When I was designing the financial education program for our employees at Major League Baseball’s central offices I was looking for a vendor to help deliver the educational content. During this process, I was very surprised to find that many of the vendors that I spoke with initially assumed I was only trying to educate our employees on our 401(k) plan. While 401(k) education is an important part of the financial/retirement education process, it would be synonymous to an architect only providing you with plans for the kitchen when you asked him to help design your house. While the kitchen is obviously an important part of the house, I’m sure you would not be too happy if he stopped there. Why is it then that when many people talk about financial education or retirement education they only focus on the company’s 401(k) plan? Obviously, any program that is to focus on financial and/or retirement education needs to include discussions about your 401(k) plan. However, you are cheating your employees (or your client and its employees, if you are a service provider) if that is the only type of education you are providing.
Before we launched our financial education program, I surveyed our employees in order to find out such details like what topics they wanted us to cover and what method of communication they would prefer (group meetings, emails, etc.). Included in the survey were questions about our employees’ savings habits. What stood out to me were the responses from some employees that said they could not even begin to think about saving or investing until they could get the rest of their finances in order. In my mind, this reinforced the notion that employees need a well-rounded financial education program if it is to really make a difference. For those employees who are not saving, you need to teach them first how to budget and reduce their debt. Once they have their “financial house” in order, the 401(k) education you provide will then become relevant to them. Those employees who may already be more financially set may already have a basic understanding of your 401(k) plan, but may still need help in other areas, such as long-term care planning for themselves or a loved one, saving for college, advanced savings/investing strategies, etc.
The challenge with offering a well-rounded financial education program is that there are so many topics to cover. If people could grasp these concepts upon first read, it would make everyone’s life much easier. Unfortunately, studies have shown that individuals need to be presented with a topic several times before they fully understand it and act upon it. With this in mind, my advice would be to design a program that will allow you to communicate your ideas using multiple platforms. You will need to start by analyzing the audience you are trying to reach in order to determine which methods of communications will work best. For some, the emphasis can be on face-to-face meetings and supplement the meetings with other methods, such as e-mails and newsletters. For companies who are very decentralized, this approach will probably not work and a better approach may be to utilize video conferencing or pre-taped presentations, supplemented by other methods, such as e-mail. The point is to avoid only using one medium. Just as your workforce is diverse, so should your communication strategy if you want to reach as many people as possible. Mix it up, make it diverse, and finally…have fun with it. If you can do this, you will be on your way to designing a program that can have a meaningful impact on many lives.
In closing, to use another cliché, if you are trying to paint a beautiful landscape you wouldn’t only paint the trees. Therefore, it’s important to paint the full financial picture for your employees. Yes, it will take more work on your end, but your employees will be much more grateful for this and you will find it to be a much more rewarding experience for you. I bet you’ll even learn a thing or two along the way. I know I did.
Director of Retirement Services
Major League Baseball
Legislation was recently passed to avoid the fiscal cliff crisis. Many Americans are facing their own individual fiscal cliffs, due to the economic climate and inadequate financial education. According to Jump$tart’s 2007 report, Making the Case for Financial Literacy, nearly two-thirds (63%) of Americans acknowledge they don’t save enough, and more than a third say that they often (11%) or sometimes (25%) spend more than they can afford. More than one in three (36%) Americans also say that at some point they have felt their financial situation was out of control.
Clearly, there is a need for greater emphasis on financial education, and employers have a unique opportunity to deliver it. By giving employees a stronger grasp of the basic principles that can help them achieve their dreams — and avoid financial nightmares — the State of Wisconsin benefits as well. The Wisconsin Department of Transportation Employee Assistance Program (EAP) uses several methods to deliver financial education to its 3,400 employees.
Adult learners prefer information that will help them attain a desirable goal – improve their credit scores, for example, or fund a comfortable retirement, or help avoid bankruptcy. It is important to ‘know each audience’ and address its specific needs. WisDOT’s workforce is comprised of a variety of professional, technical, public safety, customer service, administrative, and managerial staff. Identifying and meeting the unique needs of those individuals is a challenging priority for the EAP.
An agency-wide wellness survey revealed that employees wanted more online delivery of education. In response, the EAP began to webcast its financial education seminars to improve access for its employees statewide. An Internet-based link made it possible for employees to forward the information home to share with family members.
