Financial Planning for Employees

Many executives receive, as part of their compensation package, financial planning to help with their personal estates. These perquisites (perks) came about as corporate boards of directors tried to find ways to attract much sought after personnel.

Corporations have also discovered that the benefits of professional financial counseling are of value to all levels of employees. This is not just another benefit but an integral part of management strategy that includes personal financial planning as a means of keeping an employee content.

The benefit of financial planning for non-executive employees is very popular as a corporate perquisite for ten major reasons:

Peace of Mind

Employees and spouses receive peace of mind from having all financial matters arranged and coordinated in one comprehensive package. This comfort zone encourages employees to devote total concentration to the corporation’s business.

Corporate Good Will

Added good will is established for the corporation willing to pay all or a major part of the fee for comprehensive financial planning as a benefit. The employee can concentrate on his or her work. The knowledge that the corporation takes care of its people is appreciated by the employee, spouse and family.

Reduced Time Spent by Internal Administrators

Corporate human resources and benefit plan administrators are plagued by numerous requests for clarification of their benefits from many personal advisors of their employees. Using a single financial advisor to coordinate all the financial plans eliminates much lost time.

For example, if each of ten employees called three different outside advisors - such as an attorney, accountant, insurance agent, real estate agent and maybe a securities broker - 25 to 30 separate telephone calls for benefit clarification might have to be dealt with internally.

With one financial planner for each employee, the number could be reduced to 10. The number could be reduced to one, if one financial advisor firm handled all of the employees and only one interpretation was needed for company benefits.

Employee Time Savings

Employees do not generally have counsel on whom to call for the interpretation of benefit options. They tend to spend a great deal of time “consulting” fellow employees. This is extremely wasteful of the employer’s time. It may also not be good for employee morale if mis-information is spread.

An outside, objective financial advisor is often a welcome resource. Once a trusting relationship is established, the financial advisor is frequently used for advice on personal circumstances.

Better Advice for the Employees

Most employees over age 45 have accumulated many different types of assets and some have complicated business affairs. When an employee consults separately with every professional advisor - attorney, accountant, and broker - the advice received is difficult to integrate unless a cooperative or team approach is used.

If these advisors are coordinated by a financial advisor or if they meet together to discuss the best interest of the client, the total plan becomes better than the sum of its parts. A financial advisor assures that all of the agents serving the employee have all the relevant information.

Reduced Corporate Liability

Corporations may avoid liability by having an objective, disinterested, third party provide the future projection analysis of corporate benefits. A future salary or benefit projection issued by the company, which fails to materialize, could open up a liability for failed “promise.” It is all too easy for employees to bring suit for benefits, which were incorrectly communicated.

Projection of future retirement benefits and insurance plan options are integral to effective financial planning, but should be prepared by outside consultants.

Additional Review of Corporate Benefits

Corporations can avoid possible liability by using outside professional advice to detect errors that might prove costly. An actual example involved a major hospital that printed employee benefit booklets showing Social Security benefits as one amount across the board for all employees regardless of their salary brackets. The financial advisor found the error in time.

Improved Employee Retention

Certainly, the benefit of financial counseling by itself will not retain a key employee. However, a heightened awareness of the value of the employee benefits, and the substantial rewards payable at retirement, will help retain a valued associate. Moreover, confidence in the value of staying with the same employer will make the worker less likely to spend time and attention talking with other companies or recruiters.

When recruiting a key person to join the organization, the offer of personal financial planning might be highly perceived, especially by an employee who has traveled a great deal and had his or her financial affairs in disarray.

Saving the Employee Money

How much more can you pay employees? It has been said “You can never pay an employee enough until he learns how to manage what he already earns!” Too many people spend too much, save too little and do not realize it until too late. Not only will employer sponsored financial planning cost less than when individual contact and employee benefit study is required, but it will increase the financial growth of each employee.

Maximizing the Money Already Being Spent

Corporations pay a great deal in both direct and indirect benefits for employees. In fact, in some cases benefits exceed direct compensation. If an employee or spouse does not fully understand or appreciate these benefits, the expenditures are wasted. It is logical to augment an extensive employee benefit package with the personal fine-tuning of financial planning.



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