Financial Intel: Online or In Person?

Information on pretty much any question that pops to mind is always just a few clicks away, anytime, from anywhere—and that’s pretty darn cool, right? Nonetheless, you still want to see an actual doctor sometimes, right? The same can be said about financial advice. Though it is very handy to get some retirement savings pointers online, at our own convenience, receiving guidance from experienced professionals can make all the difference. Retirement plan sponsors are wise to ensure the plan offers both online and in-person financial educational service to employees. Read on for pointers from professionals. 

Depending On Finfluencers….

Observing that social media “finfluencers” are making financial education more accessible and engaging, the World Economic Forum points to a survey from the FINRA Investor Education Foundation which found, perhaps not surprisingly, that younger workers are most comfortable seeking financial advice online: 

• When making investment decisions, investors most often rely on research and tools provided by brokerage firms, business and finance articles, financial professionals, and friends, family or colleagues. 
• A majority of younger investors (60 percent) also use social media as a source of investment information, compared to 35 percent of those ages 35 to 54, and only 8 percent of those 55 and older. 
• YouTube is the most popular social media channel for investment information. 
• Over half of investors under 35 use YouTube (56 percent),and 41 percent use Reddit.

Unfortunately, as advisors at Adcock Financial Group remind us, not all the information employees are consuming online is accurate, “And while younger generations are the most likely to seek out this digital advice, they’re also the most vulnerable to its consequences”: 

Social media platforms and influencer content are not inherently bad, but they are unregulated. Anyone with a camera and confidence can offer “advice” without any credentials. This opens the door to the kind of misinformation that can lead employees to make costly mistakes…..While it’s easy and convenient to look online for financial advice, the information found may be incomplete, misleading, or inaccurate….When your employees receive and act on poor financial information, it can have a detrimental effect on financial wellness. Workers who are financially stressed may become less engaged and less productive – and that can hurt employers.

According to the World Economic Forum, in just the first six months of 2023, fraudulent scams, initiated on social media, resulted in losses of $2.7 billion—and 37% of those losses were incurred by investors still in their twenties. Though employers cannot stop employees from obtaining financial advice online, they can make a big difference by providing in-person financial education at work as part of the retirement plan: 

Partnering with a retirement plan advisor makes a real difference. Advisors can deliver robust financial education programs and fill education gaps with tailored, relatable content that can improve employee decision-making and overall financial wellness…. A licensed financial professional can engage employees through group meetings or one-on-one sessions. Either possibility will give employees opportunities to:

• Receive personalized financial education from a licensed professional
• Double-check the accuracy and applicability of advice they’ve found online
• Choose saving strategies that reflect their personal finances and goals
• Build financial confidence while improving their financial security

Underscoring that financial stress impacts employees and businesses, professionals at Voya Investment Management have found that employers who offer financial wellness programming improve employee retention, and recommend these five focus areas for programming:

1. Financial Decision-making
2. Retirement Education
3. Investment Education
4. Emergency Savings
5. Student Loan Payment Support

Erroneous Financial Advice? 

Retirement plan sponsors, even when outsourcing plan services, can be held personally accountable for mistakes and oversights that negatively impact participants. For example, erroneous guidance or improper investment options can result in allegations of a fiduciary breach against the plan sponsor. Perhaps nothing was even done wrong, but defense against an ERISA claim is an out-of-pocket plan sponsor cost that adds up very quickly at the rate of $600—-per hour. 

As a retirement plan sponsor, it’s best not to wait for a Department of Labor investigation, a participant complaint, or creative plaintiff attorney to expose an error. Colonial Surety Company makes it easy and affordable to secure your business, your plan, and your personal assets today. 

Remember, your required ERISA Bond protects the plan from acts of fraud or theft—-it does not protect you, the sponsor in the event innocent mistakes is made. Only fiduciary liability insurance does. Arm yourself with our convenient Fiduciary+Cyber Liability Insurance Package today and you’ll have: 

• Fiduciary Liability Insurance: Up to $1,000,000 in coverage for defense and penalties in the event you are accused of mistakes in carrying out your duties to the plan.
• Cyber Liability Insurance: $50,000 of coverage (included at no extra cost) to address the DOL’s strict standards for response and notification services following cybersecurity incidents. (Colonial Surety Company’s Cyber Liability Insurance explicitly covers both the retirement plan and this business.) 

Quote and Obtain Fiduciary+Cyber Liability Insurance Here

Why Colonial Surety Company?

• A-Rated Excellence: Rated “A” (Excellent) by A.M. Best.
• Legacy of Trust: Protecting business owners since 1930.
• National Reach: Fully licensed and Treasury-listed across all 50 U.S. states and territories.