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What Makes Workplace Financial Education Work?

It’s National Employee Benefits Day – a day set aside to recognize trustees, administrators, benefits practitioners and professional advisors for their dedication to providing quality employee benefits and the important role they play in their colleagues’ well-being. It’s also a good day to consider the impact of workplace financial education.

According to “A Closer Look: What's Working in Workplace Financial Education,” a program is likely to be more successful the longer it is in place. Results from this survey showed that it takes more than five years to be reported as successful. For successful employers, 24% had programs in place for 6 to 10 years and 49% for more than 10 years, versus 11% and 42%, respectively, for unsuccessful programs. Programs newer than five years were more likely to be unsuccessful.

Employers with successful programs survey their employees to assess both their financial well-being and which financial topics need to be covered. Employers should also measure improvement and behavior changes after the program is in place. Nearly 30% of employers with successful programs have conducted an assessment. None of the employers with unsuccessful programs had done so.

However, not all employers have the resources to implement a comprehensive financial education program at the outset. The report noted that when starting, it is best to focus on one or two topics that an employee assessment tool has identified as critical. If an employer has the ability to offer a wide-ranging program, research shows more success if a variety of topics are covered. Employers with successful programs provided education on multiple topics, including:

  • savings;

  • investments;

  • insurance;

  • spending;

  • health care in retirement; and

  • preretirement financial planning.

Similarly, the success group was more likely to offer education using a wide variety of formats, including free personal consultation services, classes and workshops, web-based online resources, workbooks and calculators.

Not surprisingly, employers with successful programs customize education for ages, income levels and life stages. Nearly one-quarter of successful employers provide targeted information, while 11% of unsuccessful employers do so. Similarly, employers with successful programs are more likely to use personalized methods. For example, 30% of successful employers make financial planners available to employees, while 16% of unsuccessful respondents do so. Free personal consultation services are provided by 62% in the success group versus 36% in the group not citing success.

The report notes that if a face-to-face program is planned, participation will be greater if the event is held during work hours. In addition, education is likely to be more successful if it reaches more individuals and is made available in languages that reflect workforce demographics. Successful employers were more likely to educate retirees as well as active employees (28% versus 13%), include spouses (45% versus 28%) and translate materials into languages other than English (30% versus 21%).