The Benefits of Providing a Financial Education for Employees

The Benefits of Providing a Financial Education for EmployeesThe Benefits of Providing a Financial Education for EmployeesThe Benefits of Providing a Financial Education for Employees DeZubeFinancial education can be a significant benefit for employees. But did you know it also benefits employers?Employees who are better at managing their finances are less likely to end up with financial woes. That may also mean fewer requests for salary advances or hardship withdrawals from company 401(k)s.Financial stress can impact your workforce in negative ways by reducingworker productivityand increasing absenteeism.In fact, financial angst is more common than you might realize. More than half (52 percent) of respondents from PricewaterhouseCoopers 2016 Employee Financial Wellness Survey said theyre stressed about their overall finances 28 percent said their financial problems were a distraction at work.Financial education for employees can be a budget friendly investment with easy setup and la sting value.Large Company BenefitsMany large companies recognize the benefits of offering workers some financial education.Communications conglomerate Cox Enterprises provides employees with free access to one-on-one phone consultations with money coaches. These conversations titelbild topics such as debt counseling, retirement planning, budgeting and student loans, says Senior Manager of Public Relations Elizabeth Olmstead. A Know Your Numbers initiative provides a partal retirement readiness statement to eligible Cox employees to help them stay on track with saving for a comfortable retirement.These programs have had positive results and led to higher employee participation rates in retirement savings plans. Management cares about these programs and helps drive them as educational tools for employees to understand and utilize their benefits, says Olmstead.Organize Initiatives EconomicallyThe good news is that offering financial education and advice neednt cost a lot of money or ta ke a lot of time. Even informal sessions can have profound influences.Nest DC, a boutique property management company in Washington, D.C., schedules a brown bag lunch-and-learn about personal finances for employees. The sessions had a huge turnout and ran three times as long as expected. The meeting showed the company how eager employees were to learn about finances, says Managing Director Veronica Vivas.Nest DC ended up buying access to an online finance program, then offered employees a chance to win a $1,000 drawing in exchange for watching the programs videos and completing short quizzes. It was low cost $10 per person per month, including the budgeting tool, Vivas said.The focus on finances led more people to sign up for the companys SIMPLE IRA (Savings Incentive Match Plan for Employees Individual Retirement Account.) Financial education also helped boost employee morale and cross-team relationships. A group of employees were inspired to save money by cooking lunch together i n the company kitchen instead of going out to lunch.Tap Service ProvidersCompanies that supply benefits to your organization can be a resource for financial education. MassMutual, for example, conducts free, on-site financial workshops called PlanSmart for its clients employees.The great thing about our program is its a turnkey solution employers can plug into, says Allison Mislow, regional PlanSmart director for Barnum Financial Group, Shelton, Connecticut. While the four week, face-to-face program is typically offered only to employers with 500 or more employees, Barnum makes an exception for firms with higher on-site headcounts, such as law or engineering firms.Each week the presenter talks about a financial topic and gives employees homework that applies the lessons to their own financial lives. At the end of the four weeks, employees have a greater understanding of where they stand with investments and how well theyre saving for retirement.The program incites employees to take action, too, with 58% of participants increasing their contribution to 401(k) within three months.Your benefits provider may offer similar programs. Outsourced HR management firm strategic HR inc., Cincinnati, recently asked its retirement plan administrator to send someone in to speak to the companys 15 employees about retirement benefits and general finances. It was a huge hit and demonstrated a need for further training, says President Robin Throckmorton.Explore Smaller OptionsSmall organizations can usually find a local Certified Financial Planner willing to provide financial education, says Aaron Kahn, an independent, fee-only CFP with Wealth Management Strategies, Inc., Pittsburgh.While he does charge a fee to do roundtable discussions with employees, Kahn says the fee provides unbiased advice from someone whos more of a sounding board than a ausverkauf person.I was doing a round table a few weeks ago with a group of mostly Millennials. They were well paid but had student loa ns and they couldnt decide whether it was worth sticking with their current loan balance, consolidating their loans or dumping all their extra income into their loans, says Kahn. Someone from an investment firm might tell the employees to put extra income into investments, while a life insurance company adviser would likely suggest buying a life policy he says. A neutral adviser will discuss pros and cons of each option and how to calculate the best return.Whether you choose to use a financial adviser or a reputable program, implementing financial education for employees has clear benefits forboth organizations and workers alike.