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Continuing the Conversation: Company Benefits when 401(k) Plan Includes Financial Education

July 5, 2018—Have you started the conversation at your company to determine how to get the biggest organization benefit from your company's 401(k) plan?

In last month’s Starting the Conversation blog I shared some facts to get company leadership talking. There’s a heavy organization cost when employees can’t retire at normal retirement age and an even greater burden when employees lack the solid financial foundation that allows them to build toward retirement.

Helping employees establish a solid financial foundation can have a positive workplace impact, and it is most logically accomplished through a financial education program that is part of a 401(k) plan. To get a sense of the workplace benefit, understand that half of all employees who reported being financially stressed said they spend three or more hours during the workweek dealing with personal financial issues, according to a PricewaterhouseCooper survey. Workplace stress can be overcome when employees are knowledgeable and confident on financial issues, with the help of an effective financial education program.

To get started in evaluating options for an effective financial education program, the first resource should be current 401(k) providers. A well-qualified retirement plan advisor can guide and assist employers in offering practical financial education. Key best financial education practices involve subject matter and method of delivery.

For subject matter, start out with the basics – budgeting, debt-management (and elimination), savings, insurance, home-buying, saving for children’s college. Once those issues have been mastered, move on to retirement preparation subjects: retirement income planning, wills, Long-Term Care insurance, estate planning and Social Security claiming strategies.

For optimum delivery methods, again a well-qualified retirement plan advisor can guide you on what’s available. In addition to answering questions 401(k) plan participants have about financial and investment management, your advisor should help provide basic financial information, through workplace meetings and webinars. And your advisor can point you in the direction of recordkeeping and other service providers that deliver personalized financial education.

Today’s technology makes possible individualized education programs and tailored messaging. Here’s an example of what can be accomplished: some platforms – available via computer and smart phone – survey users as they create accounts, asking questions about their spending and savings habits, their financial attitudes, and their progress toward retirement. Those answers allow the platforms to direct users to video education modules that help them master the financial information and skills that will improve their financial position. Users’ progression is measured as they complete modules and re-surveys, which direct them on to more advanced topics and ultimately retire-ability. Encouraging messaging can be “pushed” to users, and reminders can be sent to re-activate users who have slowed or stopped viewing the educational materials.

As your organization continues its conversation on ways to optimize the company retirement plan to its benefit and the benefit of employees, financial education programs are just one area to include in your conversation. Look for future blogs on 401(k) Plan Design, Making “Proper” Investing Easy, and Employee Communications. All are key strategies to help employees build a firm financial foundation and de-stress, while moving toward retire-ability. Your organization will benefit!


This blog is written to help make the lives of plan sponsors easier in the process of meeting legal requirements under ERISA for their defined contribution plans. Please understand that reading this blog should not alone take the place of a one-on-one consultation regarding the needs of your specific plan, and hence cannot be a guarantee against fiduciary breaches.

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