A mission-driven approach to financial benefits: A conversation with Vanguard’s Kathryn Larkin

There’s something different about how Vanguard thinks about money — not just the money it manages for its clients, but the financial security it seeks to provide its own employees.

Over the past year since becoming head of global benefits for the investment giant, after having worked in benefits and compensation for law firms and the industrial gas industry, Kathryn Larkin has discovered that difference runs much deeper than generous contribution figures — though that differentiator is certainly headline-worthy. Vanguard’s approach includes a 10% salary contribution to employees’ 401(k) regardless of employee contribution, a 4% match on employee contributions, and HSA contributions up to 5 times higher than the industry average.

“We don’t really view it as a perk,” explains Larkin. “We view it as part of the complete compensation structure.” Perks, as she sees it, are things like employee discounts or concierge services — nice-to-haves that make work life a little easier. But retirement contributions, HSA matches and flexible spending accounts? They are strategic alignment tools.

That approach stems from something Larkin describes as “complete alignment with the mission,” with Vanguard seeking to genuinely help people invest for the future.

For one, Larkin sees the HSA matches as smart business strategy rather than altruism. HSAs serve dual purposes: immediate healthcare needs for families dealing with illness and long-term retirement savings for those ready to build wealth. They lend a flexibility that serves both employee needs and organizational goals.

It’s especially important when considering the mounting financial pressure on today’s workforce. With 25 years in employee benefits, Larkin has watched stress levels intensify dramatically. “Everybody walks into their place of work bringing something with them,” she says, ticking off the familiar challenges: housing barriers that exceed what previous generations faced, rising healthcare costs despite robust employer plans and student loan debt.

But there’s something that makes traditional financial stress different in these times: the relentless ping of notifications. “We’re in this instantaneous information overload world where if your credit report changes one point, you get an alert,” Larkin notes. Commuters no longer read the daily paper on their train ride to work, she notes; now, everyone is staring at their phones, watching alerts about late payments, spending updates and credit charges in real-time. “By the time individuals arrive at work, they’ve had a conversation in their own head about what’s going on” with themselves financially, she notes.

That reality shapes how Larkin approaches one of her biggest challenges: convincing multiple generations of workers to care about financial benefits that might not seem immediately relevant to all. After all, for younger employees focused on apartment rent and weekend plans, retirement savings can feel abstract.

Vanguard’s solution involves targeted communication to employees that meets people where they are. For parents, it might promote dependent care flexible spending accounts by showing how tax savings could fund emergency savings goals. It’s about connecting immediate financial relief to longer-term security in language that resonates with lived experience.

Some might call it paternalistic — why not just give employees the cash and let them decide? Larkin recalls when she was just entering the workforce and wishing she could access her employer’s 401(k) match for new clothes. “Now I’m like, thank God I had that match,” she laughs. “Sometimes you do have to step in, because at phases in life, you don’t really see the end game.”

That perspective influences how she thinks about the broader role of employers in addressing what research suggests is a $9.6 trillion productivity drain from financial stress. But rather than focusing solely on productivity metrics, Larkin advocates for a more fundamental approach: creating valued employees who feel fairly compensated, recognized for performance and genuinely cared for.

“Part of feeling valued is feeling, am I fairly compensated? Does my employer actually care about me?” she explains. “Do they care about me today, and are they thinking about my tomorrow, not just their own?” It’s a philosophy that rejects treating employees as widgets while acknowledging that business success depends entirely on the real humans doing the work.

When asked about balancing employee financial security with shareholder responsibilities, Larkin sees no conflict. “When you make an investment in your employees, you’re actually also making that investment in your shareholders,” she contends. After all, those employees are the ones creating shareholder value through their daily work.

After watching HR evolve into a more strategic business function over the course of her career, particularly amid recent workplace disruptions, Larkin believes more people managers have come to understand the connection between employee financial wellness and organizational success.

The question isn’t whether companies can afford to invest in employee financial security. For Larkin, it’s whether they can afford not to.