Employers may find new success in influencing employees to make smarter financial decisions. Last week, a program that reaches employees through an employer-based education program announced the results of Investor Education in Your Workplace, and they were hopeful.
The program, started in 2009 in Wisconsin with 3,476 participants and 2,935 graduates, is delivered by an online platform and provides educational information on retirement and financial literacy.
In the spring of 2011, the program saw a 30% decrease in the number of participants who paid late fees on loans or bills in the last three months and 11% had actually taken action by putting aside expenses for three months.
“The field of promoting financial education has been evolving for 20 years and there are a good deal of studies that show you can improve their understanding of money, but there hasn’t been results across the broad range that show that as they get smarter you can drive changes in behavior,” says Joe Saari, CEO, Precision Information, the parent organization of the program. “There’s a model that can reach thousands of employers and help people make positive changes in their behavior.”
In the second year, the program expanded from Wisconsin to Pennsylvania and North Carolina and had 3,629 graduates.
Also in 2011, there was a 55% increase in the number of people who kept a financial plan, a 29% increase in keeping a written budget and a 117% increase in knowledge about investing for retirement. They do not currently have a system in place that tracks knowledge retention long-term; however, they did test 2009 participants three times over the course of 10 months after course completion, which showed only a 2% reduction in knowledge.
“The general notion in most economic challenges is the only thing we have to fear is fear itself. As more people have more knowledge, you fear less the things you understand,” Saari says. “The program will have a significant impact on people preparing for retirement.”
At a time when some individuals have delayed or indefinitely suspended retirement, the ability to save and plan has become more important.
“There are people staying on longer, so jobs aren’t opening up for younger people. This might be helpful to those who want to retire but need to know a way to do it,” Saari adds.
In the course, participants are pre-tested to provide a baseline of knowledge and then go through a one-hour class once a week for 10 weeks. Afterwards, a post-test is given. In addition, the program is grant-funded through the Investor Protection Trust and is offered at no cost to the employer.
Though the program is geared toward long-term investments and therefore might not change a 60-year-old’s ability to retire at 65, it may provide the tools to transition from full-time to part-time through savings.
“You need to be literate in a language — be it Spanish, English or financial lingo — before you can make decisions,” Saari says. “We want to paint that bigger vision and work on reaching the most people to make the biggest impact.”
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