Financial Finesse Releases Second Quarter Research on Employee Financial Issues for 2011

Study finds employees experiencing a “wake-up” call regarding their own retirement preparedness and beginning to take steps to address the problem

El Segundo, CA.— Financial Finesse, the leading provider of unbiased workplace financial education programs in the U.S., announced today the latest trends in employee financial issues in a quarterly report that is rapidly becoming a bellwether for economic and consumer financial trends, having correctly forecasted several key economic changes and consumer financial patterns over the last ten years.
The report, which tracks patterns in employees’ financial questions and self-reported priorities and challenges, underscored some key economic and financial trends that employees and their employers should be aware of as they navigate what continues to be a difficult economy, namely:

- Employees are sustaining, and in some cases building upon, improvements in their finances, a trend the company has seen since late 2009 when employees started to take more control of their finances in response to the recession. In the first two quarters of 2011:

• 71% of employees reported having a handle on their cash flow vs. 64% in 2010
• 88% reported paying bills on time, up from 82% in 2010
• 53% reported having an emergency fund in place vs. 48% in 2010
• 57% reported regularly paying off credit card balances, up from 51% in 2010

- Now that many employees have addressed their immediate financial concerns, they are also putting significantly more focus on their retirement planning, as well as other long-term, proactive financial planning issues. Nearly 60% of questions received by our financial planners were on long-term planning issues in Q2 versus 48% a year prior. Additionally, over 25% of employees’ questions were specifically about retirement planning, up from 20% in Q2 2010.

- That said, as employees are shifting their focus to retirement planning, they are realizing just how far behind they are. Only 14% of employees said they felt confident they were on track to replace at least 80% of their income in retirement despite the fact that employee participation in company-sponsored retirement plans increased six percentage points to 91%, up from 85% this time last year.

Financial Finesse believes the decline in the percentage of employees reporting they are prepared for retirement is actually a positive sign that we may be making some headway towards avoiding a nationwide retirement crisis because it’s the result of employees coming out of denial and taking the steps needed to fix the problem.

Liz Davidson, Founder and CEO of Financial Finesse, notes that “there’s an interesting phenomenon at play here. Employees are feeling less prepared, even though, in reality, most are doing better with their retirement planning according to research on average 401(k) balances, and our own research on the positive steps employees are taking to better save and invest for their retirement. We believe this is because many employees are getting a wake-up call as they look more closely into their retirement planning after ignoring it during the recession.” She then added, “a wake-up call is not necessarily a bad thing, particularly when the alarm clock should have gone off a long time ago.”

That said, Davidson warns that employees still have a long way to go and that most will have to continue to increase their savings and practice disciplined investing habits in order to be able to retire comfortably and on time. She cautions that this is only a start—an early good sign in a difficult economy, where the future is very uncertain with expectations of increased inflation, cuts in government and company benefits, and a real estate market that may take a while to recover.

Davidson also notes that retirement is a “completely different ball game” now, with employees required to take on more responsibility for funding their retirement and making investment decisions, and with employers under more pressure to find safe ways to get them the guidance they need to make the right decisions. She concludes that “the retirement crisis is still a nationwide problem for the country, a company-wide problem for employers, and a personal problem for millions of employees. The difference, for now at least, is that there is increased awareness among both employers and employees about the problem, and an increased focus on solving it.”

To download a copy of the report click here.

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Dperry@financialfinesse.com
(424) 218-7954

Financial Finesse is an unbiased financial education company providing personalized and
innovative financial education and counseling programs to over 500,000 employees at over 400
organizations. Financial Finesse partners with organizations to reach goals such as reducing
fiduciary liability, increasing plan participation, decreasing stress, and increasing productivity
through its unique approach to financial education. Financial Finesse does not sell products nor
manage assets. For more information, visit www.financialfinesse.com.

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