Whether you are the CEO of a high-growth technology company or the owner of the local hardware store, some challenges remain the same.
How do you retain good employees in this tight market, increase morale and loyalty, and maximize worker efficiency? You may want to consider providing financial education as an employee benefit.
If you come from a large corporate environment, chances are you have experienced some type of employer-sponsored financial education. The popularity of self-funded 401(k) and 403(b) retirement plans has prompted many employers to provide educational programs centered around retirement planning. Not only do these tend to increase employee participation in the qualified plan, they also help the employer comply with regulations defined under Section 404(c) of ERISA (The Employee Retirement Income Security Act) to avoid possible liability for losses in the plan.
An estimated half of all workers are provided some type of financial education at work, most of it focused on retirement. The majority are employees of large corporations, as very few smaller businesses provide this type of benefit. The number of employers providing comprehensive financial education on other topics, such as college funding, estate planning and insurance topics, is much lower.
The question is, why bother? A recent study conducted by Virginia Tech’s National Institute for Personal Finance Employee Education (NIPFEE) indicates that financial education and advice have a positive impact on employees’ attitudes and behaviors. In other words, good financial wellness and higher productivity are positively related.
Virginia Tech’s studies show that, compared to employees with higher financial wellness, workers who were less satisfied with their personal finances have:
- lower pay satisfaction;
- poorer health;
- higher absenteeism;
- more time wasted at work dealing with personal money issues.
From an employer standpoint, financially savvy employees means lower costs and less time spent in areas such as payroll advances and administering 401(k) loans.
As an employer, how do you provide this type of financial education and how much does it cost? Some firms charge a flat rate based on the presentation or charge per employee participating. Others make the presentation at no charge if given the opportunity to meet with employees individually if they so desire.
How or what you pay for the sessions is not nearly as important as ensuring they are educational. Be sure that no specific products or recommendations will be made. Ask for references from other employers and consider sitting in on a presentation elsewhere. Be sure that the financial adviser you choose is not only an excellent speaker (good advice is meaningless if nobody is listening), but also has the credentials necessary for the advice he or she giving.
Smart employers realize that time and money spent providing comprehensive financial education to their employees will be returned many times over in increased productivity and morale. Smaller business owners can use this benefit as a tool to attract and retain employees and to be competitive with their larger counterparts.
In short, any investment in financial education as an employee benefit just makes good “cents.”
Ruth A. Forsyth, a certified financial planner, is a senior financial adviser and manager of market development for The Acacia Group. She also co-hosts the radio show “All Things Financial” Wednesdays from 7 to 8p.m. on 1410-AM. Reach her at (412) 922-4360 or at [email protected].