![Why Do Employees Need Financial Education? ,[object Object],[object Object],[object Object],[object Object],Sources: 1) Research Works, February 2009; 2) Dallas Morning News , September 17, 2007; 3) Journal of Financial Planning , April 2008; 4) Employee Benefit Research Institute, 2009](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
Recommended
Recommended
More Related Content
What's hot
What's hot (20)
Similar to Hr Presentation, Financial Education in the Workplace
Similar to Hr Presentation, Financial Education in the Workplace (20)
Hr Presentation, Financial Education in the Workplace
- 1. Financial Education Why Investing in Employees’ Financial Well-Being Makes Good Business Sense
- 4. Why Would an Employer Provide This Type of Service?
- 5. Employees’ Money Problems Can Become the Employer’s Problem “ Employees with money problems are like sharks swimming around the workplace taking bites out of the bottom line.” — Dr. E. Thomas Garman President, Personal Finance Employee Education Foundation Source: Personal Finance Employee Education Foundation, 2009
- 6. Potential Employer Benefits Liability Protection Productivity Benefit Participation
- 8. The Business Cost of Poor Productivity Financial troubles can decrease productivity by as much as 20 hours per month . Cost to business: $15,000 per year per affected employee. Source: The Journal of Employee Assistance , 1st Quarter 2009, January 1, 2009
- 9. Financial Stress and Productivity “ Having spent my career helping individuals and corporations increase productivity, I’ve become convinced that one of the greatest, unnoticed drains on individual productivity is the distraction that financial stress puts on people.” — Dr. Steven R. Covey Author of The Seven Habits of Highly Effective People
- 19. Before You Start the Education Process… Ask yourself: What does HR want to get out of a financial education program?
- 26. Value to Employers 66% of HR and finance executives at large companies believe that broader financial education at the workplace is more important today than it was a year ago. Source: credit.com, 2009
Editor's Notes
- (Make sure each participant receives a copy of The Complete Financial Management Workshop workbook with your business card, company brochure, if available, and the sponsor brochure before beginning the presentation.) I appreciate your taking the time to join us at today’s meeting. My goal is to provide information to help you better understand how a financial education worksite program can work for your organization and why it makes good business sense. We’ll cover some of the benefits your company and employees can expect, different methods to consider, and the importance of selecting a vendor who can meet your needs and objectives. Please feel free to ask questions. I’ll try to answer as many as I can without taking too much time during the presentation. There’s a question-and-answer period after the presentation to address more detailed questions. 0010
- Why do employees need financial education? Here are some key statistics to consider: Sixty-one percent of Americans report having “serious financial problems.” 1 That’s not surprising when you consider recent economic conditions and that the average debt of Americans was $8,329 per household in 2008. 2 One of the main sources of stress in the workplace is personal financial problems. 3 One-third of 401(k) investors do not know how their assets are allocated. 4 About 35 percent of Americans are not currently saving for retirement. 5 Sources: 1) Research Works , Partnership for Workplace Mental Health, February 2009; 2) Creditcards.com, 2009; 3) Dallas Morning News , September 17, 2007; 4) Journal of Financial Planning , April 2008; 5) Employee Benefit Research Institute, 2009 0020
- The reality is that we spend most of our adult lives making financial decisions, yet we receive virtually no formal financial education on personal finances from elementary school through college. We prepare students to understand math, history, and science and all the other elements that go into formal education, but we leave out this fundamental subject. Meanwhile, we’re bombarded with credit-card and loan offers and “hot” stocks to buy, but we’re not educated about how to manage our own finances and how to build our net worth. Would you have benefited from learning about money management, investing, and retirement planning strategies earlier in your life? 0030
- This leads to a fundamental question: Why should an employer provide this type of service? Will workers see it as a value-added benefit? Or will it just take time away from employees’ busy work schedules? 0040
- As Dr. E. Thomas Garman so colorfully described in this quote, employees’ money problems are not just personal. They become the employer’s problem as well. The question then becomes: What steps can you take to correct the problem? There is no single answer, but we believe financial education is part of the overall solution. Employers that are willing to invest in financial education for their employees will save money through increased productivity and potentially reduced absenteeism, and can also profit in other ways. Source: Personal Finance Employee Education Foundation, 2009 0050
- Let’s explore some potential employer benefits of financial education using this pie chart. We’ve broken the pie into three pieces representing three basic ways in which financial education can affect employers. The first area is productivity . Did you know there is a growing body of research showing a link between workers’ financial stability and their productivity and performance at work? 1 The next area is benefit participation . Were you aware how this type of financial education program can help improve employees’ understanding of, participation in, and appreciation of employer-sponsored benefit programs? The third area is liability protection . Are you concerned about complying with regulatory guidelines and reducing ERISA-related liability? Source: 1) Research Works, February 2009 0060
