Financial Education for Employees: A Growing Necessity

For many companies, providing financial education for employees has not been a priority. Instead, many organizations give employees minimal information about saving for retirement, debt management, and other financial issues, assuming that it is not their job to educate employees on these matters.

Well, times are changing. With news headlines pointing to organizations´ failure to protect employees, companies are realizing the need to properly equip their workers with information to make educated and informed decisions about their finances. With the imminent legal action against employers that fail to protect and empower employees with adequate financial information, the case for providing employee education becomes even more compelling. And, the benefits of providing financial education for employees extend far beyond potential reduction in liability. Indeed, companies that provide ample investment and financial education programs will yield a multitude of positive results for their employees and for themselves.

NES Consulting provides In-House/ Public courses that can help educate employees and employers. These programs disclose information about the plan in various formats and provide the resources your employees need to make educated, confident decisions about their company equity. Such programs are beneficial to both the employee and the employer.

The primary employee benefits are:

• An increased understanding of retirement plan provisions
• The ability to make better decisions about options or stock
• An understanding of the monetary and intrinsic value of the program
• Reduced anxiety about taxable events and “what if” scenarios

From the employer”s perspective, the benefits of third party education are:

• Reduced company liability
• Promotion of employee self-reliance
• Better service to the employee
• The ability to attract and retain employees
• Increased goodwill with employees and their families
• Reduced administrative costs

Employer Trends

Depending on the size and complexity of your workforce, it is best to consider a combination of learning methods and ways of disclosing plan information. Here are some employer trends in the delivery of retirement plan education and communication:

• Disclose the stock plan document upon hire. Many employers wait till after the employee signs the offer letter to provide the stock plan document. Reduce your risk for fraud/misrepresentation claims by including a stock plan agreement with your offer letters.
• Disclose an attorney-drafted “summary document” upon hire. Such documents are written with less legal jargon. They highlight key plan provisions and detail issues that may impact the employee with the grant and exercise of their options.
• Post documents on the company intranet. Do not make your retirement plan agreements a mystery. Provide employees with easy access to review the documents as often as they want.
• Team with an unbiased third-party educational provider. Third-party educators provide your employees with meaningful information about retirement plans in general or customized information as per plan specifics.

What Is Your Company Doing?

If you offer your employees company equity and/or retirement plans, financial education may be the missing link to reducing employer liability, capitalizing on the benefits of your equity program, and successfully incorporating an ownership culture.

Employees who are uneducated about retirement plan provisions may make irresponsible decisions that, in aggregate, can have deleterious impacts on your business and your employees” personal finances. Help your employees maximize a critical benefit, and stay out of court — offer responsible benefit plan education — it is a win/win strategy.