Four things belong in the program: what you teach, how you teach it, who does the teaching, and which participant numbers you check before and after.
Teach your own plan first. The match formula, vesting, and what a loan or an early withdrawal actually costs. Budgeting and debt come after that.
There is a line between education and advice. Four kinds of material sit on the education side. Anything else gets tested against the five-part test in the ERISA rules.
Handing out general education is not a fiduciary act. Choosing and monitoring who hands it out is. That is the part most committees never wrote down.
Here is the test: count how many employees are leaving match money on the table, then count again ninety days later.
It's easy to assume a financial education program is a calendar item, something the recordkeeper handles at open enrollment. In practice it's four decisions: the topics you teach, how you deliver them, who delivers them, and one participant number you check before the program and after.
Most programs have the first two. The last two rarely get made on purpose, and those are the ones a committee answers for.
Why This Is Worth Getting Right
Offering education is a choice. Once you make it, though, someone has to be selected to deliver it, and that selection is a fiduciary act. Running general education isn't. Choosing and monitoring who runs it is.
Neither side of that line is inherently safer. Plenty of plans deliberately want their advisor giving genuine fiduciary advice to participants, and that's a legitimate design. What matters is that the choice was made on purpose, rather than drifted into by a provider who believes they're only educating.
Prudence is judged on the process behind a decision, so what your record has to show is that the topics were chosen on purpose, the provider was compared against alternatives, and somebody read the material before it went out. Most committees have pieces of that and have never put them in one place. It rarely surfaces until someone asks.
If you want a structured way to see which of the four decisions your plan has actually made, the checklist below walks through it.
Financial Education
The Financial Education Program Checklist
A working checklist for recording the four decisions behind a participant education program, the topics you cover, how you deliver them, who delivers them, and the participant measure you will judge results against.
What Topics Should Employee Financial Education Cover?
Start with your own plan. That is the material some providers do not have, and a common source of participant confusion.
How the plan works. Enrollment, the deferral election, Roth versus pretax if you offer both, and how to change an election.
The match formula. The exact deferral rate needed to capture all of it, in dollars for a typical wage.
Vesting. What is already theirs, what is not, and what happens on termination.
The cost of taking money out early. What a loan or preretirement withdrawal does to retirement income.
General investment concepts. Risk and return, diversification, dollar cost averaging, compounded return, tax deferred investing, and inflation.
Broader money topics come next. Someone with credit card debt and nothing in savings isn't likely to raise their deferral rate, however well you explain the match. Budgeting and emergency savings content deals with what's actually in the way. Pick those topics from what your workforce tells you rather than off a vendor's menu.
What Is the Difference Between Financial Education and Financial Advice?
Education informs. Advice recommends.
Four kinds of material count as education regardless who hands it out or how often.
Plan information. The terms of the plan and how it operates, the benefits of participating and of contributing more, the effect of preretirement withdrawals on retirement income, and descriptions of the investment alternatives.
General financial and investment information.
Risk and return, diversification, dollar cost averaging, compounded return, tax deferred investing, historic differences in rates of return between asset classes measured against standard market indices, the effects of inflation, estimating future retirement income needs, determining investment time horizons, and assessing risk tolerance.
Asset allocation models. Portfolios for hypothetical people with different time horizons and risk profiles.
Interactive materials. Questionnaires, worksheets, software, and similar tools that let a participant estimate future retirement income needs and see how different allocations would affect that income.
The last two come with strings attached. A model has to:
be available to all participants
rest on generally accepted investment theory that accounts for historic returns of different asset classes over defined periods
carry the material facts and assumptions behind it
tell participants to consider assets they hold outside the plan
and, where it names a specific investment alternative the plan offers, say that other alternatives with similar risk and return characteristics may be available and where to find information on them
Interactive tools carry all of that, plus one more. What the tool spits out has to actually follow from what the participant typed in.
Anything outside those four categories gets judged against the five-part test in the regulations.
A provider is an investment advice fiduciary only where every part is true. It:
recommends securities or other property, or advises on their value
does so on a regular basis
under a mutual agreement or understanding
that the advice will be a primary basis for investment decisions
and that it will be individualized to the recipient's needs
All of that for a fee or other compensation.
Crossing into advice isn't prohibited. If all five parts are true, the provider is a fiduciary for that advice, and your job shifts from reviewing content to overseeing a fiduciary. Decide which side your program sits on before it launches, and write the answer down.
Who Should Deliver Your Financial Education Program?
Three realistic sources. The recordkeeper, whose education may already be included in the fee you pay. Your plan advisor, whose sessions can be built around your plan design. An independent provider, whose content reaches further into general household finance.
Any of them can be the right answer. The process behind the choice is not optional, because hiring a service provider is a fiduciary act even when the service itself is not. Ask several candidates the same questions and document why you picked the one you picked. That is the same discipline you apply to the ongoing oversight work you already expect from your advisor.
Four questions worth asking each candidate: how are you paid and by whom, will you make recommendations to individuals, what happens after the session, and what materials will you send us for review in advance.
Monitoring is the second half of the duty and the half that lapses. Review the content periodically for accuracy and for anything that reads as a product pitch, and note the review in the minutes. The same circumstances that should prompt a fresh look at any provider apply here.
How Do You Measure Whether a Financial Education Program Is Working?
Most committees find out whether the education worked by asking how the session went. That tells you almost nothing. The people who show up are usually the ones already paying attention, and the ones you were trying to reach didn't come.
