Financial Finesse, a provider of workplace financial wellness programs, recently released its “Trends in Employee Financial Issues” study. In talking about the study, Liz Davidson, CEO and founder of the El Segundo, California-based firm, highlights the fact that, “More employers are offering their employees in-house financial wellness education, financial planning resources and access to unbiased financial professionals.”

Davidson recommends more employers and/or plan sponsors should offer such resources to their employees. She told PLANSPONSOR, “Major changes in behavior are needed in order to help employees retire comfortably and at their desired retirement age. Equally important, most employees need to make significant changes to their savings and investing behaviors to avoid financial stress, which is the number one cause of stress related illness.”

The best way for plan sponsors to assist employees in this area, says Davidson, is to provide ongoing financial coaching as an employee benefit and institutionalize this into the company’s culture. “Every single employee should be aware they have the benefit available and that this is part of their company’s commitment to helping employees become financially secure.”

Davidson says financial planning and financial wellness resources for employees should definitely be expanded. “Employers are doing more than ever before, but it’s still not enough to solve the problems caused by employee financial stress and delayed retirement, not to mention mismanagement of benefits, which are becoming increasingly complex and expensive for employees.”

Davidson recommends:

• Transitioning from event-based approaches, such as “lunch and learns” or enrollment meetings, to a process-based approach that makes financial wellness an ongoing benefit, available on an unlimited basis to every single employee.
• Providing services in a multi-channel format, since all employees learn differently and are more likely to retain information, and act on it, if it’s received from multiple sources and types of media.
• Bringing the education to the employee instead of trying to bring the employee to the education. The traditional method has been to teach employees key financial concepts, such as asset allocation, and assume they will then make the appropriate changes to their portfolios. The problem, says Davidson, is the majority of employees are not interested in financial concepts. Instead, employees want to know how to become financially secure and independent, and ultimately build significant wealth over time.

Once employees have a better sense of their retirement readiness, or lack thereof, there are things plan sponsors can do to help them, Davidson adds.

“As mentioned in the study, an increasing percentage of employees are running retirement projections, and are either discovering they are on track to retire comfortably or that they are behind where they need to be. Once employers have a gauge of retirement readiness within their key demographic groups, there are two key things they should do,” Davidson notes.

For those employees that are not on track with their retirement readiness, she says, plan sponsors can provide ongoing financial guidance and coaching through workshops, one-on-one financial planning sessions and pre-scheduled financial coaching sessions. These steps can help employees develop a plan to increase their savings and better manage their investments.

As for those employees who are in a good place with regard to their retirement readiness, Davidson says, “Reinforce good decisions they have made by ensuring they understand the importance of sticking to key investment principles, and maintaining or even increasing their savings rates. It is also critical for this group to receive guidance around how to protect the wealth they’ve built so that their nest eggs aren’t decimated by unforeseen circumstances such as long-term care needs, a major market correction, or sudden increases in inflation or taxes.”

Highlights of the study, including relevant charts and graphs, can be downloaded here.