- The results of employees’ poor personal financial habits can affect their performance at work. Let’s look at several areas. 1 Absenteeism, tardiness, presenteeism. People who have personal financial problems typically take more time off from work, tend to be more tardy, and spend time at work focusing on personal issues. Poor health. Financial problems add stress to people’s lives and can affect their health, causing even more distraction and absences from work. Between 75 percent and 90 percent of all visits to doctors are stress related. 2 Lower employee morale. When some employees aren’t working optimally, it can result in poor morale among co-workers, which affects work performance, quality, and productivity. Lower pay satisfaction and turnover. Employees with financial troubles often feel that they are not being paid sufficiently, a feeling that sometimes leads them to search for a new employer with higher pay. Forty percent of employee turnover is due to stress. 3 Accidents. Employees who are distracted with outside issues have more accidents on the job. It has been estimated that between 60 percent and 80 percent of on-the-job accidents are related to stress. 4 Theft. Studies show that people with financial problems steal more often. Substance abuse. In addition to affecting morale and productivity, substance abuse can result in additional expenses for Employee Assistance Programs. Loss of customers. Poor service and workmanship could lead to a loss of customers, which can affect your bottom line. Administrative costs. All these costs are cumulative. When HR has to deal with these issues, it costs the employer both time and money. Attending to money-related distractions can account for as much as 10 percent of departmental budgets. 5 Sources: 1) Personal Finance Employee Education Foundation, 2009; 2 – 5) Journal of Employee Assistance , 1st Quarter 2009 0070
- The old adage that “a picture is worth a thousand words” really rings true here. If you look at this woman, she doesn’t seem focused on her work at all. She could be overwhelmed, stressed, or worried. Maybe she’s looking at the Internet and reading that the national unemployment rate reached 9.5 percent in June 2009, reaching a 26-year high. 1 Think about all the financial stressors we’re bombarded with every day. Companies have downsized, frozen salaries, added mandatory furloughs, discontinued 401(k) matching, even closed down. According to a survey of Workplace Options, financial stress caused by the housing crisis, retirement savings, gas prices, and credit problems has affected employees, and anxiety about a troubled economy has taken a toll on workplace productivity. 2 How many people are in a similar place mentally as this woman? Studies show that employees with financial troubles can expect their on-the-job productivity to decrease by as much as 20 hours per month. 3 This “silent epidemic” of money problems costs businesses $15,000 per year per affected employee. 4 Think about what it may be costing your organization. Sources: 1) CNNMoney, July 17, 2009; 2) World at Work, 2008; 3) The Journal of Employee Assistance , 1st Quarter 2009; 4) The Journal of Employee Assistance, January 1, 2009 0080
- (Read slide quote.) 0090
- There are many benefits that your organization could enjoy as a result of providing financial education at the workplace. (Review five or six of the bulleted items; you don’t need to read the entire list.) Source: Personal Finance Employee Education Foundation, 2009 0100
- Here are the results reported by employees after receiving financial education through their employers. (Read bullet points.) From these responses, we see more empowered employees who can make better financial decisions, diversify their investments, increase their retirement plan contributions, improve their financial situations, and feel more confident about planning for retirement and other financial goals. Does anyone here not believe that these employees will be more content and effective? Of course they will. And when that happens, everyone wins. Source: Personal Finance Employee Education Foundation, 2007 – 2009 0110
- Many employers see a strong increase in benefit participation after financial education is provided. Research suggests that a workplace financial education program can increase employee benefit participation and contributions. 1 This isn’t surprising. After all, educated employees are more confident about investing and taking advantage of employer-sponsored retirement programs. Source: 1) Federal Reserve Banks of Kansas City and Atlanta, 2009 0120
- Despite all the information available — or perhaps because of it — there is a critical need for sound retirement education. A few statistics make this startlingly clear. According to one study, 56 percent of workers have no idea how much they need to save for retirement. 1 How can you reach a goal if you have no idea what that goal even is? Another study indicated that the average 401(k) plan balance is about $65,000. 2 And 53 percent of workers have less than $25,000 in total savings and investments. 3 Hardly a sizable retirement program. Clearly, people need help. They need to know what they can do to help themselves. And the earlier workers start setting funds aside for retirement, the more dramatic the impact on their future financial security. Sources: 1, 3) 2009 Retirement Confidence Survey, Employee Benefit Research Institute; 2) Employee Benefit Research Institute, 2008 0130
- As an employer, why is it important to provide financial education for your employees? There are two laws that affect most employers. The Employee Retirement Income Security Act of 1974 (ERISA) was wide-ranging legislation designed to protect workers who work under pension plans. ERISA’s provisions are in the tax and labor codes. Some type of retirement education was required by ERISA to enable employees (who were given control of their investments) to make informed choices about how to allocate their assets in defined contribution plans like the 401(k). The Pension Protection Act of 2006 (PPA) amended certain provisions of ERISA. 0140
- Prior to enactment of the Pension Protection Act, fewer than one in four plan sponsors provided investment advice to their employees. Eighty-four percent of those that did not provide advice cited fiduciary concerns related to ensuring that the advice provider had no conflict of interest as the primary reason. Source: Department of Labor, Employment Benefits Security Administration, 2008 0150
