The Canadian Source Of Employee Pension Fund Investment And Benefits Plan Management


Financial Education In The Workplace


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Should your company be offering financial education to its employees?

Let's briefly look at various factors to help you decide.

In December 2011, A Better Quality of Life Financial Consulting surveyed 608 working Canadians between the ages of 21 and 60. The Financial Education in the Workplace survey found, among other things, that one in four employees are seriously distressed financially. Clearly half of them are somewhat to extremely stressed about their current financial situation.

Debt levels in Canada are at a whopping 150 per cent of annual income and when alerted to this fact, many Canadians have done nothing to change the situation. Two reasons for failing to act are a lack of knowledge about how to change and not understanding the implication of not changing.

Many employees and other Canadians still don't understand Registered Retirement Savings Plans (RRSPs) or the 'new' Tax-Free Savings Accounts (TFSAs) let alone their Defined Benefit, Defined Contribution, or Canada Pension Plan. Now the government wants to add yet another plan in late 2012 called the Pooled Retirement Pension Plan or PRPP. The interdependencies of these products and how to use them most effectively has become so complex that without accredited and experienced advice from a professional there is little hope of these programs achieving their intended goals.

In the survey, the simple yes or no question was asked: Do you want your employer to offer financial education programs? The answer was a resounding, YES! It showed 87 per cent do want financial education provided by the employer. But if it is offered, will the employees participate? Again the answer overwhelmingly came back, YES! Nearly nine out of 10 employees said they would participate.

According to Shepell fgi, an employee assistance program provider, 63 per cent of all finance-related calls to its service in 2010 were for assistance with personal debt and credit issues, up from 50 per cent of finance-related calls in 2009.

In my white paper, 'Increasing Profitability Through Financial Literacy,' I cite several studies over the last few years that have found that comprehensive financial education programs can help restore productivity and increase profitability. In an older 2009 survey by Desjardin Financial Security, 61 per cent of respondents cited money as their number one stressor. I can only assume that with the present world and financial market chaos this number is only increasing.

Stress has repeatedly been linked to poor health. The consequences are increases in cost to employers through health benefits, absenteeism, and declines in the quality of work. Increased stress causes irritability and anger which spills over into the workplace contributing to work conflict and lower organizational commitment.

In 2009, the Personal Finance Employee Education Foundation in the United States did a study that demonstrated the return on investment (ROI) for employers who offer a comprehensive financial education programs is three to one or more.1 This research showed that an employer can see a benefit of $450 per employee for even a slight improvement in personal finances.

The one observation that is rarely discussed is that a comprehensive financial education program can positively impact a company's bottom line; not just for a particular quarter or even a year, but for many years to come.

The expression a little bit of knowledge is a dangerous thing is never more true than when it is applied to personal finances. Occasional 'lunch and learns' and once-a-year benefit seminars tend to create more questions than they answer, potentially leading to liability due to the misinformation. Similar issues arise from isolated communications or reactive forms of financial education such as EAP services or websites that require the user to have the financial knowledge first.

Effective financial education programs are comprehensive, systematic, easy-to-use, multi-platform, and interactive. They also need to have strong senior executive support and good communication and direction from human resources and managers. Lastly, they need to be delivered by a third-party that is experienced and qualified.

A comprehensive program ensures that all employees have the opportunity to benefit equally. Many businesses provide pension and retirement education, but attendance is usually dominated by the 45+ age group. The reality is that the financial concerns of a 23-year-old are very different from a 50-year-old. Providing a program that encompasses all areas of personal finance ensures that all employees can benefit and likely see an improvement in their overall financial wellness of the entire company.

A financial education program offered systematically on a minimum monthly basis helps to increase employee engagement and reduce misunderstanding and miscommunication. This regular education, coupled with access to Certified Financial Planners to follow-up, will foster higher levels of satisfaction and increase financial wellness. The byproduct of this regular education format includes an increase in organizational commitment.

By using a multitude of learning formats consisting of workbooks, seminars/webinars, calculators ,and online tools backed by access to a Certified Financial Planner to respond to questions, employees can be engaged and coming back for more. Self-study, interactivity, and discovery methods offer the opportunity for individualized learning and a greater chance of financial wellness.

All of this is critical to delivering a successful financial education program but it can all be ruined quickly! When asked how important it is to have an accredited financial educator providing the education, 80 per cent said that it was very important to extremely important. Topping accreditation was experience with 86 per cent saying it was very important to extremely important that the person providing financial education have experience in providing financial planning advice.

All these pieces are good but without the endorsement from senior executive, supported by strong communication and commitment from HR and managers, employees may see financial education programs as just another thing they have to do and may reject the additional 'work.' By creating a culture of financial success and providing nominal positive incentives, companies can increase the levels of participation and assure a positive return on investment.

In summary, with the ever-increasing volatility in the markets and complexity of financial products, it is no wonder that more than half of us are seriously stressed about our finances. The demand for financial education in the workplace is overwhelming and when delivered properly will generate a tremendous return to the company's bottom line. With nearly all employees wanting to participate in a financial education program, companies will likely see an increase in productivity while enjoying a reduction in absenteeism and presenteeism as well as greater organizational commitment.


Frank Wiginton is the CEO of the Employee Financial Education Division and author of the book How to Eat an Elephant – One Day a Month to Financial Success. Obtain a copy of his book by visiting or visit to learn more about this topic.

1. Prawitz, A.D., Garman E.T., (2009) 'It's time to create a financially Literate Workforce to improve the bottom line.'

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