Planning financial education must take into consideration individual learning styles. Some adults are visual learners; others learn best by listening to an audio presentations or attending seminars. EAP found that after brief one-on-one meetings with financial and benefits experts, employees took steps to improve their finances. Guidance provided by objective experts who weren’t pushing them to buy products proved more valuable than larger financial fitness events in a group setting.
One initiative offered to employees was a 10-week online course called Investor Education in Your Workplace. This program allowed participants access to objective information, with plenty of time to assimilate information. In addition to gaining knowledge, participants reported significant increases in behavioral change: keeping a written budget, setting aside three months worth of expenses, saving more than previously, and paying fewer late fees on loans or bills.
Providing financial education in the public sector has its challenges. Courses must be accessed on one’s personal time and education must be free of charge and provided by experts who are not trying to sell a product. It is not possible to provide incentives for participation, or reward involvement with time off. In order to overcome these obstacles, the course work must be delivered by a trusted entity and the education itself is offered as its own reward.
The WisDOT EAP was already a known and trusted entity in the agency. EAP was also equipped to help individuals who express the need for more help with their finances. For crisis-oriented financial situations, EAP is able to provide confidential assessment and referral to community experts for swift resolution.
Providing quality workplace financial education through the EAP endows employers with a wonderful opportunity – to empower workers by increasing their knowledge, strengthening the quality of their financial decisions, and making the most of the employee benefits. Perhaps most importantly, in a time of increased retirements and rapid change in the public employer’s workforce, offering financial education can increase employee goodwill and show that the employer cares about their success and well-being.
Susan Fuszard, CEAP
EAP Consultant, WI Department of Transportation
Although players are highly compensated they are not impervious to the economy, sudden loss of unemployment, credit card debt and other types of financial concerns that can have a major impact on a person’s overall health and well-being. Their celebrity coupled with their very public salaries makes them vulnerable to fraud. Their inexperience in dealing with sudden wealth makes them vulnerable to poor decision-making. This is why the NFLPA decided to provide the players with a financial wellness program. Also, if players are committed to their own financial well-being this should translate to increased savings and investments that will help them reach a level of financial independence.
Build It and They Will Come, Maybe.
The NFLPA has always provided financial education to the players; however, since the NFL Players Association is a union we do not have the typical access to the players as their employers do. In addition, the diversity in income, age, and experience make it even more difficult to tailor a program that meets all players’ needs.
Nonetheless, an unlikely event facilitated the development of a comprehensive program. When the players were faced with an impending lockout that could have ended the 2011 season, we devised a plan to encourage them to save up to 50% of their salaries over a two year period. We provide players with a customized online financial learning center and educational seminars at various events. This educational platform delivered a wide range of information to assist them in making their financial decisions; track their savings and even delivered a personalized assessment of their “lockout preparedness.” We had one problem. We built it, yet they did not come!
Quite honestly, most people don’t proactively seek out financial education sites until there is a specific need, issue or life event that occurs. So we changed our strategy and began a robust e-messaging campaign around trending industry issues and topics. We even incorporated podcasts featuring players, celebrities and other industry experts who shared their experiences – good, bad and sometimes even funny. I believe this peer-to-peer model is the most popular as the messaging is authentic and relevant to the guys.
We also hosted webinars and held contests where players could compete for a prize. The most popular competition was a take on a rookie hazing event involving a player who spent $54,000 on dinner for his teammates. This hazing event was covered extensively by the media. We turned the outrageous event into a contest asking players to submit their ideas on how they would spend $54,000. It was amazing to see that players would actually compete for a $150 gift certificate!
We extended the service to family members, financial advisors and agents and made the platform a one stop shop for financial information for NFL players.
Forty-eight percent of players saved 20% of their money in preparation for the lockout. Although the wellness program was devised to assist players in the preparation for a lockout, it ultimately was a fire drill for when their paychecks really do come to an end. As a result of the lockout, the players learned how essential planning is to their financial future. We learned to take advantage of teachable moments; keep things interesting and relevant; and to allow players to share their stories.
To date players continue to use this educational resource in their daily planning. As a bonus, they now have access to a financial helpline and can speak with financial counselors to obtain guidance and support for their immediate financial problems. This latest addition to the program has proven to be invaluable and has truly made this a comprehensive financial wellness program.
