Employee Education And Life Transition Planning
By: Graydon Watters
With many employees requiring a major event in their lives to see the need for life transition planning, employers face a difficult task helping them see the importance of this, says Graydon Watters, of Financial Knowledge Inc.
With Canada’s rapidly aging population and ever more companies offering phased or early retirement, financial, retirement, and life planning issues are becoming increasingly more important – and complex.
To address these concerns, some employers have been providing ongoing education programs for their employees for many years. These employers know that an investment in their most important resource (their people) is an investment in their corporation’s future.
Life transition programs, particularly for older employees, raise a gamut of issues beyond financial and retirement planning – from feelings about aging, health, and wellness to the utilization of time and human needs satisfaction and to replacing the fulfillment of work. Therefore, to ensure success, financial and pre-retirement programs should encompass a holistic approach that begins with life transition planning.
Education A Process – Not A One time Event
Life transition planning is an education process that responsible employers can provide for their employees to enable them to handle life’s major transitions such as:
- Buying a home
- Planning a family
- Changing careers
- Drafting a will and power of attorney
- Planning for retirement
- Creating an estate plan
However, life is not straight forward, and there can be many turning points such as:
- Separation and/or divorce
- Downsizing or early leave
- New career
- Bereavement/coping with loss
- Aging parents/eldercare
Employers can provide the financial and retirement education resources and learning tools. However, each employee has a responsibility to learn and apply the knowledge because, ultimately, it’s their retirement.
Unfortunately, many employees require a major change event in their lives in order for them to prioritize life transition planning.
Think about the process of preparing your employees for their journey into retirement. What type of questions would an independent educator ask to create the context to plan for one’s future?
- How many years before your planned retirement date?
- What mix of meaningful activities will you pursue?
- Do you plan to travel extensively during your retirement?
- Where do you plan to live in retirement?
- What is your anticipated life expectancy?
- Where will your major sources of retirement income come from?
- How much income will you need to fund your retirement?
Each of these questions are designed to lead from the ‘what’ and the ‘how’ to the ‘why’ of creating the context for planning.
The most successful professional educators have built their practices by focusing on creating the context from life transition planning. They know that all financial and retirement planning begins with life planning – an assessment of one’s dreams, goals, and values from which the context is created to plan for one’s future followed by the alignment of solutions to meet one’s needs.
When an employer decides to offer an education platform it is important to realize that employees learn differently and at their own pace; therefore, the provision of a variety of learning mediums is of the utmost importance (see Chart 1).
There are three major mediums that can be used to empower employees with their life transition planning: internet/e-learning; books and publications; and seminars and workshops.
Let’s begin by reviewing the value added benefits that each of the learning mediums provide for employees.
The fastest growing medium in the financial education field today is e-learning. It is the least expensive of all mediums and it is well-received by younger boomers who are more computer literate and comfortable with this medium.
Through a third-party provider, employers can lease or purchase complete and comprehensive e-learning financial education systems that will:
- Reduce employee training time and cut employer costs
- Provide education at work or at home 24/7/365
- Allow employees to share financial knowledge with other family members
- Enable employees to learn at their own pace
- Provide automatic upgrades and revisions
- Assign and track employee usage and accreditation
E-learning must meet several tests to ensure the information is accurate and credible. Some questions to consider include:
- Who created the educational content?
- What are the author’s credentials (experience, degrees, and designations)?
- Is the material objective, unbiased, and verifiable?
- Is the site independent or sponsored?
- Is the education material written for the layperson?
- Is the website well constructed and user friendly?
- Is the information updated frequently?
It is imperative that the website be designed with lots of features and interactive applications to ensure the user has a positive educational experience on each visit to the site. Some of the features to look for include:
- Interactive worksheets, checklists, and quizzes
- Informative charts, tables, graphs, and illustrations
- Topical case profiles
- Dictionary/glossary and sources of information
- Margin callouts
- Audio/video instructor clips
- Interactive exercises
- Multiple use interactive calculators
- Key points to test retention
- Lesson review and quizzes
- Curriculum certification
Books And Publications
This medium enables plan sponsors to provide financial education for all employees at a reasonable cost. Most often, older employees including boomers born in the late 1940s and 1950s, prefer this education medium. A book is tangible and a wellwritten book that covers financial, retirement, and life planning themes is often considered an heirloom.
