Americans are notoriously ignorant about basic personal finance, and Arkansans are even less financially savvy than the national average, according to a nationwide study conducted by the FINRA Investor Education Foundation.
Numerous efforts are being made to introduce children to financial concepts in the classroom, but those projects do little to address the ignorance of adults who face a far more complicated financial landscape than the ones their parents and grandparents navigated. And while employers may recognize that their employees need more information to make better personal finance decisions, the leap from worrying about one’s employees to accepting the responsibility for educating them can be a big one.
“Employers are just trying to run their businesses, and they think they are doing good to offer a 401(k) plan,” said John Shrewsbury, managing principal of GenWealth Financial Advisors of Bryant.
Last month, GenWealth announced a series of free financial workshops to be held at the University of Arkansas Cooperative Extension Service building in Little Rock. Public interest, Shrewsbury said, had been disappointing. And while he would be happy to make the presentation directly to employee groups, “as far as I know, there aren’t any employers knocking on our doors.”
That may be at least partially because GenWealth does hope to identify paying clients through its workshops, a profit motive that could alienate some potential learners even if they could benefit without signing up for future services.
Most employers count on their 401(k) plan providers to do all the educating, but Shrewsbury said suspicion about the motives of even the employers is rife in the general population.
“You would be overwhelmed at the times we hear people say that [the employer] is making out on that 401(k) plan,” he said. And this is true of middle-class and even high-income employees, he said.
“It’s almost like they think [the employer is] skimming money off the top or something,” Shrewsbury said. “You have people who don’t even put enough in to get all the company match, and that absolutely drives me crazy. We’ve become so consumed with not being taken advantage of that we don’t do what we know we need to do.”
The Arkansas Securities Department created a retirement planning program specifically for state employees enrolling in the Arkansas Public Employees Retirement System, one of the larger state pension plans. It was so well received that the Arkansas State Employees Association asked for it at its annual workshop, said Larry Cathey, the ASD’s investor education coordinator.
That led the ASD to modify the program into a one-hour presentation for general audiences. In August, Securities Commissioner Heath Abshure announced that the department would present the program to any group in the state — businesses, organizations, churches or any other gathering — free.
As of last week, Cathey said no businesses had signed up for the presentation, which emphasizes the need for retirement planning. Neither had any municipalities, which have been offered the program for their employees.
“The whole crux of this is to start as soon as you can, and that you really need to know how much you are going to need” to have saved for retirement, he said. “The first problem is [workers] don’t think they need to spend any time trying to figure this out. The name of the program is ‘The Road to Retirement, Charted Course or Aimless Wander,’ and for most it is an aimless wander.”
Cathey is sympathetic to employers who “have to fight that fine line between productivity and providing employee benefits.” He suggested that a “lunch-and-learn” opportunity might be a convenient way to offer additional financial education.
Financial Education Resources
• Arkansas Securities Department
• Federal Reserve Bank of St. Louis
• Personal Finance Employee Education Foundation