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Putting a Friendly Face on Financial Literacy: Boost Productivity, Retain Talent, and Improve Profits.

My Financial Coach > Know-More Blog > Putting a Friendly Face on Financial Literacy: Boost Productivity, Retain Talent, and Improve Profits.

Most, if not all, companies recognize the need to attract, retain and reward key employees with financial literacy. People are the lifeblood of business. To ensure access to top talent, these companies design sophisticated compensation and benefits programs for the executive suite and other highly compensated employees.

  • 79 percent of employees cited a competitive benefits plan as an influencer in a job decision, says Wellable.
  • 78 percent of workers would likely remain with their employer because of the benefits it offers, up from 72 percent in 2016, according to WillisTowersWatson.

It’s different today. Companies also struggle to find engineers, consultants, and mid-level managers in the so-called tightest labor market in history. So, we see similarly complex executive-level benefit programs introduced to non-traditional employee populations who also make a critical difference to companies’ future growth.

But do these new recipients fully understand the true value and potential of their benefits?

We know they don’t.

And we also know the solution.

In a new survey from the International Foundation of Employee Benefit Plans, less than 20 percent of employers said they believe their employees have a high level of understanding of their benefits.

HR professionals, do not despair.

All your hard work to communicate benefit value to employees is not in vain. Evolving conditions simply tell us that traditional communication methods no longer work effectively.

Seven out of ten American workers say financial concerns are their most common cause of stress. People generally avoid financial management because it is fraught with personal taboos, takes time and effort, and they often lack confidence in their financial literacy.

Financial pressures impact workplace productivity, engagement, absenteeism, retention and employee health. According to a PwC Survey:

  • 20 percent of employees report issues with personal finances.
  • 37 percent say they spend three hours or more at work each week thinking about or dealing with issues related to their personal finances.
  • 70 percent of HR professionals indicate financial challenges have a large or some impact on employee performance, citing stress and distractibility as main factors.

Financial Literacy—It’s About Time

Employers have begun to grasp the generational differences in their workforces. They know it’s time to meet employees where they are in life and on the many communication platforms they frequent.

This awareness has led many companies to embrace the goal of financial literacy for their employees, a top trend in employee benefits today. Best of all, the cost of educating employees on financial literacy is far less than the cost of retirement plan funding or health insurance.  What’s more, it can produce a state of financial wellness within the workforce.

Financial coach teaching financial literacy to clients Traditional financial planning has existed all along for most senior executives and the highly compensated. Companies offer it through a hands-on advisor who spends considerable time on investment management, estate planning, and protection strategies.

This old-school approach works well for high net-worth individuals with complex benefits, who are typically served by national financial planning firms, brokerage houses, or national banks.

These services are fee-based, usually paid by the company, costing between $10,000 and $25,000 per year. The financial institutions also earn additional fees for assets under management or commissions on insurance and other products sold.

Even senior executives are beginning to question the objectivity of many recommendations from their traditional financial services providers, a subject for another post.

Lack of Understanding

In a recent client survey done by Executive Benefit Solutions, a Boston-based firm, data revealed that lack of understanding caused low participation in nonqualified deferred compensation plans for management.

Financial literacy chances livesManagers were focused on short-term goals like setting up children’s college funds or accumulating wealth in equity compensation plans. They expressed surprise to learn that their employer’s plan already had a feature for college savings on a tax-deferred basis. They were equally surprised to learn of their opportunity to defer the tax on restricted stock units when vested, and even the ability to diversify into other investments.

Armed with proper knowledge, the executives were able to save more cost-effectively and increase their stock holdings. One employee in the survey said, “I received different advice from my stockbroker who told me to sell the company shares.”

But what about the next level down from the C-suite where rising stars work to contribute to corporate growth?  Don’t they merit attention and retention?

Coaching Toward Financial Literacy

A well-structured financial coaching program, built on the need for financial literacy, provides your employees with:

  1. A dedicated advisor with deep knowledge in benefits and who assumes a fiduciary responsibility to advise in the employee’s best interest;
  2. A multidisciplinary planning process to integrate personal assets with workplace benefits;
  3. A personal employee website so everyone enjoys the convenience of real-time access to everything they own in one place and on any device; 
  4. Access to leading experts for help in complex situations beyond a basic financial plan;
  5. An extension of your benefits team to communicate and help employees make better benefits decisions such as when to make elections;
  6. Educational resources to maximize benefit value and build personal wealth.

Benefit Bonus:  Corporate Governance

Given the rising requirements for benefits compliance, the rules of corporate governance, and the ever-changing regulatory environmentespecially for publicly traded companiesan educationally base financial coaching service serves to mitigate corporate risk.

The more employees know the rules in financial transactions, the fewer mistakes are made, and the lower the risk of compliance issues for the employer.

Time to Decide

To succeed in our hypercompetitive world, you need a healthy workforce. Right?  

And to achieve that benefit, you invest in your employees’ health through wellness programs, preventative incentives, and insurance coverage.

If you’re losing three hours every week per employee to financial stress, at what point does it make financial sense for you to invest in their financial health?  

Consider this simplified calculation:

A company with 100 employees losing 3 hours/week per employee at an average hourly pay rate of $20 for 50 weeks a year totals $300,000.   In one year!

How much will you save?

Savings Per Year:


Based on 3 hours per week per employee over 50 weeks.

What could you do with an extra per year to the bottom line?

  • Improve a facility.
  • Buy new equipment.
  • Hit profit goals.

Imagine the possibilities.  Time to decide.

To your workplace wealth,

Bill

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