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More Companies Offering Employees Education in Money Management

June 07, 1998|STEVE GINSBERG | Steve Ginsberg writes for the Washington Post

Course: Finance 101, taught by Mobil Corp. Open to all employees.

That's right, the Fairfax, Va.-based oil company is teaching people about financial planning. Mobil offers three financial management programs to its workers: basic money management, a full-day seminar during regular working hours at a cost of $25 per employee; savings investing, a free two-hour seminar; and pre-retirement investing, a free two-day workshop for employees over 50.

"We have a dual motivation" to offer financial planning, said Chris O'Flinn, manager of global benefits for the company. "We don't want employees to come to work with financial problems that good planning could have avoided, and good financial planning leads to nice things like houses, cars and college education. We want our employees to have those things."

In addition to relieving workers of money management migraines, several other factors are driving an increasing number of companies to teach their workers how to budget their dollars, workplace experts say. Most financial education efforts concentrate on retirement options, experts say, but many also are delving into the realm of estate planning, car or home financing, and even credit card debt. To keep workers' wallets fat, companies are educating employees through seminars, workshops, phone hotlines, one-on-one counseling and software packages.

"This is one of the most happening things in the workplace," said Tom Garman, a Virginia Tech economics professor who has done extensive research on corporate financial planning programs. "The smart companies are moving beyond retirement education; they're teaching about budgeting and credit management."

Still, the overriding concern for employers is retirement packages, such as 401(k) plans. At present, many of these plans are growing at a record pace and many employees are enjoying financial windfalls. But employers worry that if the stock market turns sour, workers and retirees' attitudes will change and they will blame their employers for their diminished returns, experts say.

"When the stock market drops, retirees will jump all over employers" and a rash of lawsuits will follow, Garman said.

That's one reason employers are offering financial education to their workers.

"Litigation is in the back of everyone's mind," said Bill Arnone, national director of employee financial education for the accounting firm Ernst & Young. "Companies can't guarantee results, so they're providing tools so their employees can meet the challenge of fiduciary responsibility." These tools also help insulate companies from potential lawsuits, he said.

Productivity is also on employers' minds. Many workers are worried about money problems, and when those worries spill over into the office, the employees accomplish less.

"Our research shows that financial wellness is totally related to important factors of productivity," Virginia Tech's Garman said. "Absenteeism, performance ratings, work time spent calling creditors and such--it adds up to very serious numbers."

Garman estimates that 45% of workers have money troubles and that a third of those have serious financial problems.

"This becomes horribly expensive for employers," Garman said. "But if companies spend money on financial education that improves workers' behavior and wellness, [my research] has shown that they save $400 per employee per year."

In today's tight labor market, recruitment and retention of workers also are major goals of companies offering these and other nontraditional benefits, Ernst & Young's Arnone said. "Employers need these programs," he said, "to retain the talent they have and attract more talent."

Recruitment and retention are among many reasons pharmaceutical company Merck & Co., based in Whitehouse Station, N.J., extends financial planning classes to its employees, said Wendy Miller, senior director of benefit planning and research.

"Basically we're trying to offer a broad range of flexible benefits," Miller said. "With a diverse population, [financial planning] appealed to everyone across all demographics. It's been a very popular benefit."

At the company, this assistance comes in the form of individual counseling with financial experts, telephone help lines, seminars and software packages. Many of these programs cost money, though the scale of the programs allows companies to negotiate reduced rates with instructors, Miller said.

Miller estimates that about 1,000 of Merck's approximately 17,000 employees have taken advantage of the financial assistance.

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Steve Ginsberg writes for the Washington Post.

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