- The Pension Protection Act provides the plan sponsor with fiduciary relief with respect to investment advice provided to participants and beneficiaries if certain conditions are met. A plan sponsor is generally deemed to have discharged its fiduciary duties if: The advisor provides investment advice pursuant to a written agreement; and The plan sponsor conducts due diligence and selects the provider prudently. 0160
- Here are a few key points to be aware of regarding ERISA. Generally, as long as these guidelines are met, an employer is considered to be in compliance. You must explain that the plan is intended to be Section 404(c) compliant and thus generally relieves the fiduciaries of the liability for any investment losses. You must provide the participants of your plan with the following: At least three investment alternatives consisting of a broad range of diversified investments that have materially different risk-and-return characteristics A general description of the investment objectives and risk-and-return characteristics of each investment alternative Identification of the investment managers 0170
- In addition, participants and beneficiaries should be able to receive from the plan fiduciary, upon request: Annual operating expenses, such as investment management fees, administrative fees, and transaction costs, of each investment alternative Copies of financial statements and reports on the investment alternatives A list of the assets in each investment portfolio Past and current performance of shares in an investment alternative Information on the value of shares held in the participant’s account A plan may impose reasonable restrictions on the frequency that participants and beneficiaries may give investment instructions. The frequency must be appropriate for the investment alternative’s expected volatility and must be at least once within any three-month (quarterly) period. 0180
- Before you start the process of providing financial education for employees, we urge you to ask this basic question: What does HR want to get out of a financial education program? Once you answer this question, the process of choosing a program becomes much easier. 0190
- A great place to begin is by finding common ground for your employee base. The two most obvious and effective ways to do this are to start with general financial management and/or retirement planning. Financial education should provide the financial skills workers need to help take control of their financial futures, including key areas such as risk management, cash management, investing, tax management, and estate conservation. Retirement planning tends to be the most popular topic among employees because they are generally able to participate in an employer-sponsored retirement plan, such as a 401(k). In addition, r etirement planning should include specific concepts such as utilizing IRAs and understanding the tax implications of taking distributions from retirement plans. 0200
- Newsletters offer an inexpensive yet valuable way to keep employees informed on financial issues. As with many offerings, newsletters are most effective when combined with other forms of education, particularly workshops. If you utilize a newsletter, it’s important that it covers a broad range of topics. This ensures that the many different concerns and interests of employees will be addressed. Web sites can be an effective way to deliver financial information to employees. I can provide your employees with access to my Web site, which is filled with rich interactive financial content. It has a research section with articles, calculators, and e-seminars focusing on financial and retirement planning, cash and risk management, taxes and estate planning. Current financial events also appear on the site every month. Newsletters and access to a financial Web site enable employees to continue the education and implementation process, and you demonstrate ongoing concern about your employees’ financial well-being. 0210
- Workshops have become one of the most popular and effective ways to deliver financial education. These presentations are usually delivered by a financial professional in a classroom-like setting where participants can ask questions while receiving important technical information on financial topics. The idea is to provide education in an interactive environment conducive to learning. The presenter should be well versed and trained both as a financial services professional and a financial educator. Workshops allow for a more wide-ranging education that benefits all types of learners. The opportunity for attendees to take action and make positive changes in their lives is enhanced with this delivery method. 0220
- The workshop tools that we use are carefully chosen and professionally prepared. The information is complete, thorough, and the materials have been reviewed by FINRA, the Financial Industry Regulatory Authority. So your employees can receive the education they need to help make intelligent, informed financial decisions. Moreover, our program is entertaining and informative. We’re confident it would be a tremendous benefit to your company and employees. 0230
- Each participant at our educational workshop will receive a full-color, 175-page workbook that will enhance the presentation. This valuable resource is packed with helpful information, useful insights, exercises, and easy-to-use worksheets. It was specifically designed to help participants identify their needs and evaluate their options. Most people find that the workbook is a valuable resource long after our program has ended. 0240
- Here are some workshop tips to keep in mind. If you decide to provide financial education during work hours, it should be in segments no longer than two hours. There is no reason to have employees take time away from their work schedules to receive financial education. Since this is more of a family benefit, providing the education after work hours allows a spouse or financial partner to attend the presentation. A single session should never be longer than three hours in length. This is about the maximum time attendees can stay focused. Anything longer needs to be presented in a multi-session format. When a workshop covers retirement planning, it should include basic information on investing and how people can apply financial principles to their situations, not just the options offered by an individual employer’s retirement plan. 0250
