How Employees Really Learn and Your Retirement Plan

There is seemingly constant discussion, and much consternation, about the difference between how well people understand and prepare for their financial future (or their retirement) and how well they should understand and prepare. Most studies and reports indicate that many people aren’t saving enough, many others aren’t planning, and many others make mistakes.  How realistic is it for an employer to provide a good communication program for their employees and help them become better prepared for their future?

Certainly, there are employers who have done a better job than most of engaging their employees and providing meaningful guidance.  They have accomplished this with their own commitment to employee education or by using service providers that offer a thorough, innovative or persistent approach to engagement.  Typically, the most effective program is not a top down corporate communication plan but a bottom up approach that focuses more on the needs  of each employee.

Whether intentional or not, many successful programs include the components of what is known as Adult Learning.  This is the notion that working age adults learn differently than school age children and young adults.  When we are young, most of us are forced to learn in a school-like setting using conventional classroom methods.  However, when we are out on our own, this approach is less feasible, or less effective, for most adults.

The following concepts of adult learning impact how people learn about finances, saving, and planning:

  • People’s personal life experiences shape their attitudes about learning.   If someone inherits $10,000,000 they may not be interested in learning too much.  On the other hand, someone facing bankruptcy or difficult financial circumstances may be more interested in budgeting, for example.
  • People learn better when they participate in the process.  Adults like to have some control over how and what they learn.  
  • People want to know the implications of what they are learning – how does this affect me now?  This is critical. Most adults are not interested in theory – they are more interested in how financial matters impact their life.
  • People learn better incrementally.  Providing too much information in one setting can overwhelm employees and is counterproductive.
  • People want control over where they get their information and education.  The full range of available information options can work against employers trying to offer a workplace education program.
  • Using videos and visuals to explain financial concepts can be an effective alternative to traditional written materials.
  • Learning about the retirement plan should be voluntary – adults learn when they are ready.  Another critical aspect.  Many adults are frequently preoccupied with other life issues and need to be in a position to devote the time and energy necessary to be engaged in the process.

Be realistic about the effectiveness of your campaign.   Even the best programs will be limited by the general apathy of your employees.  But approaching employee education with an understanding of how your employees learn and process information will help you design a more effective, and typically less costly, campaign!  What has been your experience with an employee education program? Is there anything that you have seen that worked well for you personally or your organization?  How was the effectiveness of the campaign measured?

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