<p>For many companies, providing financial education for employees has not been a priority. Instead, many organizations give employees minimal information about saving for retirement, debt management, and other financial issues, assuming that it is not their job to educate employees on these matters.</p>
<p>Well, times are changing. With news headlines pointing to organizations´ failure to protect employees, companies are realizing the need to properly equip their workers with information to make educated and informed decisions about their finances. With the imminent legal action against employers that fail to protect and empower employees with adequate financial information, the case for providing employee education becomes even more compelling. And, the benefits of providing financial education for employees extend far beyond potential reduction in liability. Indeed, companies that provide ample investment and financial education programs will yield a multitude of positive results for their employees and for themselves.</p>
<p>Currently, there is pending legislation that, if passed, will impact the way companies provide investment information to employees, and mandate the amount of education that must be provided. For example, the Retirement Security Advice Act - H.R. 2269 would remove barriers that currently prevent investment management firms from offering investment advice for a fee, subject to certain disclosures about potential conflicts of interest. It would also provide explicit protections for employers that chose to offer participants access to investment advice.</p>
<p>Since legal liability is something every organization wants to avoid, how do you educate your employees about their retirement savings plans?</p>
<p>Luckily, there is an answer. The best programs are provided by an unbiased source and aim to educate employees, rather than advise them. These programs disclose information about the plan in various formats and provide the resources your employees need to make educated, confident decisions about their company equity. Such programs are beneficial to both the employee and the employer.</p>
<p>The primary employee benefits are:</p>
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<li>An increased understanding of retirement plan provisions</li>
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<li>The ability to make better decisions about options or stock</li>
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<li>An understanding of the monetary and intrinsic value of the program</li>
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<li>Reduced anxiety about taxable events and "what if" scenarios</li>
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<p>From the employer''s perspective, the benefits of unbiased, third party education are:</p>
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<li>Reduced company liability</li>
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<li>Promotion of employee self-reliance</li>
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<li>Better service to the employee</li>
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<li>The ability to attract and retain employees</li>
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<li>Increased goodwill with employees and their families</li>
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<li>Reduced administrative costs</li>
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<p><b>Types of Educational Programs and Providers</b></p>
<p>The most effective educational strategy is one with a multi-faceted approach. Teaming with a financial education provider is a cost-effective, liability-free way of delivering retirement plan education to your employees.</p>
<p>A key factor to consider when evaluating a financial education provider is whether they are biased or unbiased:</p>
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<li>An <b>unbiased</b> educational provider''s sole purpose is providing education. This provider does not sell products or services directly to employees. The focus is on delivery of quality educational programs that employees can use.</li>
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<li>A <b>biased</b> educational provider''s primary purpose is not to provide education. They have products to sell and normally only provide education to gain product exposure. The educational message tends to get lost in the sales pitch.</li>
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<p><b>Employer Trends</b></p>
<p>Depending on the size and complexity of your workforce, it is best to consider a combination of learning methods and ways of disclosing plan information. Here are some employer and third-party educator trends in the delivery of retirement plan education and communication:</p>
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<li><b>Disclose the stock plan document upon hire.</b> Many employers wait till after the employee signs the offer letter to provide the stock plan document. Reduce your risk for fraud/misrepresentation claims by including a stock plan agreement with your offer letters.</li>
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<li><b>Disclose an attorney-drafted "summary document" upon hire.</b> Such documents are written with less legal jargon. They highlight key plan provisions and detail issues that may impact the employee with the grant and exercise of their options.</li>
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<li><b>Post documents on the company intranet.</b> Do not make your retirement plan agreements a mystery. Provide employees with easy access to review the documents as often as they want.</li>
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<li><b>Team with an unbiased third-party educational provider.</b> Third-party educators provide your employees with meaningful information about retirement plans in general or customized information as per plan specifics.</li>
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<p><b>Third-Party Educational Trends</b></p>
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<li><b>Online retirement plan seminars.</b> Online seminars allow employees to learn at their own pace and organize information topically, as well as by life stages. There is zero liability for the employer. Employees can access information as needed.</li>
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<li><b>Live seminars.</b> A Certified Financial Planner best presents live seminars. Employees can obtain "advice" on their particular situation in a one-on-one consultation. This offers affordable, reliable advice -- again with zero liability for the employer.</li>
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<li><b>Financial assistance hotline.</b> This offers toll-free access to a Certified Financial Planner who understands stock plan documents, taxation, and personal finance issues.</li>
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<li><b>Educational content.</b> This includes online seminars, educational content, calculators, articles, modeling tools, chat rooms, and so on. The employer provides access to content via the company intranet.</li>
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<p><b>What Is Your Company Doing?</b></p>
<p>If you offer your employees company equity and/or retirement plans, financial education may be the missing link to reducing employer liability, capitalizing on the benefits of your equity program, and successfully incorporating an ownership culture.</p>
<p>With legal defense costs of the average fiduciary liability lawsuit skyrocketing to over $400,000 (Source: Watson Wyatt Worldwide), employers simply cannot afford to avoid providing responsible educational programs for their employees. Employees who are uneducated about retirement plan provisions may make irresponsible decisions that, in aggregate, can have deleterious impacts on your business and your employees'' personal finances. Help your employees maximize a critical benefit, and stay out of court -- offer responsible benefit plan education -- it is a win/win strategy.</p>
<p><!--Liz Davidson--></p>
