Payroll is an important part of any business, but it can also serve as an important way to help millennials understand their broader finances. Every employee receives a paycheck, a manifestation of their work and a symbol of their growing financial standing. In reality, it’s more than just a check: A paycheck can serve as a catalyst for your clients to begin meaningful conversations with their employees about financial wellness and their overall role within the company.
Millennials are coming into financial responsibility at an interesting time. The workforce is evolving and today’s employees move more frequently between jobs than older generations. Yet, a majority of Millennials lack confidence that their finances are preparing them for the future. According to PwC’s “Millennials & Financial Literacy — The Struggle with Personal Finance,” only 24% of respondents demonstrate basic financial knowledge, and only 27% of millennials are seeking professional financial advice on saving and investments. Not only does this generation largely misunderstand sound financial planning practices, they are not seeking the guidance they need to improve.
Also see: “10 worst states for student loan debt.”
Employee benefit advisers have the opportunity to help clients bridge that gap. Payroll is a business imperative that involves every employee although few understand it in its entirety. By encouraging clients to position payroll as a component of a broader narrative, advisers can help business owners boost their employees’ understanding of overall financial wellness and the company’s business.
Start the conversation
Here are three ways to help clients start that conversation in their small businesses:
1) Use initial tax forms to set an early foundation of financial literacy. The millennials your clients hire for introductory positions have a whole host of skills that can help companies adapt to the changing business landscape (e.g., digital aptitude, entrepreneurial spirit), but many may not yet have an overall understanding of the business world. They will learn new skills through their experiences, and this includes financial basics. Early on, there are many opportunities to discuss payroll that can help improve their financial literacy as their careers develop. Encourage clients to use these opportunities to discuss how millennials will be paid and provide foundational financial knowledge to build upon as they grow in their careers.
2) Build an understanding of operations by being honest about how payroll is part of the overall business. Almost 95% of employees receive their pay through direct deposit, according to the American Payroll Association. For many, their paycheck is simply a number on their bank statement, but smart business owners know how that number feeds into an overall business plan. Once your clients have an open dialogue with their employees, they can discuss how payroll is an integral part of the business. It will deepen their understanding of the issues your clients face and may improve their desire to be more involved in their own finances.
3) Provide opportunities to discuss how payroll ties into broader benefits. Millennials increasingly think of their financial well-being as part of a broader suite of benefits, so be sure your clients discuss financial wellness in relation to other benefits, like healthcare and retirement. Showing the relationship between financial wellness and overall wellness can help employees understand how important their payroll and personal finances are to their professional lives.
Also see: “10 states with the least student loan debt.”
By offering advice to your clients, you acknowledge that you are a helpful resource for your clients as they navigate employee engagement. Your clients stand to improve their employees’ understanding of a complex and sometimes daunting issue, but by engaging their young employees around financial wellness, their businesses will benefit. Financial stresses often translate into workplace issues or absenteeism, so being proactive about financial wellness can help your clients cultivate a steady workforce. As millennials look to rise through the ranks, they will bring this knowledge with them and have it on-hand as their professional lives develop.
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