HR Solutions: Financial planning doesn't happen by accident

Many employees simply hope everything will work out for them with very little effort required. Older generations relied heavily on Social Security, and that may be what many members of the work force are depending on to pay for retirement.

Social Security, however, will be a waning opportunity for younger generations, and the sad reality is that most people are not saving enough for retirement. Everyone needs to be ready to take care of themselves, with good guidance and advice.

This is where financial planners step in, bringing value to workers in several ways beyond what a company’s human resources department can provide.

To shed more light on this, I talked with representatives of the local financial planning sector.

First, a financial planner is able to help staff understand the benefits and retirement savings plans offered through their employers. “More and more companies realize they don’t want the fiduciary responsibility of giving financial advice,” said Dwight Faye, associate financial adviser with Penney Murray & Associates. “The new tax laws governing retirement plans makes it more advantageous to use financial planners versus human resources (staff). Most human resources (professionals) are not licensed to give advice, but when they do, it makes them fiduciary-responsible.”

The advice that only a licensed financial planner should provide includes explaining investment choices. He or she is able to illuminate certain investments so team members become empowered to make informed decisions.

Organizations also can ask a financial planner to objectively look at the total financial and benefits picture, since it affects associates’ future and financial plans.

“Some (employees don’t) understand what benefits are offered, like a disability package,” Faye added. “Since they don’t understand it, they don’t sign up for it. Then, they become injured. It is not a good scenario.”

Second, a financial planner will try to point workers in the right direction to plan for their futures. “The chance of people reaching their financial goals significantly increases if they actively seek out a partner,” said Kelly Danielson, CPA and partner with Hlavacek, Morris, McIntyre, Yates & Danielson PC. A good financial planner will sit down with employees and talk with them about their goals to find out what matters most and how they see their retirement. “It can be a very beneficial tool. Sometimes people do nothing or have no clear plan,” Danielson added. “It is hard when you get to the end and hear, ‘If you had saved $2,000 more a year, you wouldn’t have outlived your income.’”

Realism is important, such as the fact that medical costs will increase and inflation must be considered. Of course, once a financial plan is put together, it can change as the years go by. “The numbers are very eye opening,” Danielson added. “A financial planner can get people more disciplined with savings. That’s the crux of it.”

Third, a financial planner will provide advice and not allow employees to rely totally on their employers or the government for future finances. Employees must take care of their own needs.

Traditionally, the objectives will be retirement, wealth management, leaving a legacy for heirs and planning for a child’s college education. Businesses should partner with a financial planner to create a plan for both the organization and the team members.

Lynne Haggerman, M.S., is president/owner of Lynne Haggerman & Associates LLC, a Springfield firm specializing in management training, retained search, outplacement and human resource consulting. She can be reached at lynne@lynnehaggerman.com.