Helping employees preserve and build their personal finances can go a long way in a depressed economy.
A new portal developed by EMC and Fidelity Investments Consulting Services provides EMC employees a peek into their financial future. Its capabilities function much like a time machine, in which by altering various factors, like the amount they contribute to a 401(k) account or an HSA, employees can glimpse their potential retirement savings while minimizing taxes and maximizing their employer-provided benefits.
"The leverage of retirement income was far greater and was far more powerful if people optimized what was available to them rather than if EMC put a little more money into the plan," says Adam Stavisky, senior vice president, consulting services at Fidelity Investments Consulting Services, which launched the service, dubbed WealthLink, in August 2008.
On the secure Web site, employees can reallocate their compensation to show how much they could save for retirement by tinkering with percentages and time span of savings, or contributions to the employee stock purchase plan or any of EMC's other elective benefits. By manipulating the axis on the modeling module, a bar graph projecting annual retirement income changes accordingly.
The platform also places a strong emphasis on education. After completing a wealth assessment, the tool automatically grades the user as "on track" or "at risk" while offering up suggested actions. For example, if an employee has recently gone through a divorce, there is a tool designed to educate that worker on how to cope financially.
The optimizer tool shows how much an individual has invested in the employee stock purchase plan, deferred compensation retirement plan or 401(k) plan; whether they've put money into an HSA and how much; and any after-tax savings. It then calculates how much more money could be acquired from EMC and how much could be saved on taxes if the employee took full advantage of EMC's offerings.
There is also a total rewards statement. "If employees feel financially secure and feel that they have control over their wealth, you're going to have better-performing employees than if you have employees who don't know where they are going with their finances," says Ed Golitko, human resources director at EMC.
After one year, the 2,100 employees who use WealthLink on a regular basis increased their participation in an FSA by 3%, while FSA participation among non-users of the tool decreased by 17%. Also, participation in the employee stock purchase plan by non-users dropped 20%, while participation among WealthLink users only decreased by 5%. Non-users' participation in HSAs remained flat, as opposed to users, who increased participation by 40%. And the 401(k) plan's participation rate dropped by 7% among non-users, while participation rates remained flat for those who used the portal. "It helps you look at where you are now and pushes you in the right direction," says Chris O'Brien, a software quality engineer at EMC.
"It also has basic investment advice," he says. "I like having everything on one Web site - it means I don't have to dig around and go on external Web sites for information."
His only wish is that the site would automatically aggregate data outside EMC's domain (currently, the user has to enter that information manually), a capability that may appear in an updated version, says Stavisky.
The tool has modules, which can be teased out or reworked to fit any company niche, explains Stavisky. "It's about making [benefits] work better and helping employees get more out of them, and that's why this approach is catching on with more companies," he says.
There's been a shift over the last decade to transfer risk from the employer to the employee as we move from a pension environment to a defined contribution environment. "For benefit plans to support [the employer's] workforce objectives, they need people to use the plan and elect the plans as they were designed," he says. "People need better education and personal guidance to make those decisions."