Dana Hammonds, Director of Player Affairs and Services
NFL Players Association
Sunday, September 9th marked the second annual Financial Wellness At Work Conference hosted by PFEEF and Employee Benefits News. To my knowledge, this is the only conference in the nation dedicated to workplace financial wellness, where employers, not vendors, share their experiences deploying large scale workplace financial wellness programs, along with their advice, best practices, research and results. Here are some highlights of the best practices that employers shared:
- Financial wellness is a process not an event. To be successful, you must approach your program accordingly, as an ongoing process that enables regular interactions and can be personalized to the individual employee’s financial issues, ideally through multiple channels. This was borne out in both data presented by companies and by employees themselves, who spoke about the impact financial wellness programs had on their personal finances.
- If wellness is important to you, consider hiring someone full time to be responsible for the financial wellness program. If that’s not possible for budget reasons, then make financial wellness a key responsibility of your in-house wellness manager or your benefits team. As much as experts in the field like to think they have all the answers, the reality is that every workforce is different and it takes a very strong leader internally to design, manage, assess, and most importantly, continually refine the program. It’s important to have great vendor support to help administer the program, but there is absolutely no substitute for a passionate, committed, creative leader of the program who interacts daily with the employees.
- Conduct a financial wellness assessment of your workforce prior to starting a program. This is best done through an online platform that provides employees with the opportunity to get a personalized financial wellness assessment, along with next steps to improve their financial situation. After an assessment period (typically 30-90 days), all data is then aggregated and presented to you in the form of a workplace financial wellness assessment that identifies employees key financial issues, priorities and vulnerabilities and provides a recommended action plan. This can prove to be invaluable in helping you design the right program for your workforce.
- Perform the assessment annually to benchmark results and to determine how you need to refine the program as employees advance in their financial skills and knowledge.
- Incentivize your workforce to participate in your financial wellness program. It is common for the majority of employees to participate in a financial wellness program and use it on a regular basis if they are financially incentivized for their initial participation (typically $25-50). This has worked very well with physical wellness programs and is emerging to be an important best practice for financial wellness programs as well.
With the above, most speakers noted that the majority of their workforces were participating in the program, with very high rates of return usage and/or completion of intensive training programs.
Virtually every speaker, including the employees who spoke about their experiences, was able to share tangible employee behavioral change results—most commonly reducing debts and expenses, saving more from retirement, and better managing their company benefits—along with an analysis of how improvements in employees’ financial behavior impacted their company’s bottom line—with the most notable impact in health care costs savings due to reduced financial stress.
Founder and CEO, Financial Finesse
If you are reading this blog, you already have an interest in understanding how effective financial education can provide bottom line benefits for employers and employees.
We think you would also enjoy being able to meet and learn from peers, colleagues, and industry experts who share the same interest all in one place. Good news — now you can.
This year, on September 9th in Phoenix, Arizona, the Personal Finance Employee Education Foundation has partnered with Employee Benefit News and Employee Benefit Advisors to offer the 2nd annual Financial Wellness at Work conference from 9AM to 3PM EDT.
The Financial Wellness at Work conference expects to bring together about 100 employee benefit managers, financial educators, and other leaders in the field of personal finance education to help share their knowledge, experience and best practices, and advance the field of financial education.
Key topics to be covered at the Financial Wellness at Work conference include:
- Learn How to Build Your Business Case. Learn how to build and evaluate the business case for financial education in the workplace. Get practical tools, tips, resources and research you can use to make your case.
- Drive Better Benefits Participation. Discover from a panel of experts how effective financial education efforts can help employers and employees get the best bang for their buck out of their existing benefit plans and empower greater utilization to drive results.
- Improve Financial and Physical Well-Being of Employees. Learn how financial wellness programs can make a bottom line impact on overall employee physical and financial well-being.
- Make Positive Behavioral Change. Discover best practices in employee financial education and communication strategies that can result in positive employee behavioral change, including increased participation in employee benefit plans, better budgeting habits, and reduced financial stress.
To see the complete conference agenda or register for the event, click here.
Whether you are able to attend in person or you simply like the idea of looking for ways to help people with a passion of providing quality financial education in the workplace, we hope you will spread the word and share your input and ideas.
Joe Saari, CEO
Precision Information, LLC
Publisher of the Educated Investor®
The value of financial education in the workplace cannot be disputed. Studies have shown there is a link between financial issues and reduced productivity at the job. The correlation between financial stress and health issues has also been documented. The return on investment for employers who offer financial education to staff members is strong.
