Meet Your New Financial Adviser (Hint He’s Your Boss)

Companies are taking on the roll of personal financial adviser to their employees--and it just might work.

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In Istanbul last spring, officials at a Financial Literacy summit explained why the Turkish government was going all-in on financial education. The goal is to turn the city into a global financial center, and officials worry no bank will set up operations there if the labor base is financially inept.

So government is doing what it can to encourage K-12 personal finance instruction. Turkey is about to join two dozen other nations, including the U.S., with a formal national strategy for financial literacy. This is a global movement that has seen many bends in the road. In the U.S., for example, the focus seems to be turning to private employers.

That’s not to say the states and federal government are losing interest in K-12 economics instruction. Financial education remains a hot topic and new school-based programs and initiatives sprout daily. But in the states, enough questions as to how to go about teaching kids about money have been raised to spur action in other areas.

For their own reasons, private employers seem willing to pick up the torch—and their efforts seem to be effective. Perhaps like the Turkish government, companies see financial education as self-serving. After all, a workforce that is not preoccupied with money problems is bound to be more productive.

According to Financial Education and Literacy Advisers, which designs workplace programs: “American workers spend an average of 28 hours a month researching personal financial issues. This lost productivity across an organization can be translated into real dollars—as much as $5,000 per employee per year.”

So big employers are looking more like big personal finance advisers everyday. They are encouraging financial wellness through a variety of tools and resources. More than 75% of employers are likely to introduce or expand financial wellness programs this year, according to an Aon Hewitt survey.

Among the areas of financial support they are targeting: day-to-day budgeting (25%), online tools and apps to model savings and investing habits and goals (63%), 401(k) plan fees (33%), and personal, professional advice online (44%), over the phone (35%), and face to face (23%).

Much of the effort is taking place through 401(k) plans, which in addition to offering an advice component are adapting to the more general and critical nature of this saving and investing program. For example, employers increasingly are offering a basic brokerage account within their 401(k) plan, allowing participants to buy and sell individual stocks and securities outside the plan’s fund lineup. Such self-directed brokerage windows added 26% more assets and 18% more participants last year, according to Fidelity Investments. Other 401(k) trends, as reported by

  • Rising Roth Employers continue to add Roth 401(k) features as a way to help workers manage the uncertainty of future tax rates. Some 42% of 401(k) plans now have a Roth option, up from 21% in 2009.
  • Auto pilot Nearly one-quarter of 401(k) plans offer auto enrollment, up from 17% in 2009. Among large plans, 60% include this feature. Plans with auto enrollment have an 84% participation rate compared to just 53% for plans without auto enrollment.
  • Managed accounts Roughly a third of 401(k) plan participants have all of their savings in target-date fund, up from just 3% a decade ago. This is the most popular managed account, an option now in 1,800 plans compared to just 489 in 2009.

An employer focus on financial education is a welcome development. Many of the concerns about school-based financial education do not apply at the office. Those concerns include teaching kids who have nothing immediately at stake and who likely will forget any lessons by the time they can put the knowledge to work. Adults at the office can get what they need when they need it, and they have plenty at stake. So do employers, by the way. That’s why these efforts just might make a difference.