You can do better than that, but only if you decide what you're looking for before the program runs. Once it's over, the picture you needed is gone.
So pick your numbers first. They're already sitting in your recordkeeper's standard reports, and you want the same pull twice, once before and once after, same group and same definitions both times.
Participation rate, for the group that got the education rather than the plan as a whole.
Average deferral rate, and separately the share of employees deferring below the full match threshold.
Loan and hardship activity, counts rather than dollars.
Use of the plan's calculators and modeling tools, if your recordkeeper reports it.
Attendance counts and satisfaction scores tell you the session happened. That's about all they tell you.
Three things decide whether that reading means anything.
Measure the group that got the education. If a session ran at one location or for one shift, compare that group against the rest of the plan over the same window. Two groups under the same plan design, in the same market, in the same quarter is the closest thing to a control you are going to get.
Match the number to the message. If the session was about capturing the full match, the number that should move is the share deferring below the match threshold. Overall participation may not move at all, and that is not a failure. Picking a measure the content never addressed is how a working program gets scrapped.
Write down what else changed in the window. Auto-enrollment, a match change, an auto-escalation feature, open enrollment, a layoff, or a bad quarter in the market all move these numbers, and any of them can swamp whatever a session did. If one of those landed in your window, the reading tells you little on its own, and the minutes should say so.
Timing matters too. Deferral elections show up within a payroll cycle or two, so a reading at roughly ninety days captures the immediate response. Loan and hardship activity moves slowly and needs a year. Reading a ninety-day number as though it were an annual trend is a common mistake.
You'll know it worked if the number you targeted moved in the group you taught, nothing else obvious explains it, and the questions reaching HR have changed.
If both readings come back flat and the same questions keep arriving, that's a result too, and a more useful one than it looks. It sends you to the real question. Did the content miss, did the delivery miss, or is the thing holding people back something the plan can't fix anyway.
Write down both numbers, the dates you took them, and anything else that changed in between. Nobody requires you to do this, and it won't prove the program caused the change. What it does is let you decide next year whether to renew this provider, switch, or drop the program, based on something other than how the last session felt.
Final Thoughts
Judge the program the way you judge any other service the plan buys. Content that covers your own plan and the money problems your workforce actually has, a provider chosen through a comparison you can show, and results measured against something you set in advance.
Whether that describes your plan is a different matter. Sessions keep showing up on the calendar, everyone assumes somebody set them up on purpose, and nobody checks. Education gets treated as a communications job. It's really a governance one. You can't make anyone raise a deferral rate, or show up at all. What you can do is make the decisions behind the program good ones, and keep some record that you made them.
If you'd rather have a second set of eyes on it, we can walk through your education program with your committee: what's being taught, who's teaching it, how that provider was selected and monitored, and where the materials sit relative to the line. Give us a call (206) 625-1800 or send us a message.
If you'd rather start on your own, start with the checklist. It puts the four decisions in order, with space to record what you have and what's missing.
No. Plans that want 404(c) protection do have to give participants enough information about the investment options to make an informed choice, but that means fund-level disclosure, not a financial education program. The DOL says so directly: meeting that condition does not require offering participants investment advice or investment education
Not the education itself. As long as the material stays inside the four categories, whoever delivers it isn't a fiduciary for doing so. Choosing them is a different question. Choosing that provider is a different question. Hiring a service provider is itself a fiduciary function, and selecting a provider of investment education is a fiduciary action carried out the same way. After the appointment, an employer should establish and follow a formal review process at reasonable intervals.
A written document recording the program's objectives, topics, provider, delivery cadence, and how results will be measured. No rule requires one. It works the way an investment policy statement does.
Financial wellness is the broader marketing term, usually covering budgeting, debt, emergency savings, and sometimes student loans. Financial education is the narrower one and is the term that carries meaning under ERISA, because it names the four categories of material that stay on the education side of the advice line. A wellness program can contain all four categories, plus a lot that has nothing to do with your plan. The distinction matters when you are deciding which parts of the program need the review this post describes and which are just benefits content.
U.S. Department of Labor, Employee Benefits Security Administration, Meeting Your Fiduciary Responsibilities:
Federal Register, Interpretive Bulletin 96-1, Participant Investment Education, 61 FR 29586 (codified at 29 CFR 2509.96-
29 CFR 2510.3-21(c), Definition of Fiduciary, restored five-part test for investment advice
Important Disclosures
Accuracy and currency. Figures and legal descriptions in this article were verified against their cited sources as of the publication date. Law, regulation, and industry data change, and this article is not updated as circumstances change. Confirm current requirements with qualified counsel before acting.
Educational purpose only. Provided by First Hill Trust Company for general informational and educational purposes only. It is not legal, tax, accounting, investment, or fiduciary advice, does not constitute a recommendation regarding any plan, investment, strategy, or course of action, and does not consider any recipient’s specific circumstances. Consult your own qualified advisors before acting.
No offer, agreement, or commitment. Nothing in this material constitutes an offer, solicitation, agreement, or commitment to provide any particular service or to assume any particular responsibility. Descriptions of what a trustee, administrator, adviser, committee, employer, or other party “may” or “can” do are illustrative of how such arrangements commonly work and do not describe the terms of any specific engagement. The actual services provided, the allocation of responsibilities, the scope of any delegation, and the duties of any party are governed solely by the applicable plan documents, trust agreement, advisory agreement, and written service agreements. In the event of any inconsistency, those documents control.
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