Ideally, the book should offer the breadth and depth of knowledge required to achieve financial security, a balanced lifestyle, and a retirement with dignity. And the book should provide a roadmap for today’s employee to face tomorrow’s challenges with confidence. The book should be designed to create an educational experience – to provide knowledge, to change attitudes, and to provide the skills necessary to take control of ones finances.
Books are a practical alternative for companies to give to employees when they:
- include it as part of a new employee start-up kit
- use it as a recruitment or retention tool
- plan to change or supplement their pension plan
- add a new savings or group RSP
- include with their annual pension and benefits statement
- want to enhance employee morale
- want to reduce employee anxiety over personal financial affairs
Seminars And Workshops
During the mid-1990s, CAP group providers began to offer financial information seminars extensively to plan members, usually in bite size lunch and learn modules, 30 to 60 minutes in duration. This resulted in financial information being offered to hundreds of thousands of employees by many unskilled adjuncts and in that process the quality of the knowledge and presentation skills were watered down substantially.
The net result was that employee registration for financial information lunch and learn sessions dropped significantly during the last few years. As well, the prolonged bear market of the early 2000s coupled with the lack of good corporate governance and other improprieties – Enron, World- Com, Andersen Consulting, Martha Stewart, Parmalat, Hollinger, etc. – shattered employee trust. Plan sponsors have learned that there is a significant difference in the end result of their communication effort dependent on whether they offered abbreviated information sessions versus in-depth holistic education sessions.
Many plan sponsors have discovered that financial and pre-retirement education workshops delivered over one or two days by facilitators that use a holistic approach to empower plan members leads to a successful experience. Professional and skilled third-party facilitators pride themselves in delivering:
- Unbiased, factual independent education
- A motivational can-do theme
- A call to action
As well, the best facilitators are able to impact employees at three levels: increase their knowledge, change their behaviour, and add new skills. True professional facilitators deliver education workshops, often leaving the participant thirsting and craving even more knowledge.
The Learning Curve
Plan sponsors have a much better understanding of the role that education can play in life transition planning for their plan members. Many plan sponsors divide their education budget between low-cost first line of defence and higher-cost second line of defence education mediums to meet the needs of their plan members.
The first line of defence includes financial e-learning curriculum and books that enable employers to address their fiduciary and governance responsibilities by providing a low-cost first line of defence against potential litigation in the future. At a cost of just pennies per day, these education solutions produce one of the cheapest forms of insurance available for the plan sponsor.
The second line of defence includes seminars and interactive workshops which are the most effective communication medium to empower employees to take control of their life transition plans. Nothing beats live face-to-face interaction, notwithstanding the higher costs of offering this medium. Employers should note that workshops that have a retirement focus could be offered as a non-taxable benefit to employees and a deductible expense to the employer.
As a means of preparing for one’s transition into retirement, many employers are choosing to offer pre-retirement planning workshops for employees aged 45 and older. These programs are being offered by third-party fee for service education firms that do not sell financial products.
The CAP guidelines, with regard to the plan sponsor’s responsibility in providing education to employees, will certainly appease the regulators for any company that embraces proactive financial and preretirement education initiatives. When a plan sponsor provides financial education for plan members, it meets the needs of three major groups:
- Employees/Plan Members – provides a complete life transition management system
- Plan Sponsors/Employers – covers fiduciary and governance responsibilities
- Regulators/Public Policy Makers – meets compliance and education guidelines
There is an exponential return for employers that provide financial and preretirement education for employees as a continuing process and not a specific event, because learning happens most effectively over time. While a well-planned and coordinated introduction of a new pension plan, group RRSP, or savings plan is an important one-time event, ongoing employee financial education is critical. The reasons include:
- Employee’s situations change
- Significant numbers of new members are added to the plan
- The investment climate changes
- Tax laws and tax rates change
- People just forget
Employees will thank their employer for the education benefit provided in years to come when they initiate their life transition into retirement with financial dignity!
Graydon Watters is president of Financial Knowledge Inc.
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