presented by dr. tom watson watson training & development “workplace financial programs are...
TRANSCRIPT
Presented byDr. Tom Watson
Watson Training & Development
“Workplace Financial Programs Are Profitable When Done Right”
The Business Case for Financial Education
© Watson Training & Development, 2009
Only 14% of eligible workers contribute to IRA accounts
Only 42% of workers save for retirement, including 401(k)s
Only 53% of workers participate in any retirement plan
Only 60% of full-time employees have access to an employer-sponsored voluntary retirement plan
70% are not saving enough for a financially successful retirementAverage 401(k) balance = $50,000Median 401(k) balance = $19,000
Employees are NOT Saving Enough for Retirement
Participation in retirement savings plans are inadequate
Most are not saving enough for retirement
Workplace education and advice programs have been underutilized
Millions of employees say they cannot afford to save for retirement, and 1 in 4 say credit card debt is a reason
Employees do not know how to help themselves
Employers do not understand the value of providing their employees easy access to the best mix of quality financial programs
Employee Personal Financial Challenges in Retirement Saving
Surveys80% - worried about their personal finances and think financial times will get worse60% - trouble making ends meet37% - no emergency fund $392 – average savings balance10% - delinquent in bills4 million – IRS garnishments16 million – unpaid utility bills15 million – calls from collectorsMore news
401(k)s are being tapped to save homes $4 gas is a reality; $5 may be next
Employee Personal Financial Problems
• Credit card payments ($11K) $330-$430 month
• Vehicle payments ($15K) $400-$500 month
• College loan payments ($30K) $400-$600 month
• Savings $33 monthChild-care ($5-$21K) $400-$1200 monthProperty taxes $Homeowner’s insurance $
401(k) portfolio balances
“Don’t give employees a raise! Offer help with money management challenges”
Employee Personal Financial Problems“70% live paycheck-to-paycheck and do not save enough for retirement”
Because millions of investors are poorly diversified
30 million American workers –1 in 4 –report they are seriously financially
distressed and dissatisfied with their personal finances
Employee Personal Financial Problems – Millions of Financially Unhealthy Workers
Over 80 research studies prove that employee personal finances and the employer’s bottom line go together
Employee Financial Illiteracy is an Employer Problem
Research proves that: “Employees with money problems are like sharks swimming around the workplace
taking bites out of the bottom line”
“Every time someone on your work team brings his/her money worries to the job,
workplace productivity drops”
“Every time someone on your work team brings his/her money worries to the job,
workplace productivity drops”
“Employers ignore the elephant”“Employers ignore the elephant”
Employee Financial Illiteracy is an Employer Problem
“Financially unwell employees do not
make the best decisions for themselves…
or their employers”
Employee Financial Illiteracy is an Employer Problem
Research shows:30-80% of ALL workers waste time at work on money issues
How much time?12 – 20 hours per month
Employee Financial Illiteracy is an Employer Problem
Employee Financial Illiteracy is an Employer Problem
Financially Illiterate adults do not manage their personal finances very well…
And they do not save and invest enough for a financially successful retirement
THIS contributes to lower productivity as well as higher health care costs
Employers Often Recognize These Issues…
But Do Nothing.Employers Often Recognize These Issues…
But Do Nothing.
“You can lead a horse to water, but you can’t make it drink”
Employee Financial Illiteracy is an Employer Problem
Employees with financial distress report poor health.
Financially distressed employees have worse health than other workers.
40 to 50% of financially distressed workers report that financial problems caused their health woes.
1/3 of professional employees say are so sad or down they couldn’t perform job tasks due to financial distress.
Positive changes in financial behaviors are related to improved health.
Employer Costs: PFEEF Research Shows that Health and Personal Finances are Correlated
1. Lost productivity for each financially unwell employee $450
2. Higher health care cost for poorer health 300 Subtotal = $750
3. Lost employer FICA savings on worker who does not join health care reimbursement (FICA) 92 (cash)
4. Lost employer FICA savings ondependent care reimbursement (FICA) 382 (cash)
5. TOTAL COST TO EMPLOYER $1,200+
© Personal Finance Employee Education Foundation, 2009.
“Employer cost for not providing basic financial education that changes behaviors and job outcomes is $750 to $1,200+ per employee!”
Employer Costs: Annual Cost to Employer for Ignoring One Worker’s Financial Illiteracy©
Quality Workplace Financial Programs Rescue Employees and Employers byQuality Workplace Financial Programs Rescue Employees and Employers by
Quality Financial Programs Result in Improved Employee Personal Finances and Employer’s Bottom Line
1. Decreasing employee personal financial distress
2. Increasing employee personal financial wellness
Salary increases? No
Bonuses? No
Most retirement education workshops? No
Employee Assistance Programs? No
Marriage counseling? No
Quality Financial Education? Yes
Credit Counseling? Yes
What does NOT reduce employee financial distress and increase financial wellness?
This is knowledge about
• Spending Plans
• Credit Management
• Savings
“AND The lack of financial literacy is the major reason why employees do not save for retirement”
Quality Programs Emphasize“Basic Financial Literacy”
• Comparison shop
• Achieve savings goals
• Enjoy average to above average financial well-being
• Comparison shop
• Achieve savings goals
• Enjoy average to above average financial well-being
Quality Programs Result in Financially Literate Employees Who are Engaged with Money Issues
Human resources professionals can help make this happen
Lower financial distress Increase financial well-being Better health Retirement preparation Improved family relationships Gains in job performance
“It makes a difference to that one!”
Quality Financial Program Result in Improved Employee Financial Wellness
“Employers do not realize they can improve profits
–and prove it–
by helping employees improve personal financial behaviors”
Quality Financial Programs Result in Improved Employer Profits
“It makes a difference to that one!”
Return on Investment (ROI):The Personal Finance Employee Education Foundation expects employers typically will receive a ROI of 3:1 (or more) annually for quality financial programs
Example: Cost: $1500 invested in financial programs by employer/employee
Benefit: $4500 ROI = 3:1
Quality Financial Programs Result in a Positive ROI for Employers
One Year Projection of the Changes in 10 Variables
1. Less work-time spent on personal finances2. Less absenteeism3. Reduced turnover4. Improvements in job performance5. Lower health care costs6. Health care premium savings7. Employer’s FICA savings for more employees in
health care spending plan8. Employer’s FICA savings for more employees in
dependent care spending plan9. Fewer workers’ compensation claims10. Fewer garnishments
It is in the employer’s best interest—more profits—to provide employees easy access to quality financial programs
Conclusions about Employee Financial Literacy and Employer Profits
“It also is the right thing to do as stewards of employee well-being!”
“It also is the right thing to do as stewards of employee well-being!”
Companies Offering Our Financial Wellness Program
• Eastman Chemical Company• Neiman Marcus• Exxon/Mobil • Xerox Corporation• Citibank• Harris County• City of Houston• Alcatel Corporation• U.S. Navy
• Ernst & Young• Texas Dept of Agriculture• Methodist Healthcare System• Texas Bank & Trust• General Dynamics• U.S. Air Force• UPS• Triad Health Care• And 100’s of others
Our program is available as a live seminar, an online four month study course, in book form and on CD.
It is Guaranteed to Improve Employee Financial Wellness and Your company’s Bottom-Line
www.ThePayRaiseProfessor.comDr. Tom Watson