Employee financial planning is an opportunity to empower your employees, setting them up for a brighter financial future. But why is this strategy so valuable for businesses? What are the most important considerations for employee financial planning? And how can you maximize your chances of success in this endeavor?
The Basics of Employee Financial Planning
Employee financial planning is a set of benefits or services designed to help employees better understand their personal finances and plan for their financial futures. For example, you might have expert coaches or advisors who provide seminars for employees, teaching them about the importance of saving for retirement and helping them better understand the other benefits available to them in this organization.
Because this is such a broad scope, employers have significant flexibility in how they offer financial planning to employees and what types of services they offer. Depending on your budget, your goals, and your needs, you might offer employees occasional workshops and access to resources, or you might give them access to advisors whom they can consult whenever they have a financial matter to discuss.
The Value for Employees
Why is this so valuable for employees?
Education and security.
Employees want to feel financially secure. The majority of Americans live paycheck to paycheck, or something close to it, even if they make above-average incomes. Having access to knowledge and resources that can help your money go further can give you a heightened sense of security and confidence in your financial planning abilities.
Benefit maximization.
This is also a way to help employees take full advantage of other financial benefits that are available to them. For example, some employees opt out of 401K plans and similar investment plans simply because they don’t understand them or don’t have the time to figure them out. With employee financial planning, employees can learn everything there is to know about these types of retirement plans so they can take full advantage of them.
Independence and autonomy.
Employee financial planning allows employees to experience more independence and autonomy. When employees feel in control of their financial lives, they feel more empowered and independent, boosting their morale and sense of worth.
Employer relationships.
Finally, many employees appreciate employee financial planning because it impacts their lives and futures, deepening their relationship with their employer. It’s a mutually beneficial and positive move that can lead to greater collaboration.
The Value for Employers
And why should employers consider offering this range of benefits?
Morale.
As with many other employee benefits, one of the most significant advantages for employers is a boost in employee morale. When your employees feel rewarded, supported, and encouraged, they’re going to be more motivated and happier in the workplace. A downstream effect of this is that your employees are likely going to be more productive and focused at work. Additionally, if many of your employees are enjoying a boost in morale, the entire environment could become livelier and more supportive.
Recruiting.
Employees love benefits, though preferred benefits vary with age and other factors. Younger employees may not be as interested in long-term financial planning as your older employees. Still, they may come to recognize its value after taking advantage of some of the resources you offer. In any case, offering employee financial planning is another benefit you can add to the list, supporting your recruiting efforts. People are generally going to be much more likely to apply to your company and accept your offers if you have a robust selection of benefits to offer them.
Retention.
It’s unlikely that any employee considering leaving will stay just because you offer employee financial planning; after all, there are other ways to obtain this knowledge and these types of resources. However, because employee financial planning is a meaningful benefit, boosts morale, and is a gesture of employers valuing employees, it can have a marginal effect on employee retention. As you likely know, employee retention is both highly cost-effective and conducive to greater productivity.
Financial stability.
Finally, getting access to employee financial planning means your employees will likely become more financially stable. They’ll be able to budget more effectively, utilize their salaries more wisely, and harness the full power of retirement planning and benefits so they can be more financially stable in the future. More financially stable employees mean happier, more satisfied employees with fewer distractions and personal problems to deal with.
Employee financial planning isn’t necessarily the most important benefit you can offer your employees, but it is an essential addition to your benefits portfolio. Not only is it incredibly valuable for your employees and their financial futures, but it often benefits employers far in excess of what it costs them.
Image Credit: Photo by Scott Graham; Unsplash