When we think of financial education, group programs are usually what come to mind. Staff members gather together and learn about topics such as budgeting, intelligent use of credit, and savings either at a webinar or as part of a live speaker’s audience. However, financial education can also take place on an individual basis and should be an essential component of an employer’s commitment to a financially healthy workforce. A referral process to a qualified credit counseling agency can be a useful adjunct to the group financial education programs.
The value of an individual educational session is that it allows the counselor/advisor to tailor discussions and solutions to the particular individual’s needs. At these sessions, the first thing that happens is that a picture is taken of the client’s circumstances: income, living expenses, assets, and debt structure. Options are then outlined and discussed, as are money management tools. For some, the focus may be on a plan to get out of debt. For others, the session may focus on reaching goals such as saving more or learning to live on a budget.
It is vitally important to refer employees to a credit counseling agency that can be trusted. The Federal Trade Commission (FTC) wrote a piece entitled “Fiscal Fitness: Choosing a Credit Counselor.” The piece can be found at http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre26.shtm. The FTC recommends the following questions be asked before deciding on the agency to which you will be referring staff members:
- What services to you offer? (The FTC urges consumers to look for organizations that offer a wide variety of services, and not just Debt Management Plans [DMPs]. Under a DMP, credit counseling agencies try to negotiate reduced payments and interest rates with unsecured creditors, and, usually for a fee, the consumer makes a monthly deposit to the agency. The agency then disburses the funds proportionately to the creditors.)
- Do you offer information? (The FTC suggests using agencies that will disseminate free educational information.)
- In addition to helping solve the immediate problem, will you help develop a plan for avoiding problems in the future?
- What are your fees?
- What if fees are not affordable?
- Is there a written agreement or contract? (The FTC urges consumers to make sure the agency’s commitments are in writing.)
- Are you licensed to offer services in this state?
- What are the qualifications of your counselors? (The FTC strongly recommends choosing an agency whose counselors are certified by an independent entity.)
- What confidentiality assurances are there?
- How are employees at the agency compensated? (The FTC strongly urges consumers to avoid agencies that compensate employees at a higher rate if consumers choose certain services, such as a DMP.)
The FTC piece goes on to explain a DMP in more detail and then lists questions to ask to determine if a DMP is the right solution. The section ends with recommendations on how to best make a DMP work for an individual.
As you implement a financial education program in your workplace, you may want to consider helping staff members gain access to individual counseling that will tailor solutions and recommendations to their needs. It provides additional support to the educational information given to employees in a group setting.
President, Money Management International of Massachusetts
Director of Development, Money Management International
There is a significant cost to businesses when employees are financially stressed – and tremendous benefit to the employer who takes a proactive stance by helping employees learn to manage their finances.
How do you choose a financial education resource that will meet the needs of your employees AND your business? Knowing the questions to ask to identify the vendor that will best meet your company’s needs is critical. Here are topics to address to help you hone in on the best financial education program and provider to meet the needs of your company:
- Your goals and their outcomes are aligned. What do you hope to get from the financial education program? You will want at least a couple of these goals to be measurable so that over time, you can monitor results. Is the vendor’s financial education offering getting these results for others?
- They provide education, not just communication. There is a big difference between providing information versus educating an audience. An educational program will be interactive, and the participant will be driven to take action to help them move towards personal goals.
- Education will be provided with no sales agenda. Helping employees learn to make educated decisions about their money and benefits requires that they trust the instruction source is pure. If the student is braced for a sales pitch, they are not focused on the educational lessons.
- They will steer clear of advice. You can make a separate decision to provide an advice offering, but that is a very different benefit altogether.
- They will address comprehensive education – not just benefits topics. Employee education has historically been about investments and the retirement benefit. Most employees need much more – including some of the basics to help them get a grip on cash flow, spending habits, debt, etc.
- They are able to commit ample time to deliver the education, and adequate time to each subject. To offer 6 key lessons over a 30-minute meeting is not adequate – nor is offering 2 meetings per year to an employee base of 500.
- For instructor-led meetings, the vendor will provide a qualified and seasoned financial professional with experience as an instructor. A professional who has had real world experience will be better equipped to deliver the education delivery and manage questions and interactions within compliance guidelines (which protects your business).
