Automation and artificial intelligence power an innovative platform that streamlines the fiscal process for both employers and employees. The technology bridges the distance between financial advice and employees—wherever they work.
Meghan M. Biro, analyst, brand strategist, podcaster and TalentCulture chief executive officer, thus describes how technology and the human touch can combine to serve workers today and in the future.
Even without a pandemic, the financial picture is foreboding. According to Biro, 55 percent of adults aren’t saving enough for retirement.
“What does this mean for their financial and mental well-being?” she asked. “How can employers help?”
Biro talked with Augie Smith, founder of Otherhood, which “provides financial advice that employees might not have access to.”
With the artificial intelligence assist, the company works with human resources to help employees save for healthcare, education and retirement.
“Money talks—especially in the middle of a pandemic,” Biro said. “So does security, safety and health. The key challenge for employers and HR professionals is living, working and surviving through and beyond these unstable times.
“Saving some—or more—money can help relieve some of the financial stress embedded in this uncertainty,” she said.
Otherhood’s technology takes advantage of artificial intelligence to make data-driven recommendations that support all employees.
“By looking at patterns of how other people have saved in the past, the system helps employees save the right amount of income in the future,” Smith said.
Broad dashboard for financial strategy
Among its features are a holistic view that lets employees see their savings all in one place, set personal saving goals and reach out to HR representatives for help. HR pros can review and strategize on employee participation rates across accounts.
“Prioritizing and making short-term decisions in conjunction with long-term goals is really tough to do,” Smith said, favoring a system that turns saving into a passive action. “Set up plans that set aside money for you.
“Saving pre-tax income will go a lot farther,” he said. “Money taken out of your paycheck before hitting your bank account can mean more savings in your pocket come retirement. The strategy works for all incomes and all ages.”
In general, organizations need better savings options for their employees.
In an age of worker mobility—some changing jobs as many as 10 times by age 40—employee defined-contribution plans represent one of the best hopes for retention. These provisions at least give companies a shot at creating and maintaining a quality workforce.
“The short answer is that long-term savings options have been shown to increase performance, decrease turnover and build trust between the organization and the employee,” Smith said. “Otherhood helps the employer by providing automated financial advisory to every employee at every level.
“The return on investment is immediate and long lasting,” he said. “It’s also a great way to retain top talent and grow your business.”
That should give most employees hope to retire one day.
“It is to retire—that’s true,” Smith said. “It’s also so they can pay for big life expenses like education and healthcare. The average person dips into retirement for those expenses instead of saving for them individually and long term.”
Shallow end of expertise
One problem is a company that suffers from lack of training and knowledge.
“Most organizations don’t have the financial expertise to give their employees the best advice,” Biro said. “Savings options depend on knowing what’s best for each individual.
“These days are tough enough for employees,” she said. “Many are under financial stress. Employers can help by prioritizing financial wellness. Employees not only need better savings choices than some employers may offer, they need more of them. That same 401k won’t work for everyone.”
Savings plan administrators must do a better job of promoting the benefits of setting aside money—especially early in careers—to take advantage of compounding investments until retirement. Increased participation gives managers greater flexibility in investments.
“In a pandemic-focused world, HR teams and benefits managers should focus on increasing education of their existing plans and expansion to new plans that better serve their employees,” Smith said. “This will increase participation in the plans, keep employees focused on their responsibilities and help them build a secure financial future.
“It’s one of the big reasons we founded Otherhood,” he said. “HR teams also need better tools to increase participation in existing pre-tax savings plans. It’s a win-win for the employer to help the employee save long term.”
Nothing set aside
This is especially challenging when many employees simply do not save at all, and do not have financial advisors to help them.
“We’re using 45-plus years of employment data to inform how much employees should save, based on their specific situation—income, age, expenses,” Smith said. “We’re not replacing financial advisors, but we should be able to help employees who need advice and don’t get it.”
The goal is to reduce barriers of entry to sound financial planning.
“Employee savings plans need to focus on optimizing pre-tax savings to build up the most they can—for health expenses, education and building a retirement,” Biro said.
“Relevancy is so key,” she said. “There are huge differences between the savings goals of young parents and older Gen X, for instance. We also need visibility, security, flexibility, and mobile and web access.”
Those who need help should not have to look outside their company.
“Employees need access to financial advisors—even in a big organization—who can help them focus on their long-term goals in the smartest way possible,” Biro said. “They need expertise.”
Human resources specialists need to be schooled in the details and benefits of employee savings plans. Saying, “We have a plan. Sign here or opt out,” won’t cut it. Ill-informed advisors do a disservice to new and veteran employees and their company in general.
“Provide employees with access to great tools and a platform so there’s maximum visibility,” Biro said. “Then provide the guidance to walk them through it. Knowledge is power.
“Artificial intelligence is radically modernizing how we do financial planning,” she said. “It’s going to give the employers who use AI a competitive edge when it comes to financial benefits.”
Measure and manage
The advantage comes when benefits systems are fully meshed into corporate services.
“HR needs savings planning and benefits management tools that can be integrated with their existing payroll and other functions,” Biro said. “That won’t make things more complicated. It makes life easier.”
Management consultant Peter Drucker said, “You can’t manage what you can’t measure.” The words resonate with Smith.
“Understanding the nuances of your workforce by actively helping employees to start saving is the priority,” he said.
“Once you have employees signed up, it’s about sticking to the plan,” Smith said. “This is where Otherhood comes in. We help HR teams design a savings plan for every employee regardless of income, role, title or demographics. It’s about leveling the playing field.”
