For a large amount of the world’s population, the COVID-19 pandemic has continued to have a significant impact on our day-to-day lives. We are just starting to understand the economic, societal, and medical impacts the coronavirus crisis created in 2020.
In the past 20 years, 9/11, the Great Recession, and now COVID-19 have changed the norms of how we live and behave both in the short-term and long-term. Although many companies have begun to go back to work, there will be permanent changes not only in how we work but also the benefits we receive through our employers.
Salary is usually the focus when it comes to your compensation, but that is not the entire employee compensation picture. According to the Bureau of Labor Statistics, in December 2019 total employee compensation in the U.S. averaged $34.72 per hour worked. Employee benefits accounted for about 30 percent of the total compensation, averaging $10.37 per hour.
The type of employee benefit and the ability to customize those benefits should be a priority when looking at career opportunities.
The ability to work flexible hours from essentially anywhere with WiFi has been very important in an environment where schools have been closed for months and society has been quarantined. Remote work had increased threefold from 1996 to 2016, according to the Society for Human Resource Management (SHRM), and you have recently seen some large tech companies like Twitter let its employees work from home indefinitely.
A recent Gallup poll found that 54 percent of office workers say they’d leave their job for one that offers flexible work time. And according to a recent IBM study, more than 75 percent of respondents indicated they’d like to continue to work remotely at least occasionally, while more than half wanted remote working to be their primary way of working.
“The flexibility to work remotely has, of course, been a major point of discussion among NexGen members,” said Jesse Lineberry, CFP®, account executive with New Planner Recruiting, which specializes in placing students or professionals within their first five years of experience with financial planning firms nationwide. “I think what we’ve seen in recent months is proof of concept.”
Employees are also looking for increased paid time-off (PTO) options in addition to volunteer time-off (VTO). Higher PTO days to start for new employees, the ability to roll days over each year, flexible holidays, and “unlimited” PTO are a 21st century time-off program. VTO allows employees to get paid days off to volunteer for a cause or non-profit of their choice and is separate from the PTO bucket. According to a 2018 SHRM report, one in four companies have a VTO policy.
Financial planning firms will continue to need to offer innovative solutions to employees to allow complete remote work opportunities, flexible working hours, and opportunities to have flex days in the office. A cultural shift of greater work-life balance and personal well-being in connection with a high level of adoption of work from home during quarantine will shift the workplace landscape as we know it.
Student Loan Repayment Plans
During the COVID-19 crisis, the Coronavirus Aid, Relief, and Economic Security (CARES) Act allowed certain types of federal loans to be placed into administrative forbearance, which allowed borrowers to stop making monthly payments and accrue no interest. This helped to highlight the burden that some individuals face when it comes to their debt. The CARES Act also allowed an employer to contribute up to $5,250 annually toward an employee’s student loans. The amount contributed would be excluded from the employee’s income.
The College Board reported in 2019 that college graduates have approximately $35,000 in loans, on average, when they graduate. The Congressional Budget Office estimates that $1.27 trillion in new federal student loans will be added between 2018 and 2028.
Student loan repayment plans, or SLRPs, allow employers to make monthly contributions directly to an employee’s student loans, which helps shave years and interest off the life of the loan. Most firms offer a certain dollar amount each month, like $50 or $100, and then have a certain lifetime maximum amount over a designated period; for example, $10,000 over five years or a $6,000 lifetime maximum.
Employees want a defined career track and a budget to further their knowledge and practical experience. Employees will typically feel more engaged when they believe their employer has a vested interest in their growth.
Outlining potential career paths for employees can help with morale and retention. Oftentimes as employees sharpen their skills and take on more responsibilities, they begin to either look up (promotions within the company) or they look out (outside opportunities). A defined career path with job duties, compensation, or a time frame sets the expectations early for career progression.
A budget to help obtain the CFP® certification and ongoing CE requirements is a standard for many firms, but employees want the ability to attend various conferences across the country to not only network with their peers but learn from nationally recognized experts. After the CFP® certification, many people want to go on to get a master’s in financial planning, a tax specialty like the CPA or the EA, or work to become an expert in student loan advisory services.
Understanding Your Own Benefits
Offering employee reimbursements and allowances is how smart companies are starting to engage and delight employees, while positively impacting business goals and outcomes. They provide well-being and freedom of choice to apply those dollars toward what an employee loves as an individual. An example is a plan that allows employees the flexibility to choose reimbursements for gym memberships, yoga studios, spin classes, or a wellness retreat.
When you’re offered a new job or are trying to compare your current benefits to the market, you need to make sure you look at the entire benefits package and weigh what will affect your life most. To understand your current total package competitiveness, you should compare your benefits against similar organizations in your financial planning “tribe.” “The Twelve Tribes of Financial Planning” episode on the You’re a Financial Planner…Now What? podcast has a great breakdown of the major differences in approach between various firms and covers some of the compensation packages.
Another great resource to understand career paths and their different compensation is reading CFP Board’s Financial Planning Career Paths: Building More Sustainable and Successful Businesses. This guide, according to CFP Board, “Offers guidance on best practices for establishing career paths that facilitate recruitment, onboarding, training, career development, and retention of financial planners and advisers.”
Recruiting firms like New Planner Recruiting can be a fantastic resource to have a better understanding of your compensation and how that compares to the industry. New Planner Recruiting’s Lineberry encourages candidates to use a cost of living calculator to take make sure they have proper context, in the event they are moving to a larger city. “In metropolitan areas that have a strong culture of financial planning excellence, competition seems to have pushed salaries upward at a faster rate than the rest of the country,” he said.
Joseph Stemmle, CFP®, is a financial planner with Ameriprise Financial and an adjunct instructor at the Virginia Commonwealth University School of Business. He serves as the 2020 FPA NexGen president-elect and as the 2020 president-elect for FPA of Central Virginia.
David G. Hampton is a benefits consultant with over 12 years of experience helping organizations align their health plans with their overall business goals. He is a graduate of The University of Texas at Austin and serves as the NexGen director and 2022 president-elect for FPA of Austin.