- The vendor can provide a multi-solution approach. Everyone learns differently. Some employees will thrive using an online educational program while others will prefer a live meeting. Confirm your vendor is able to deliver education via a number of methods.
If you invest the time to pinpoint the right solution for you, your company and employees will benefit. Everyone will win!
Chief Executive Officer
The EDSA Group
Fidelity Investments recently reported that the average 401k balance is approximately $71,500.00, which while up from previous years remains very low. Participation rates in company retirement plans are improving somewhat for upper income groups, but employees in the lower income range ($20,000-40,000.00 a year group) struggle with a participation rate of less than 54%. Retirement plan hardship withdrawals and loan requests continue to increase. In an online comment to the Fidelity findings one person shared a common sentiment among today’s workers stating that while they would like to contribute the maximum amount they are feeling greater pressure to get control of their spending and for paying down debt.
Employers have invested countless hours and huge sums of money into bringing retirement plan education to employees only to see low participation rates and increased borrowing against these plans, causing them to question why this is happening. The simple answer is their employees are so worried about making the monthly mortgage and credit card payments, covering the weekly groceries, and literally keeping the lights on, that employees aren’t able to focus much attention on a retirement event that may be 10, 20, 30 years away.
We know all financial education for employees is beneficial but companies need to focus more attention on educating employees around the three basic cornerstones of financial wellness: having a good spending plan, teaching them how to save, and most importantly understanding and correctly using debt and credit management tools. Few of us are given a practical financial education growing up, so if an employee doesn’t have a solid financial foundation in spending, saving, and debt, they will be at best unable and at worst unwilling to confront more advanced concepts and tools like retirement programs.
The bottom line for many employers is that a simple investment in educating their employees around these 3 important financial wellness cornerstones will not only make an employee unafraid of their present financial challenges, but will help them embrace and participate in the future financial advantages of company sponsored retirement plans.
Vice President of Financial Coaching
CLC Incorporated/My Secure Advantage
When I started Financial Finesse in 1999, financial education wasn’t even a term. It was two separate words, strung together. And, plan sponsors were worried about employees retiring early, flush with portfolios full of high tech internet stocks that were doubling and tripling in value on a regular basis, not to mention in the money stock options for those who were lucky enough to work in the technology industry. The paper wealth was mind-boggling.
Flash forward to 2012 and who could ever have imagined how life would have changed? Who could have imagined that financial education, the two words that weren’t even recognized as a term, let alone an industry, would become one of the most critical components of a company’s entire benefits offering?
Why has this happened? The answer is simple. In a relatively short period of time, companies, out of necessity, have dramatically changed how they manage their benefits. The responsibility for funding and managing benefits, once squarely in the employer’s court with fully funded Defined Benefits Plans, company subsidized health care, and generous insurance benefits, has been transitioned onto the employee. But, until recently, most employers haven’t put the tools in place to help employees effectively fund and manage their benefits. Couple this with a tough economy, where home prices have plummeted; investment portfolios have been volatile in the short term and flat over the long term; employees have been laid off, furloughed, or had to deal with cuts in pay or bonuses; and health care costs have sustained double digit increases each year, and you have a formula for some serious problems. Every single day, we get inquiries from companies grappling with the following issues—as a direct consequence of employees lacking the knowledge they need to make informed decisions about both their benefits and their personal finances:
- Delayed retirement costs, estimated at $10,000-$50,000 per employee
- Stress driving up health care costs by causing or contributing to over 75% – 90% of doctor’s visits and finances are the leading cause of stress
- Concerns that more employees will unionize due to dissatisfaction with benefits
- Increased ERISA lawsuits
To address market needs, financial education has evolved into 4 key practice areas—Financial Wellness, Retirement Preparedness, Benefits Planning, and Workplace Financial Planning, each of which is designed to address the most critical problems that have arisen from this situation, and best practices have been established in each area to help employers create effective programs.
This blog will address these practice areas and associated best practices so employers have a roadmap to follow in designing, managing and measuring results of the financial education programs they put in place. None of us could have foreseen how life would have changed from 1999 to 2012 (including the financial education providers who are writing this blog). As they say, hindsight is 20/20.
You can’t change the past, but, fortunately, one thing we also have learned in the last 13 years is just how well education works from the companies that have designed and deployed successful programs.
It’s not too late to change the future.
Liz Davidson, Founder and CEO of Financial Finesse
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