An educated employee is an empowered employee, especially when it comes to retirement savings and financial wellness. To help employees better understand their fiduciary process, the key features of your company’s retirement plan, and the importance of setting aside money for their future, it’s crucial to offer financial education. Financial education can come in many forms, but the best way to start the conversation about financial wellness is to follow a few simple points.
Employees may misunderstand exactly what goes into your retirement plan. To dispel any misconceptions, companies should aim to communicate retirement plan information in simple, easy-to-understand terms. Keep in mind that employees are easily overwhelmed by a surplus of options! Make yourself available to help guide them toward choices that are best for them, and encourage them to approach you with questions. If they don’t ask you, there is a good chance they are taking matters into their own hands by searching for answers online or from other employees, which only increases the odds of miscommunication.
Offer Multiple Education Formats
In recent years, nearly one half of companies provided employees with financial education, whether as a large education session, one-on-one meetings, or within an online module. This results in employees with improved financial management skills who better understand budgeting, debt management, and proper savings techniques.
During these sessions, start by discussing the savings basics and why it’s important to start saving as soon as possible. Consider reviewing asset classes to help employees understand their options when it comes to investment options such as stock or real estate, and how it ties back into their retirement plan savings through your program. This is also a great time to educate them on asset allocation strategies, especially in a one-on-one meeting. Help your employees learn more about balancing risks and rewards, equities, and fixed incomes, and why it’s important to know these things when they decide to invest in saving for retirement.
Discuss Company Match
As you focus on clear communication and education, ensure that your employees understand how to receive the highest company match. Reiterate just what that match is, how to receive it, and how it positively affects their savings. Ask a recordkeeper to run a report analyzing which one of your employees aren’t contributing enough to receive the highest match — or any match — and then target those specific employees with an invitation to a group or one-on-one education session.
Ultimately, the education strategy you choose should be specific to your company and your employees. Encourage them to ask questions about their fiduciary process so you can help them achieve financial health and stability.