CFP outlines why financial planning should be incorporated into workplace benefits, ultimately improving employee confidence and retirement readiness
Retirement planning is becoming a persistent challenge for both employers and employees, especially as future pensioners struggle to navigate their financial futures.
This could lead to some workplaces considering whether hiring a full-time Certified Financial Planner (CFP) might be a worthwhile investment. But is this the right solution or is there a more practical approach?
Scott Plaskett, CFP at IronSHIELD Financial Planning, believes the core issue is that workplace retirement plans currently operate in isolation.
“The challenge right now is when you've got somebody who's dealing with a group plan, the plan deals in a silo, and it really doesn't allow the employees’ unique family details to get brought into that conversation,” he said.
While Plaskett argues that bringing a financial planner into the workplace could help employees understand how their workplace benefits fit into their broader financial picture, should employers bring a financial planner onto their payroll full-time? He doesn’t see a strong enough case.
“The key is not adding to their payroll, because adding to their payroll means that you need to have demand for that particular role. I think there's more cost-effective ways of dealing with it,” he said.
One suggestion is that companies leverage third-party financial planning services through their benefits providers, ensuring employees have access to expert advice without the additional overhead.
Indeed, many companies already work with brokers to set up group benefits and retirement plans. These brokers act as intermediaries, helping businesses choose the right providers.
“It's that broker, that third party, who would do a market survey to find the supplier of the plan,” Plaskett said. In his view, financial planning services should be included as part of these benefits packages, available to employees when they need them most.
Despite financial planning services gaining traction, Plaskett doesn’t see it as a trend driven by employers. Instead, he believes benefits providers are leading the charge.
“It's not the companies that are saying, ‘Hey, we’d be better off if we could wrap a financial planner into this.’ I think what's happening is that the benefits companies are recognizing that they need to start adding more value,” he said.
As competition among benefits providers grows, they’re offering additional services, including financial planning, to make their packages more attractive to current and prospective employees.
But whether employees actually use these services, Plaskett noted many don’t take full advantage of their benefits because they often default to pre-set options.
“If you look at any group benefits plan, 90 per cent of the employees are at the default setting. They sign up for it, don’t really take the time to go through it, and just accept the default,” he said, emphasizing having access to financial planning could help employees optimize their plans and make more informed financial choices.
For companies without a formal retirement savings plan, the question they need to ask themselves is whether offering one could help with employee retention. Plaskett believes employers should view it as an investment rather than a cost.
“An employer who reaches out to establish a financial planning relationship that they can then provide to their employees really speaks volumes for the care that the employer has about the employees,” said Plaskett.
“They don't just see them as a necessary evil in order to get to the profits, they see it as a collaborative approach and they're putting their money where their mouth is so that that pays off handsomely,” he added.
Even if hiring a full-time financial planner isn’t feasible, there are other ways to integrate financial planning into workplace benefits. One option is a fractional or on-demand financial planner, one the employer can go to on a case-by-case individual basis.
“You bring the financial planner in for the fraction of time that you need it. You identify key points when an employee is going to want to have that conversation, maybe as they hit a certain age, and then make it almost mandatory that they actually sit down with a financial planner,” he said.
Plaskett ultimately sees financial planning as a tool for building employee confidence.
“People are looking for confidence and building that confidence in their future. How do they get that confidence? Through clarity, by getting an understanding about where they're at today,” he said. “A good financial planning solution provides them with the answers to that.”
Employers who provide financial planning services, whether through benefits providers or on an as-needed basis, can offer employees peace of mind, reduce financial stress, and potentially improve retention.
Additionally, companies who take a proactive approach to employee financial wellness could gain a competitive edge, emphasized Plaskett.
“Very few companies are showing this level of awareness for the needs of their employees. But for the ones who provide them with that freedom to have a private conversation with somebody who's going to listen and provide good feedback on what to do, the return is going to come through much lower employee turnover,” he said.
