Employee Financial Education Benefits Them and You

When employees get stressed out about finances, ignorance is often a big factor. They sense that they need to take decisive steps to get on a solid path. However, they’re not sure where to start or what their options are, and that adds to the stress. This is why many employers have embraced employee financial education. That’s a good start, but making a program effective is another matter entirely.

Recognizing the need for some guidance, the International Foundation of Employee Benefit Plans issued a report entitled, “What’s Working in Workplace Financial Education.” It is based on the experience of 406 employers, and two-thirds of them already provide such programs (most for at least five years). Among other advantages, employers who’ve been offering workplace financial education tend to view their employees as financially savvy.

Persistence Required

One of the study’s major conclusions was that achieving success with financial education classes requires persistence. The longer employers have been offering programs, the more successful they consider them to be. That makes sense; trial and error is the best teacher, not to mention that it takes time to learn and digest new material.

Another of the study’s conclusions is that in many cases, the more financial knowledge an individual has, the lower his or her general stress level is. About one-third of employers that have offered classes in money matters for two years or more believe employees are “somewhat” or “very” stressed, compared to 44% of employers that have offered such programs for a shorter period of time.

Of all surveyed employers that have established financial education in their workplaces, more than half deem the programs successful, and 12% rate them “very successful.”

Employer size had no apparent bearing on the degree of effectiveness of the classes.

The Logistics

If you’re considering setting up some educational opportunities for your workplace, you may be pondering the details. For some guidance, here are the top strategies used by employers with successful programs.

    • Education is provided during normal work hours.
    • Financial education is also presented to employee spouses.
    • Educational content is customized to the needs of particular demographic groups.
    • Retirement plan data specific to each employee is generated to project whether, using current retirement savings and benefit accrual rates, the employee is on track to generate the desired amount of retirement income at retirement.
    • Financial education is available in languages other than English, where needed.
    • Criteria are established to determine which employees can participate in the financial education program (for example, minimum tenure at the company).
    • The employer has analyzed and made a determination of which financial education topics are most appropriate for its employees.

The most prevalent methods that employers used to disseminate information include:

    • Voluntary classes and workshops,
    • Retirement plan balance projections,
    • Retirement income calculators,
    • Web-based resources and courses,
    • Free personal consultation services,
    • Internet links to educational sites, and
    • Newsletters.

What topics will you offer? For most successful programs, there’s a heavy emphasis on retirement saving and investing, though in many cases, employers select topics they see as blind spots among their workers. For example, some offer courses such as debt management (including credit card use), supporting elderly parents and adult children, or funding future educational expenses.

Once you’ve identified what topics to offer and have made other logistical decisions, you’ll need to find someone to lead the classes. First take a look at who you have in-house. Is there someone on your HR staff who is a capable speaker and knowledgeable in a topic you want to offer? Other options include retirement plan service providers, investment managers or financial planners. Often these professionals are eager to provide basic information and answer questions for groups of individuals.

Don’t Be in a Hurry

As noted, you’ll need to be persistent and patient before you see a big payoff in reduced employee stress and other benefits — like sending employees on a path to retire when they want to. Chances are, it will be worth the wait.