Investment education basics: here's why this employee benefit is so popular, along with some hints on choosing the best delivery method

Workforce, Oct, 2002 by William Dickmeyer

By now, you've seen or read that helping your employees understand and manage their personal finances through employer-sponsored financial planning is one of the hottest perks around. In the annual Top Five Benefit Priorities survey conducted by the International Society of Certified Employee Benefit Specialists, for each of the last three years, "Providing Financial/Investment Planning Tools" and "Increased Investment Education" have been near or at the top of the list for both employers and employees.

Here are some ways employers are providing these services:

Traditional financial planners: Many financial planners are packaging their consulting services for employers to help provide "group" services for employers who need it. Depending on the consultant, the cost can be as little as zero, with the consultant counting on fees and commissions from products sold. Other consultants will charge the employer a flat fee per month or per employee for a menu of services in exchange for not presenting products to employees.

Financial planning software: Much of the planning software for employers is focused on tools for retirement plans only, although they are slowly integrating other areas of personal finance into their programs. Pricing varies widely amongst these products, however some deals can be found since, according to the International Society of Certified Employee Benefit Specialists survey, 69 percent of benefits professionals don't use these services yet and only 25 percent of those not using the services are considering it. Employers who wish to provide modeling software for employees to calculate everything from the impact of a 401(k) contribution on their paycheck to how much that nest egg will be at retirement need only look to their retirement plan vendor to find it.

For corporations that are looking for Web-based solutions, several companies have formed alliances to develop both standalone and Web-based software programs to help employees figure out their financial futures. Some of the names of these products are mPower, Morningstar ClearFuture, and Financial Engine's Investment Advisor. Pricing varies widely amongst these products.

Voucher Programs: If you are not interested in aligning yourself with a specific financial planner, another idea is to provide a certain level of reimbursement for employees who choose to use their own financial advisor. This option is probably better suited to a smaller company due to the paperwork involved with verifying eligible expenses for reimbursement. But it gives the employee more discretion in choosing someone with whom they are comfortable sharing their personal data.

Here are a few tips for determining how to go about providing financial planning services for your employees:

Ask your employees: One of the great injustices that HR folks tend to commit is the "I know what my employees want" line. That's true if you ask them, but many times employers make assumptions about what employees know based on the kind of work they do. Conduct surveys or focus groups with your employees to determine whether financial planning is something they need.

Evaluate, evaluate, evaluate: With each method, there are areas to look at to determine that you are getting your money's worth. With personal consultants, look for individuals that are held to an ethical and professional standard, such as a Certified Financial Planner (CFP).

Determine liability upfront: Often, the fact that an employer pays for a certain service may lead many employees to feel that it is responsible for bad or misleading advice. Take some time to determine the scope of the financial planning services and where liability lies for the advice and the subsequent decisions that are made. Reputable financial advisors will be all over this when making their presentation to you, so be wary if it isn't included.

Benefits Administration

A Survey institute

www.surveyinstitute.com

Abd Services

www.CyberSure.com

Abilizer Solutions, Inc.

www.abilizer.com

Acclamation Systems, Inc.

www.acclamation.com

Administration Resources Corporation

www.209.32.210.205

Advance Paradigm Inc

www.advparadigm.com

AFP Group

www.afpgroup.com

Allstate Financial

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American Express Retirement Services

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