In 2016, the Federal Reserve Board uncovered a disturbing trend in the U.S.: When hit with an unexpected expense of $400, most people can’t cover the cost without resorting to borrowing.
It’s a state of being known as “financial precarity,” and in an article this year in the Stanford Social Review, researchers decided to dig into whether it was strictly a personal issue or one that would have repercussions on the job.
To do that, they surveyed 1,000 short-haul truck drivers about their financial situations and concerns, and then monitored accident logs for the following eight months. They found that drivers who were worried about their finances were more likely to have preventable accidents — a phenomenon costing their companies at least $1.3 million per year.
That’s why more and more companies are investing in benefits that address financial planning and wealth management head on. But, as Todd Feintuch and Ray Zick of the Wealth Management division of Seacoast Bank have witnessed firsthand, sometimes that investment alone isn’t enough.
Companies may give employees access to a 401k with an employer match, for instance, but that’s no guarantee it will be universally maxed out.
“If employees aren’t taken by the hand and led to it, they might not know it’s there, and that happens all the time with big plans,” said Zick, Vice President, Wealth Planner and Qualified Plan Strategist at Seacoast. “If the employee doesn’t understand how the plan works, they’ll never get to step two, which is taking action.”
"IF THE EMPLOYEE DIDN’T HAVE A POOL OF FUNDS BUILDING UP FOR HIM BEHIND THE SCENES, THAT COMPANY WOULD HAVE LOST THAT EMPLOYEE."
In those cases, employees aren’t maximizing the benefits they have, and employers aren’t getting the most bang for their buck, said Feintuch, Executive Vice President of Wealth Management at Seacoast.
“Employers provide benefits for the well-being and satisfaction of the employees, which creates employee retention and a positive connection to their employer. If those employees don’t really understand the benefits, then you’re not getting the value of what you’re trying to accomplish,” Feintuch said.
That value can take shape in very tangible ways, Zick explained.
Zick worked with one employer, for instance, who instituted an auto-enrollment program for its 401k plan — essentially requiring employees to opt out of investing rather than to opt in. Without even realizing it, employees were building up a pool of money that they could save for retirement — or tap in case of emergency.
That’s exactly what happened with one employee who discovered one of his children was struggling with substance abuse. The employee didn’t think he could afford to outsource the care and intervention his child needed. He thought he would have to retire and shoulder the care himself — until he realized how much money his company had helped him save, Zick said.
“If the employee didn’t have a pool of funds building up for him behind the scenes, that company would have lost that employee,” he recalled.
That story is a testament to the need for action over information. “Generally speaking, emails and conference calls don’t work when it comes to educating people about their benefits. If they’re not already informed, then they need a little more hand-holding,” he explained.
In the world of benefits, an action-oriented plan can take the form of an auto-enrollment program, which combats employees’ financial inertia head-on, Zick said. Even more powerful is structured and targeted educational outreach presented by a financial expert and designed to outline clear steps forward, rather than offering a broad, boring overview.
“We’ve got a full-employment economy. Employees can flee from you for better benefits, better pay, better circumstances, so top of mind for every employer should be: What is my benefits package? And who is helping me define and express this package to my employees?” he said.
Seacoast Bank is one of the largest community banks headquartered in Florida with approximately $6.7 billion in assets and $5.2 billion in deposits. The bank provides integrated financial services including commercial and retail banking, wealth management, and mortgage services to customers through advanced banking solutions.
Mary Johnson is a freelance writer for The Business Journals Content Studio.