No, More Education is Not the Answer to Employee Financial Well-Being
Nate Moody, CPFA – RETIREMENT ADVISOR, PARTNER
March 2025
As retirement plan advisors, we often encounter a common misconception among employers: that increasing financial education alone will lead to enhanced financial security for their employees. While education is a vital component, it is not a standalone solution. To effectively bolster financial well-being, a multifaceted approach tailored to distinct employee groups—unengaged employees, engaged employees, and executives—is essential.
Employers may have a role to play in closing this gap. In fact, Morgan Stanley at Work’s 2024 State of the Workplace Financial Benefits Study found that 81% of employees would like more help from their employers in navigating specific financial challenges. In addition, 89% of employees say they would feel more invested in staying at their company if it provided financial benefits that meet their specific needs. And the number one most-wanted financial benefit they cite is access to a Financial Advisor.1
Unengaged Employees: The Power of Plan Design and Automation
Unengaged employees typically exhibit low participation rates in retirement plans and may lack the wherewithal to actively manage their financial futures. For this group, relying solely on financial education is insufficient. Instead, implementing strategic plan designs with automated features can drive positive outcomes:
- Automatic Enrollment: Automatically enrolling employees into retirement plans ensures immediate participation, overcoming inertia and procrastination.
- Automatic Contribution Escalation: Gradually increasing contribution rates over time helps employees save more without requiring active decisions.
- Default Investment Options: Providing target-date funds or managed portfolios as default options simplifies investment choices for employees who may be overwhelmed by complex decisions.
Research underscores the effectiveness of these strategies. A study by the Social Security Administration revealed that without a successful plan design, financial education alone is often ineffective, and even a well-structured plan can fail to achieve retirement savings goals without automation.2
Engaged Employees: Integrating Education with Benefits
Engaged employees are proactive about their financial well-being and seek resources to enhance their knowledge. For this group, combining financial education with integrated benefits can lead to substantial improvements:
- Comprehensive Financial Workshops: Offering workshops on budgeting, debt management, and retirement planning empowers employees to make informed decisions.
- Access to Financial Tools: Providing calculators, planning software, and other resources enables employees to apply learned concepts to their personal situations.
- Benefit Integration: Aligning financial education with existing benefits, such as health savings accounts, emergency savings accounts, and student debt assistance programs, creates a holistic support system.
A study evaluating the Finance Authority of Maine’s employee financial wellness program found that participants who engaged in financial education and coaching reported higher financial well-being scores and improved financial literacy compared to national averages.3
Executives: Personalized Financial Planning & Advice
Executives often face complex financial scenarios, including equity compensation, tax considerations, and estate planning. For these individuals, personalized financial planning and advice are crucial:
- One-on-One Financial Coaching: Tailored sessions address specific financial goals and challenges, providing executives with actionable strategies.
- Advanced Planning Services: Assistance with tax optimization, investment diversification, executive compensation programs, and succession planning ensures alignment with long-term objectives.
- Professional Collaboration: Coordination and collaboration with an executive’s comprehensive financial advisory team including tax accountant, estate planning Attorney, banker, etc.
A comprehensive approach that includes personalized advice has been shown to improve financial behaviors and outcomes. For instance, a study published in the Journal of Financial Counseling and Planning found that workplace financial education combined with individualized counseling led to better financial wellness among executives.4
Lebel & Harriman: Your Partner in Financial Well-Being
At Lebel & Harriman Retirement Advisors, we understand that a one-size-fits-all approach to financial security is ineffective. Our firm, established in 1978, has a rich history of providing independent, tailored financial education & planning services to employers and individuals.
Our team is dedicated to building long-term relationships, providing solutions that enhance retirement outcomes and financial security. We invite you to contact us to learn how we can assist in designing and implementing financial benefits that address the diverse needs of your workforce.
In conclusion, while financial education is a valuable tool, it must be part of a broader strategy that includes automated plan design, integrated benefits, and personalized advice to effectively enhance financial security across all employee groups.
Securities Disclosure: Securities offered through Valmark Securities, Inc. Member FINRA, SIPC. Investment Advisory Services offered through Valmark Advisers, Inc. a SEC Registered Investment Advisor. | 130 Springside Drive, Suite 300, Akron, OH 44333-2431 | Telephone: (800) 765-5201 | Lebel & Harriman, LLP and Lebel & Harriman Retirement Advisors are separate entities from Valmark Securities, Inc. and Valmark Advisers, Inc.
