What are the trends in corporate financial education programs?
Question: I work for the HR department of a large bank and need to recommend a financial education program to launch in 2005. What are the trends in corporate financial education programs? What are the most innovative companies doing?
Answer: There are three important trends to consider as you roll out the program:
1. Financial education is rapidly becoming a benefit of its own accord - as opposed to a tool for plan communication. As a result, companies are rolling out company-wide programs and making the education accessible by all employees so that the program is truly a level benefit.
2. The trend is away from online advice engines and other online financial planning applications towards personalized, live services. Even many of the online advice engines are now offering live, individualized financial education and guidance, recognizing that they need to do so in order to remain competitive.
Most people prefer talking to a financial expert about their problems to accessing online tools. This is particularly true for employees with significant financial problems. Utilization for live services such as workshops, a financial helpline and personal financial consultations is considerably higher than for online services and they are much more effective at helping employees improve their financial situations.
3. There has been a trend for the last several years away from offering advice and towards offering education. Under the old model, companies used advice providers to provide financial planning services for employees. Today, this is considered a taboo at most companies for legal liability reasons.
Instead, companies are offering education and guidance, which provides employees with information and frameworks to make critical financial decisions but avoids specific investment recommendations. This approach actually reduces legal liability by ensuring compliance with ERISA 404 (c).
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