When it comes to employee benefits and perks, many employers are going beyond the standard 401(k) and health benefit offerings.
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According to The Society for Human Resource Management (SHRM) and the American Institute of CPAs (AICPA), which track companies who offer their employees financial education courses, more companies are offering these programs. While some companies have had to limit benefit offerings in order to cut costs, educational programs to teach employees how to more effectively manage their finances are becoming more prevalent.
As health savings accounts replace health maintenance organization (HMO) plans in the workplace, and employer-sponsored retirement plans shift away from defined benefit pension plans to defined contribution plans, more companies are working to help their employees become financially fit. A study by SHRM found that 30% of organizations surveyed this year offered one-on-one financial/investment advice, 24% offered in-group or classroom advice and 22% offered online advice.
“The increase we’re seeing has just as much to do with providing fewer benefits as it does with employee demand for seminars that cover, say, first-time home buying, college savings and long term care insurance,” says Bruce Elliott, manager of compensation and benefits for SHRM. “These programs are becoming more acute since the recession, a trend that’s here for the mid-term if not for the long term.”
Melora Heavey, senior manager of communications for AICPA, says companies benefit from having financially healthy employees. “Companies are trying to manage insurance costs, and having a workforce that has a thorough knowledge of their benefits and options help them to do this.”
But it’s not just about a company’s bottom line. Elliott calls the programs “comprehensive wellness,” because financial education helps to relieve stress. “Stress relief makes for a happier employee; financial stress can be a huge trigger for depression.”
More employees are requesting these programs and participation in existing training courses are on the rise. American Express (NYSE:AXP) reported an 8% increase in employee participation in financial education courses over last year, and says 78% of its workers are in attendance at these seminars. And younger employees are showing greater interest, as participation among 20-somethings jumped from to 61% in 2010 – a 14% increase over the previous year.
Each company, from small businesses to Fortune 500-level enterprises, offers its own kind of financial education program, whether it’s large-scale seminars or online workshops and podcasts. 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.
“There are companies who leverage the relationships they already have, using an expert to educate their workforce free of charge,” says Elliott. “For example, we’ll bring in our banker and he will discuss different educational tools. You could also use a local financial planner who can promote their services and retirement products to an audience that is eager to learn more.”
Elliott says that these programs have encouraged participation in the retirement plans offered by his company. “We have a 94% participation rate in our employee 401(k) program,” he says. “We can attribute this to our educational seminars.”
Companies interested in implementing financial education programs for their own employees can find free resources at wlife.org.