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.

Mel Stiller
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!

Susan Windham
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.

John Henderson
Vice President of Financial Coaching
CLC Incorporated/My Secure Advantage