Novyy Buh Laurence D. Fink is worried about our retirement, and he believes that workplace financial education is a big part of the solution. Fink should know. He is chairman and CEO of the world’s largest asset manager, BlackRock, which manages nearly $5 trillion—much of it earmarked for retirement.
Fink has long championed long-term thinking, greater savings incentives and curbs on early withdrawals from retirement accounts as part of the solution to what is a global retirement savings crisis. In his most recent annual letter to the CEOs of America’s largest corporations, he calls on companies to beef up workplace financial education so that individuals better understand the steps they must take to reach financial security.
“Asset managers also have an important role in building financial literacy,” he writes. “But as an industry we have done a poor job to date. Now is the time to empower savers with new technologies and the education they need to make smart financial decisions.”
He calls retirement funding “a matter of shared economic security” and says that to help workers adjust “businesses need to hold themselves to a high standard” and act with conviction to give employees the tools they need. Companies must do their part to “developing a more secure retirement system” for all employees, Fink says. This includes deploying more assets to financial education and financial wellness programs so that workers know how to take advantage of the savings plans they are offered.
“The retirement crisis is not an intractable problem,” he writes. “We have a wealth of tools at our disposal: auto enrollment and auto escalation, pooled plans for small businesses, and potentially even a mandatory contribution model like Canada’s or Australia’s.”
Companies must embrace the responsibility to build financial literacy in their workforce, he writes. To a large degree, workers have been left to fend for themselves as employers have shifted from traditional pensions to 401(k) plans. This shift has introduced less financial security in family life and now contributes to greater financial anxiety, which translates into lost production at work. Programs that help workers better understand how to save and invest are thus good for employers too.