One of the most common questions we get when speaking to HR Directors is “Why do I need The Financial Gym when we can bring in our 401K provider to speak about financial literacy?”
This is valid, and it begs the question:
How financially literate are your employees?
The provider’s presentation on your 401k program may include discussion around:
The wide variety of mutual funds and ETFs available to help your employees gain maximum risk diversification
The magic of compound interest and importance of starting to save for retirement early in their careers
How to invest their money in the market in order to protect their assets from inflation
But according to the Standard & Poor’s Ratings Services Global Financial Literacy Survey, almost half of adults in the US don’t even know what those terms even mean. This means that there is a good chance that your millennial and Gen-Z workforce, maybe even your Gen X and Baby Boomer employees don’t even understand what a 401K is, how to distinguish between the available fund options, and how it relates to their overall financial situation.
Traditional financial services companies and their representatives generally operate under the assumption that everyone has the basics of managing personal finances under control. That means they can effectively manage a budget, avoid high-interest consumer debt, and maintain a healthy emergency fund. But the reality is that 40% of Americans can’t handle a $400 emergency without using a credit card.
The provider may speak about how someone who can start saving 3% of their paycheck at the beginning of their career could be a millionaire by the time they retire thanks to compound interest.
Let the stress sink in in the virtual conference room.
What about the person who can’t afford to save 3% of their paycheck right at the beginning of their career? They have student loans to pay off, credit card debt, half of their income is going to their rent. The list goes on.
The Financial Gym speaks to topics of financial literacy in a fun, approachable way that your employees can relate to. We create a safe space for employees to ask questions like “What are ‘the markets’? Is it a place I can go to?” without the fear of looking stupid. We also address the stress and anxiety that money matters often bring.
If employees understand the concept of what a 401K is and how it relates to their larger financial situation and savings goals, they will understand the provider’s presentation better. A better understanding also has the potential to increase the utilization and opt-in to your company’s specific 401K program.
The Financial Gym is a national, personal financial services company with a fitness-inspired approach. Certified Financial Trainers™ work with employees one-on-one via corporate partnerships virtually across the country. TFG also provides engaging webinars including Retirement Planning, Financial Goal Setting, and Understanding your Brokerage Statement.
The Difference Between The Financial Gym vs Your 401K Provider is written by The Financial Gym Team for financialgym.com