All 28 of his employees decided to get involved, making Meyers’ company’s benefits more worthwhile for both his purposes and his employees’. Bob Harris, AVP of professional development at Waddell & Reed, said he sees many employers make simple mistakes when offering benefits, sometimes by not offering education, but also by offering education in ineffective ways. He recommended the following techniques:
Offer ongoing programs, not once-off
Many times, it takes a significant life event for an employee to take any interest in their financial future. So when programs are only offered, for instance, once a year, many employees may not be in a position to take advantage of them. “Financial planning is a process; it’s not a one-time event,” said Harris. “So you’ve got to catch people when they’re ready to move forward, not just when you’re ready to offer the program.”
Offer more than just theoretical education
When Harris consults employers, he said he finds that the programs that perform best are those that incorporate a behavioral component, meaning that they have practical aspects that allow employees to change habits. “They need someone who is going to hold their hand through the process,” said Harris. “The firms doing best are those that offer activity-based learning and financial planning advice.”
Don’t use a one-size-fits-all method
Employers are increasingly offering diverse ways to learn about finances to fit people’s learning styles. “There’s a lot of different ways it can be provided,” said Harris, “and what we’re finding is not any one way serves all of the people all of the time. So providing accessibility and flexibility in timing of the methodology in how it’s delivered (is important).”
When benefit administration firm COBRAguard audited their 401(k) program last year, they found that a large number of employees had taken loans from their plans. The company was not alone: a 2011 Fidelity survey found about a quarter of 401(k) accounts have loans against them. But COBRAguard president Robert Meyers wanted better, so he introduced a plan to help his staff better understand how to manage their accounts. He subsidized an educational program for employees, and allowed them to choose to spend $99 on the course if they desired to a better financial education.