- Many executives believe that employee concerns over their personal finances are creating a more difficult work environment. According to a study by CFO Research Services, 66 percent of HR and finance executives at large companies believe that broader financial education at the workplace is more important today than it was a year ago. Source: credit.com, 2009 0260
- You might be asking yourself, “Will my employees value this service?” Based on the research, they will. In a 2008 Employee Benefits Trends Study, 50 percent of workers indicated they would like general financial planning information at the workplace. That’s up from 30 percent in 2007. 1 And this study occurred before the 2008 credit crisis and market chaos! Another question you might have is, “Will young employees appreciate this educational benefit?” According to the 2009 Young Adults & Money survey, young people believe that “making better choices about managing money” is the single most important issue for individual Americans to act on today. Moreover, two-thirds of the survey respondents (ranging in age from 23 to 28) said they would like their employers to offer education and guidance on a range of financial topics that go beyond typical employee benefits. 2 Sources: 1) Benefits Selling Magazine , June 2008; 2) Business Wire, March 31, 2009 0270
- There are three basic steps involved in setting up a workshop: preparation, promotion, and presentation. We will work with you to select dates and times and a convenient location for the workshop, as well as determine how many sessions are appropriate for your workforce. We also need to select a location. Throughout the process, we will ensure that everything runs smoothly. Once the dates and times are established, we can help promote the workshop through your accepted communication channels. We have several promotional pieces, such as a flyer, e-mail invitation, and statement stuffer, that can be modified and distributed to employees to generate interest in the program. Registration can be handled by you or by our worksite team. We can confirm registrations with all of those who sign up for the workshop. The workshop is flexible and can be presented as a one-hour “lunch and learn” program, a two-hour presentation during work hours, or a six-hour comprehensive workshop over a period of several days or weeks. The six-hour version will provide the broadest financial education and cover all six areas of personal financial management: risk management, cash management, investment concepts, tax management, retirement planning, and estate conservation. If you want us to focus on specific topics, we can do that, too. 0280
- This brief list represents our pledge if you choose us to be your financial education provider. Our educational workshop, The Complete Financial Management Workshop, is an outstanding learning program. We offer a complimentary, no-obligation consultation to all workshop participants who wish to take advantage of it. They can use this time to ask questions raised during the workshop, or they can use the time to review their particular financial situations with us. There will be no self-promotion by the educator or discussions of our company’s specific products and services during the workshop. It is not a sales meeting. The workshop is designed to provide basic principles people need to make informed financial decisions. We pledge that there will be no uninvited future contact with employees who attend the workshop. The complimentary consultation is available to those who request it using the response card, but we respect the decision of those participants who are not interested in meeting with us after the program has ended. 0290
- This brief list represents our pledge if you choose us to be your financial education provider. Our educational workshop, The Complete Financial Management Workshop, is an outstanding learning program. We offer a complimentary, no-obligation consultation to all workshop participants who wish to take advantage of it. They can use this time to ask questions raised during the workshop, or they can use the time to review their particular financial situations with us. There will be no self-promotion by the educator or discussions of our company’s specific products and services during the workshop. It is not a sales meeting. The workshop is designed to provide basic principles people need to make informed financial decisions. We pledge that there will be no uninvited future contact with employees who attend the workshop. The complimentary consultation is available to those who request it using the response card, but we respect the decision of those participants who are not interested in meeting with us after the program has ended. 0290
- Thank you for attending today’s presentation. I look forward to working with you to provide financial education to your employees. Now we’d like to preview a portion of The Complete Financial Management Workshop . This will give you an idea of the high quality of this presentation. After the preview session, there will be a general question-and-answer session to address any additional questions or concerns you may have. ( Note: Show the CFMW preview presentation, then take time to answer any questions. Your goal is for the HR professionals to contact you either to schedule the workshop with their companies or to follow up with additional information. Some HR professionals may want to preview the program in more depth; in that case, the one-hour or two-hour comprehensive presentations can be given at their worksite location or your office. If you want feedback about your session and their interest in your program, consider providing attendees with an evaluation form on which they can indicate a desire to work with you and offer this program to their workforce.) 0300