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A new world of benefits

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Convergence is often defined as the process of two separate entities coming together toward a common point, like when two roads intersect, or, on a much larger scale, when universes collide.

A convergence of a more galactic nature is taking place in the employee benefits marketplace as the needs of both employers and employees intersect. This intersection is leading to a new employee-benefits dynamic and never-before-imagined opportunity for benefits producers and agents: As employees are seeking help with their personal finances to achieve greater security, employers are looking for ways to help them achieve just that as a way to improve employee engagement and productivity.

Increasingly, employees need help evaluating and managing their personal financial and benefits needs as money issues spill over into the workplace. Nearly one in four employees say personal financial problems have become a distraction at work, according to a 2014 survey of financial wellness issues by PriceWaterhouseCoopers. Meanwhile, money issues have consistently topped Americans’ list of biggest stressors since 2007, the American Psychological Association reports. These factors are a big contributor to lost workplace productivity.

Employers are feeling this pain and are taking steps to help employees address their personal financial issues, both for altruistic and business reasons. A recent Aon Hewitt survey found that nine out of 10 large employers want to introduce or expand financial wellness programs in 2015. Anecdotally, employers are also looking to better manage costs – a never-ending quest – and make their benefits packages more effective by better meeting employee needs.

This movement towards improved financial wellness is taking place as employers offer more benefits on a contributory or voluntary basis. Long gone are the days when paternalistic employers paid for a generous menu of life, health, disability and pension benefits for each employee. Today, employees are left alone to determine their personal financial needs and then mix and match their benefit choices as best they can. Often, employees are overwhelmed and struggle to decide what makes sense for them; too often, they punt by making no decision at all.

The shift in benefits availability and cost is leading to a convergence as the common interests of employees and employers in financial security and workplace productivity align. There is an opportunity for everyone in the employee benefit space to provide better guidance tools and resources to assist employers and employees make better decisions holistically across all their benefits.

Benefits providers are now launching, revamping or redesigning tools to promote better decision-making and outcomes about employee benefits and financial security. Many tools address needs such as health care or insurance protection or retirement, and some address multiple needs. The best tools provide personalized guidance and recommendations on a comprehensive set of needs based on data about employees’ personal lives and finances, including their family situation, income, budget obligations, financial risks, and current insurance protection and retirement savings.

The output is a customized personal financial analysis that the employee can then use to prioritize his or her benefit needs and selections, and make prudent choices. Ultimately, helping employees make better overall financial decisions should reduce stress levels over financial problems. With at least one less thing to worry about, employees typically are better able to focus on work, boosting productivity.

From a financial planning perspective, the cornerstone to providing employees with effective guidance is the personalized analysis that speaks to their unique situation. For instance, an employee who is married with two children and a mortgage will have different priorities and needs than an employee who is single with no children and rents an apartment. The employee who is married may have a higher priority for life insurance and disability insurance to protect his or her family in case something unexpected happens. On the flip side, the employee who is single may focus on retirement as their top priority with insurance ranking lower in the benefit pecking order.

Whatever their needs, employees can make the best decisions for their individual situations if their employer’s benefits platform allows them to review and select from the widest possible menu of benefits such as medical coverage, defined contribution retirement plans, life and disability insurance, and other protection products such as accidental death and dismemberment, chronic illness and long-term care. That’s why the analysis tool must take into account the different benefits made available through different providers, as many employers rely on separate providers for health benefits, retirement savings and various insurance protection coverages.

These innovative tools are creating a new dimension for employee benefits whereby the interests of employers and employees intersect, creating better outcomes for both.

From the employee perspective, workers and their families receive greater insight into strengthening their financial security and reducing the biggest stress factors for American households.

Employers, on the other hand, have a new lever to pull to increase productivity. The return on investment for employers can be substantial, ranging anywhere from $1 to $3 returned for each $1 invested, according to the International Foundation of Employee Benefit Plans.

Benefits producers and agents, by making these new tools and solutions available in the workplace, are gaining new credibility and influence with their clients.

Perhaps the most important measure of the new benefits continuum: the convergence of satisfaction of employers, employees and benefits producers.