EXECUTIVES AT PRUDENTIAL first started to notice the change about a year and a half ago.
More workers at the financial services firm were turning to an employee assistance program. But in addition to seeking help with the typical legal- or family-related concerns, the staffers were asking questions about a spouse who had lost a job, about a depleted retirement account or about paying for a child’s education.
To get its employees’ focus back on work, Prudential came up with a plan. Through its health and wellness department, the company would offer employees a budget coaching program and the services of a certified financial planner. “It seemed people would benefit from coaching very specifically targeted to helping them get their finances under the most basic control,” says Kenneth Dolan-Delvecchio, vice president of Prudential’s health and wellness department.
It is a little examined side effect of the downturn: The loss of productivity due to anxiety. According to a MetLife study released last month, more than three-quarters of employees said financial advice and guidance programs would improve their productivity. And they are being vocal about their needs. About one-third of employers report that they have seen a spike in demand for financial education from employees in the past 12 months, according to a November poll by the Society for Human Resource Management.
President Obama seemed to acknowledge the problem when he signed an executive order in January creating an Advisory Council on Financial Capability — tasked with helping individuals make informed financial decisions. He also designated April as National Financial Literacy Month.
The verdict is out, however, as to the effectiveness of such programs, which sometimes end up attracting those employees who don’t need the help, experts say. Who is benefitting, then? Financial education companies like Financial Finesse, for starters. Based in Manhattan Beach, Calif., Financial Finesse, which doesn’t sell financial products, charges employers between $150,000 and $500,000 a year, depending on the size of the program. In 2009, business was up 20%, says the company CEO, Liz Davidson, who expects continued growth this year. “Employees are asking HR managers for this, and HR managers are calling us as a result,” Davidson says.
Can a financial literacy campaign really make a difference? Here is a look.
Five years ago, just 2% of employers offered financial education workshops to employees, according to a Hewitt Associates report that included a survey of companies on the availability of “financial security” programs. For 2009-10, that figure jumped to 19%, while 8% of employers offered financial counseling to employees (for 2004-05, this category didn’t exist in the report). As employees bring their financial concerns to work, employers “realize they can’t be just focused on retirement investment; they have to deal with other issues,” says Kent Allison, head of PricewaterhouseCoopers’ National Financial Education Practice.
This year, for example, PricewaterhouseCoopers rolled out a financial assessment component of its financial education program. It’s a 15-minute questionnaire, asking workers about their retirement confidence, use of employee benefits, level of financial stress, and more. Allison likens it to a health risk assessment used in corporate wellness programs. Employees get a “wellness score,” along with a report recommending actions to take and educational information, says Allison.