Promoting Financial Wellness.

In this recession economy and out-of-control worker debt, many employers who don’t have automatic 401(k) enrollment have seen participation drop.

Here’s how one small business in Arizona cleverly tied 401(k) education to employees’ other financial concerns. Rather than simply holding its usual 401(k) open enrollment education meeting, it held a “financial wellness fair.”

Stressed 401(k) importance

How it worked -  on the same day the company’s 401(k) provider sent a plan rep to discuss the retirement plan, the company also arranged for a licensed financial planner to speak to workers.

The financial planner went first. She started the session by pointing out that she wasn’t affiliated in any way with the management of the 401(k) plan.

That was vital both for the company’s legal protection under ERISA and for building trust with workers. She then discussed why it’s vital for people  to participate in the 401(k) plan, and offered attendees budgeting tips and basic strategies for cutting their debt.

The financial planner’s talk cut to the heart of a few major issues that hurt both worker salary satisfaction and 401(k) participation. Numerous studies show that the No. 1 reason many individuals  avoid 401(k) participation is that they feel they can’t sacrifice any part of their entire paycheck and still survive financially.

The second part of the session was the standard 401(k) enrollment presentation from the vendor. End result -  Employees were more attentive and there was a noticeable uptick in both new 401(k) enrollments and salary contributions from already-enrolled workers.

The event was such a smash that the corporation plans to make the Financial Wellness Fair a regular part of 401(k) enrollment. While the financial planning advice is generic (the corporation may add third-party personal finance planning as a voluntary benefit in the future), it’s also timely.

The 401(k) signup appeal comes while the financial planning tips are still fresh in employees’ minds and they’re motivated to do something to help themselves.