Businesses Benefit from Providing a Financial Education to Employees

By on July 7, 2017

Financially stressed-out workers are not good for businesses. Unfortunately, most employee are daunted by the intimidating task of saving for retirement. Even the most financially knowledgeable of us are nervous about our financial future or just don’t know where to start learning about the available options.

Some businesses already provide financial literacy programs for their workers with the most common topics focused on savings, investments and retirement. Employers say that they provide this kind of education so that their employees will be better able to manage their money and make informed financial decisions.

So what’s in it for the employer? It’s pretty clear that personal financial issues have a significant impact on an employee’s’ overall job performance, especially as it relates to increased stress levels and an inability to focus on work. Financial stress can adversely impact morale and physical health, and can cause job absences and tardiness. That means that the stressed induced by your employees lack of financial planning could have a direct financial impact on your bottom line.

Financially Savvy Employees are Productive Employees

Employees who contribute to expand their financial knowledge will also increase their ability and confidence to make smart financial decisions. Doing so enables employees to focus more energy on work activities and less on issues outside of work (often trigger by money troubles).

What Your Business Gets OUt of It

Here is a rundown of the benefits you, as an employer, stand to reap from providing comprehensive worksite financial literacy programs to your employees:

Providing Information Can Reduce Your Liability Risk

If your business sponsors retirement funds you are usually required to meet the Employee Retirement Income Security Act (ERISA) Section 404(c) requirement of providing employees with “sufficient information” to make informed decisions regarding investment alternatives. Giving your employees a thorough financial education can reduce any risk of employer or manager liability.

Educated Employees Participate, Reducing Your Direct Expenses

The more they know, the more likely employees are to participate in health care and stock plans. Their participation will reduce the portion of Social Security/Medicare taxes paid into by the business.

The expenses of your company fund managers or human resource departments can be reduced from employees better managing their money and requiring fewer payroll advances, wage garnishments, or 401 k loans. And finally, productive workers are far less likely to commit errors or have accidents which activate a Workers’ Compensation claim – that keeps your annual premiums down!

Stress-Free Workers are Productive Workers

Most employers see that employees are less productive at work when they are worried about personal financial issues. A financial education program increases productivity and enables employees to focus on work activities rather than financial problems. And if you bring the education, employees are not wasting their time and yours looking for the information when they could be working.

Attract and Retain Quality Employees

It is very important to attract and retain quality employees. With top talent able to shop for top salaries and benefit packages, employers need to offer attractive incentives; an on-site financial education demonstrates a trustworthiness to attend to your teams needs for the long-term.

Educated Employees Can Retire on Their Time Instead of Yours

Increasing the financial security of employees and helping them plan for retirement also helps employers improve workforce planning and attrition rates. Financially secure employees are more likely to be able to retire when they choose rather than have to delay retirement or lose focus being worried about an unexpected early (forced) retirement.

Reap the Return on Investment

By even the most conservative estimates, businesses are likely to see a return on their investment to offer financial literacy program as a result from attracting quality talent, increasing their team’s overall productivity and reducing direct costs of taxes or benefit claims.

A employer-sponsored financial education seems to be a win-win, so lead the charge in improving and educating your employees to be financially savvy. But as an employer, what can you do? What are financial literacy programs and how do they work?

Offering a Financial Education

Every business, from small mom-and-pop shops to Fortune 500 corporations, can offer its own kind of financial education program, whether it’s large-scale seminars or online platforms and webinars. These programs can be low budget or cost more than a million dollars. Some companies use their human resources staff or finance department to run the seminars while others hire third parties. It’s important to review your options with a trusted business and/or legal advisor to find the right program for you.

The possibilities are limitless, but here are a few ideas your business might be able employ to educate or offer resources which can improve the money management skills of your team:

  • Offer classes, access to online retirement calculators and workshops or webinar sessions.
  • Use in-house staff, a professional third-party service provider from your retirement plan administrators or investment providers, or an unbiased financial education company that is focused on changing employees’ financial habits and behaviors by helping them make informed financial decisions and create strong financial plans.
  • Include an advice component so employees can understand other things affecting their finances, including insurance, mutual funds, assets or financial goals as a whole.
  • Include educational content and financial tips with your employer-sponsored retirement benefit statements that employees look over.
  • Support the major financial milestones and life events of your employees like marriage, buying a house or having a baby; and make any pertinent financial information to their situation available
  • Customize your information to your audience by industry, age or gender. And invite their spouses or financial partners to the sessions

Employees should never stop learning about their financial security and retirement, and employers should never stop offering education. These changes can truly impact an employee’s well-being and a businesses’ bottom-line

Take Steps to Give Your Team a Financial Education Today

April marks Financial Literacy Month. It’s the perfect opportunity for employers to start providing financial education programs to employees, and for employees to ask about the benefits they receive and education that’s available in their workplace. After all, employees who have the tools to make smart financial decisions will be healthier, more productive members of your team.

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About Harold Goldman

I am the founder of FinancialSafetyNet.org, and a Retirement Planning and Long-Term Care specialist. I am also the President of Emes Insurance Services, Inc., a Murrieta based insurance agency designed to help people with Retirement Planning and funding for College. I believe in educating my clients to become financially competent in an effort to develop plans for guaranteed income, protection against loss and tax-advantaged growth. To contact me Call (844)-376-2265

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