Financial Planning as a Workplace Benefit
How to Offer Financial Planning as a Workplace Benefit
According to Health Advocate, money is one of the most consistently identified causes of stress for Americans in the workplace.
This remains true even for folks who are making enough or more than they need. The constant feeling of overwhelm related to not knowing if we are doing the right things with our money is an ever-present stressor even for middle to high income earners, and has a large impact on employee presence and productivity in the workplace.
As organizations look to find more ways to recruit and retain talent, investing in a financial planner that can help employees navigate life’s financial decisions has started to become a more common workplace benefit. In this post, we’ll explore how financial planning as a workplace benefit works, whether it’s right for your organization, and how to find a financial planner to meet your employees’ needs.
What Does it Mean To Offer Financial Planning as an Employee Benefit?
Financial Advisors are not new to the workplace benefits arena, but how we show up has started to look different. The most likely place to find a financial advisor in the workplace is through a company retirement plan. These advisors, in the best-case scenario, show up for a day or two each year and offer employee consultations on how to sign up for the plan, choose their investments, and perhaps a little light retirement planning. In the worst iteration of the above scenario, this type of financial advisor could be there selling expensive investment and insurance products to employees with the end goal of primarily increasing their own compensation.
When we talk about financial planning as a workplace benefit though, it is distinguished from the company retirement plan. Though the retirement plan may come with its own financial advisor, that person is not necessarily trained or expected to provide any type of comprehensive financial planning for employees outside of the retirement plan. On the other hand, financial planning as a workplace benefit should provide the opportunity for your employees to access or work with a comprehensive financial planner who can provide information about more than just retirement and retirement accounts; someone who can answer your employees’ questions about student loans, credit card debt, insurance, estate planning, taxes, home buying, and college planning for their kids.
What Types of Employees Benefit Most from this Type of Benefit?
Financial planning as a benefit for a job that does not pay enough for employees to consistently make ends meet is often not enough of a resource to change the financial trajectory of employees’ lives.
The truth is, without sufficient resources to pay for basic expenses, financial planning may not provide anything but a high level of frustration in jobs that don’t pay enough to meet basic needs for food, shelter, etc. In these cases, the employer would likely be better off utilizing their resources to increase employee pay, as that will have the most direct and immediate impact on their financial situation.
The sweet spot, then, is somewhere in the middle. Financial planning as an employee benefit shines in middle-income work places where good financial management will likely be enough to shift the long-term financial trajectory of many employees’ lives. The salary range that represents middle income depends on where you are located, but a good metric here might be to assess whether, at current salary levels, with good but not excessively restrictive financial decision-making, your employees could be in a position to purchase a median price range home, raise a couple of kids, and save enough to retire at 65. These are the employees for whom access to a good financial planner can be a life-changing benefit, but for whom the cost of hiring a good planner may feel prohibitive. They are likely to not only benefit the most, but also appreciate the benefit quite a bit, as it’s something they may not otherwise have access to.
One of the keys to determining whether a financial planning benefit is right for your employees may simply be to ask them, formally or informally, whether it’s a benefit they are interested in. Most often, I’m contacted by organizations whose employees have expressed a strong desire for this type of service, and for whom a whole group approach is simply too broad to meet their varied needs and life-stages. In this case, a one-time or ongoing investment in providing financial planning services can go a long way in reducing financial stress and overwhelm for a wide range of employees who may simply need an opportunity to get their basic financial questions answered.
How Can I Offer This Benefit to Employees?
There are a few different approaches to providing this type of benefit, each with advantages and disadvantages to consider.
Many larger benefit and 401(k) companies are starting to provide this type of broad group education on topics beyond just the company retirement plan. If paying for financial planning as an added benefit is not in your budget at this time, looking for a retirement plan provider who also provides this service as a low or no cost add-on may be a good route to go.
In most cases, though, the range of life and career stages of individuals at an organization can make a broad educational approach only modestly helpful to individuals. And educational workshops and resources will likely favor employees who are already a little bit more financially motivated and proactive, while leaving behind the ones that are financially tentative or uncertain of their next move. To provide an even more individualized benefit, hiring a financial planner to work individually with employees, or reimbursing employees for part or of the expense of hiring their own financial planner can be a good way to provide individual access to a financial planner who can address their specific financial questions.
A simple way to offer a more individualized financial planning benefit is to offer a reimbursement program for some of the costs of financial planning. The typical cost for individuals and families to work with a financial planner for a year is between $2000 and $7500. Having an employer who is willing to offset part of this cost through re-imbursement on a one-time or ongoing basis can make a significant difference in both incentivizing employees to seek out a financial planner and making the costs related to hiring one more affordable. For employers who may not want to go through the process of vetting and hiring a financial planner themselves, this can be a good way to encourage your employees to seek out assistance with their finances. As someone who does this work, I am often asked to sign off on these reimbursement forms at the end of the year so that my clients can get part of their financial planning fees reimbursed from their employer. I always appreciate the way this feels like they are being rewarded for the hard work of sitting down and paying attention to getting their financial picture in order.
The other alternative is to consider hiring a financial planner to come in and offer individual meetings for employees once or twice per year. While this won’t provide the same level of depth that a reimbursement program will, since each employee will only receive a couple hours of time working with the planner, it is often the most equitable and accessible way to provide financial planning as a service to your employees. Because you are taking responsibility for hiring the planner, paying their costs, and providing the space and structure for meetings, you are likely to see a higher level of participation, particularly from employees who are younger, lower-paid, and those who feel more anxiety and shame about their finances. By removing as many barriers as possible to access, the employees who need it most are likely to benefit more from this type of arrangement.
Typically, you can expect to pay a financial planner $200-$400 an hour for this work, and not all financial planners offer this type of service, so the process of finding and vetting planners may take some work on your end.
A good financial planner should be able to hold space and create opportunities for financially nervous and tentative employees to safely work through feelings of shame or insecurity around money and start making progress on their goals, while also bringing the financial expertise needed to add value for employees who may need help with more technical or advanced questions along the way.
