When employers add personalized services such as telephone counseling to their financial-education programs, employees seem to do better at managing their money, according to a new study by Ernst & Young and ExecuNet.
Specifically, fewer employees take loans from their 401(k)s, more employees change their allocations, and more employees participate in 401(k)s. Employees also contribute more to their retirement plans.
More than 47 percent of employers that provide telephone counseling as part of their financial-education programs found that 401(k) participation rates went up more than 5 percent.
Corporations provide financial-education programs for several reasons: to improve employee satisfaction, to help employees manage their retirement assets and to improve their firms’ image among potential job candidates.
Another reason employers set up retirement-education programs: liability issues. According to Ernst & Young, "those that do not have these programs cite their concern over exposing their companies to liability. On the opposite end of the spectrum, many of those that have instituted education programs have done so in order to limit their potential fiduciary liability as a plan sponsor."
This irony, Ernst & Young says, may demonstrate that federal laws have left employers confused about what will and won’t get them into hot water.