPETITIVE LANDSCAPE

The U.S. financial wellness benefits market is highly fragmented, with numerous top vendors and start-ups entering the space. These new entrants, including employee benefits providers offering EAPs, healthcare, and insurance, may lack extensive track records but are driving innovation and reimagining the financial services landscape, such as introducing micro-savings options as alternatives to traditional savings accounts. Notable U.S. financial wellness benefits market players include Prudential, Bank of America Merrill Lynch, Virgin Pulse, Mercer, and Financial Finesse. In addition, the market has seen the entry of banks, credit unions, community-based non-profit organizations, and insurance companies, which primarily serve at-risk individuals. These entities often acquire or partner with smaller financial wellness benefits industry players. For instance, many 401(k) advisors are now collaborating with unbiased financial wellness partners to integrate financial wellness into retirement plans. Retirement plan consultants, in particular, are shifting their focus beyond 401(k) plans to make financial wellness the core of their business as the market trends in that direction and employers place their trust in these advisors.