Student loan debt. Maxed out credit cards. Underwater home loans. Limited savings. These are just some of the financial issues facing today’s workforce. Results of the Financial Education for Today’s Workforce survey found that four out of five workers said their financial issues “are somewhat, very or extremely impactful on their job performance.”
The negative impact of financial issues hasn’t gone unnoticed by employers. Many companies (two-thirds of those in the survey) have begun to address the financial wellness of their employees by offering financial education to help employees manage their money. And, as the results of a 2014 Society for Human Resources (SHRM) study found, employees are looking to their employers for help with managing their financial wellness.
Keep in mind that financial wellness and education are very broad subjects. People need education and training about many topics, including how to create a budget, save money, reduce debt, and plan for retirement. What are the critical areas of focus for employer-provided education on the topic of money? According to more than 400 survey respondents, the top three areas of focus are:
- Increasing participants’ ability to manage money (52%)
- Improving participant asset allocation/retirement investment decisions (42%)
- Increasing understanding of current benefits (42%)
These areas of focus–managing money, making retirement decisions, and understanding current benefits–are a great place to start when considering education an employer might offer to assist employees with financial wellness. Based on the specific needs of your workforce, you might consider offering programs covering topics such as:
- Managing personal finances: This type of general content can cover everything from creating (and following) a budget, to the importance of having an emergency savings account, to education around tax choices and implications.
- Paying off student loan debt: Members of today’s workforce face enormous student loan debt. Help your employees understand how to manage that debt with confidence and in the most efficient way.
- Planning for retirement: One in three Americans has saved $0 for retirement, according to a 2016 survey. The best way to plan for retirement is to start saving early. Educating employees about the importance of planning for retirement, as well as the investment options available through your plan, are an important part of financial wellness programs. Check out How to Convince Young Employees to Save for Retirement for tips on appealing to your younger employees.
Relevant articles (you should forward these to your employees!):
- Paying Off Debt vs. Saving: How to Prioritize
- Not Saving for Retirement: Consequences and Considerations
- End of Year Tax Planning: Tips for Big Bonuses, Commissions, and More
- 401(k) Basics for Your First Job
- Tax Savings in Your 20s
- 401(k) Tax Advantages
- Employee Benefits Questions You Need to Ask Before You Enroll
Whether you want to increase participation in your 401(k) plan, financial understanding of other benefits like health insurance, or just overall awareness when it comes to the best practices of personal finance, there are many ways to provide valuable knowledge and training to your workforce. Your employees will truly appreciate an employer who helps them make the most of every dollar of their salaries and is looking out for their long-term well-being!
If your 401(k) provider offers financial consultation as part of their service, be sure that participants and employees know what’s available and communicate any guidelines for contacting the advisor (e.g., amount of time allowed, types of questions, any fees, etc.). Encourage employees to assess their situation and reach out to the advisor with questions. If your provider doesn’t offer this service, contact local financial advisors to inquire about their consultation services and options for making those available to your employees.
Thanks to technology, there are a variety of tools that can help individuals create budgets, estimate debt pay-off, and project retirement income needs. Your 401(k) provider may have tools or suggestions based on their industry experience. If not, conduct a search for easy-to-use, impartial, and free tools which you can recommend to employees. This article highlights several financial planning tools for budgeting, saving, tracking bills, investing, and/or protecting against identity theft that your employees may find helpful.
Workshops and eLearning courses
Ask your 401(k) provider if they would be willing to offer a lunch and learn session or a financial wellness series at your office. Not only will employees benefit from the information the advisor shares but they will also hear about money management best practices from other employees who attend. You might also be able to find relevant courses at a local community college, community center, or from an eLearning provider.
Make sure the presenter is not shilling anything at this presentation — it should be an educational presentation, not a sales pitch or upsell for any financial product that the presenter receives a commission for. Unfortunately, this is quite common, so make sure to check their fiduciary status!
Your overall approach must be thoughtful and included as part of your general benefits strategy. To make it worthwhile for your employees and your organization:
- Ask for feedback: What topics would help employees the most? How would they like to access the information and training?
- Create a plan: Determine the what, when, and how you’ll implement financial wellness as part of your benefits. Will involvement be voluntary or mandatory? Will you use any incentives to encourage participation? (Take a look at this report which has data that may help inform your approach.)
- Communicate: Once you are ready to launch your financial wellness offerings, put a plan in place for how you’ll notify employees and how you’ll continue to socialize the content and encourage participation.
- Review: Assess offerings based on changing financial needs. Be sure that you’re evaluating your financial wellness offerings on an annual basis; update and make revisions as required.
As always, be selective, cautious, and forthcoming about the recommendations you make and services you provide related to the topic of financial wellness. While you’re offering education, resources, and tools, be very clear that employees are responsible for their actions and decisions. Hopefully, with this type of training and support, workers’ financial issues will decrease and as a result will no longer impact their job performance.
Related article: Online 401(k) Plans: The Benefits for Employees and Employers