Description of the programme

The intervention consisted of a one-hour information session, during which participants were given a preview of - and invited to attend - a longer three-and-a-half hour 'financial awareness' workshop. No further details are given about the workshop.

These sessions were delivered to employees at one of the largest insurance companies in the United States, in offices across the nation. Employees surveyed were exclusively ‘white-collar’ and the full report provides a detailed breakdown of other attributes.

The study

The study identified the effects of employer-provided financial education on employee financial literacy; employee expectations for their future financial situations; and their satisfaction with the employer, examining the causal links between educational activities and their outcomes.

It builds on a review of other research in this area (details given in full report), by filling in identified gaps in knowledge about the impact of workplace financial education.

A self-completion questionnaire was mailed to 2,361 life insurance company employees in eight geographic regions of the USA. 1,519 completed questionnaires were returned, of which 1,486 were usable with half of employees (708) having participated in the half-day workshop.

The study defines financial literacy using multiple measures representing four areas of financial knowledge: knowledge about retirement needs, investing money, providing for the future and managing credit use. It tests seven different hypotheses relating to the impact of these knowledge areas on a range of factors such as improved financial literacy and its impact on workplace satisfaction and expectations for individuals' future financial situations.

What are the outcomes?

• specifically with respect to the following statements: I have a very clear idea of my financial requirements in retirement; I have a better understanding now of how to invest my money than I did six months ago; I feel more informed now about how to provide for my financial future than I did six months ago; I have a better understanding now of how to manage my credit use than I did six months ago.
• whether respondents expected their financial situation to get worse, better or stay the same.
• with respect to how employees rate the company (compared to other companies) and their support for the company.

Key findings

• Overall, the study supports the hypothesis that employer-provided education significantly stimulates financial literacy and, in turn, leads to expectations of a better future financial situation as well as greater satisfaction within the workplace.
• Participation in the educational session is a significant predictor of financial literacy in the four areas studied: individuals who participated in the educational session had higher scores on financial literacy measures compared with those who did not participate in the session.
• These four areas of financial literacy are significantly positively correlated with expectations for future financial situations and except for retirement, also with company rating and company support.
• Similarly, expectations for future financial situation are significantly positively correlated with company rating and support.
• Expectations for future financial situation are significant predictors of workplace satisfaction. Employees with expectations for a prospering financial future are also more likely to rate their company higher as a company to work for compared to other companies. Employees expecting their future financial situation to improve are also more likely to be supportive of the work of the organisation.
• The results also offer an explanation for how and why employee participation in educational sessions benefits the workplace.
• There are clear potential benefits to the employer, in the shape of positive and committed employees. The findings therefore have implications for the efficacy of strategies to build financially stronger and satisfied employees.

Points to consider

• • Survey respondents were self-selecting and might therefore have had a predisposition to be supportive of the objectives of the programme.
  • The findings show correlations, but cannot prove definitive impacts of attending a financial education workshop - for example, employees who attended the workshop may have been more financially literate to start with.
• • The programme was conducted in 2005 and individual financial circumstances, possible outcomes and the environmental conditions may have changed significantly.
  • The costs and benefits of the initiative were not examined.
• • Results may not be generalisable to other employment sectors: respondents to this survey were insurance company employees and may therefore be more financially aware than individuals employed in other sectors.
• • The conclusions may not have wider general applicability, given the elapsed time and the fact that the survey base was from a financial services company.