In The Worksite

Do Your Employee Benefits Benefit Your Employees?

For financial planners, the mantra is ‘know your client’; For employers, the mantra should be ‘know your employees’

by Herbert K. Daroff, J.D., CFP, AEP

Mr. Daroff is affiliated with Baystate Financial Planning in Boston, Ma., and is a contributing editor to this magazine. Connect with him by e-mail:

I have heard estimates that the cost of providing employee benefits ranges from 60% to 80% of payroll. That is, if your payroll is $1,000,000 then you likely spend another $600,000 to $800,000 on employee benefits. When’s the last time you asked your employees what they think of the benefits you provide? Think about benefits in four (4) categories: (See chart below). What do your youngest employees really want? Help pay off their student loans. Give them paid time off to for volunteering.

What does a 35-year old think when you tell them that they will have more money at retirement age 65? Sixty-five seems like an eternity away. What if, instead, you told them that once they work for you 10-years, you will help them pay for their children’s (or for older longer service employees, their grandchildren’s) college education and/or help pay off their loans?

Incentive To Stay vs. Penalty For Leaving

We like to design benefits that give employees an incentive to stay, not a penalty for leaving. What if you turned your 401(k) participant meetings into financial planning seminars? How much productivity time is lost while employees are worried about their own finances, their aging parents, their children, and other family members?

I heard about a survey conducted regarding rewards for a job well done. Which would you prefer?
a. $30 cash
b. A letter of praise or commendation certificate
c. Pizza
d. Nothing at all

Pizza was the winner. A local radio commentator could not understand why. You could buy lots of pizzas for $30. What he did not understand was that the pizza party was at work and only those to be rewarded were invited. The recognition was in front of everyone else who was not invited. The hope is that all of those not invited think, “next month, maybe I can get invited to the pizza party.” It’s the recognition by your peers that is more valuable than the $30, or the pizza.

Some rewards backfire. A large, well known company gave huge bonuses to a design group because of an exceptional new product launch. The entire team took the next several months off. The company lost their best team for an extended period of time.

Earning Loyalty

Which employee benefits have been the most rewarding for me? My law school tuition was paid for provided I attended school at night and worked for them during the day. They also paid to move me and my family from Philadelphia to the Boston area to take a new position with them. I stayed with them for 20-years, through a number of transitions and a fair amount of business turmoil. They earned my loyalty. I have now been with my current firm for 21 years. They, too, have earned my loyalty though individual benefits tailored to my needs.

For most of the readers, I suspect that your business owner clients are small firms, likely with fewer than 100 employees

For most of the readers, I suspect that your business owner clients are small firms, likely with fewer than 100 employees. You can provide individualized specific benefits, in addition to vacation, health insurance, and a retirement plan. For financial planners, the mantra is, “know your client.” For employers, the mantra should be, “know your employees.” Not just the management team. Which employees love which sports? What is their favorite team? Which ones prefer opera, or classical music, or Shakespeare? What are their musical tastes? Which ones have children who are exceptionally talented, or exceptionally challenged?

One client, years ago, used to give out cash bonuses at the end of the year and throw a holiday party for the employees and their significant others. He constantly overheard the significant others remark that the employees never got bonuses. He realized that many of his employees didn’t tell their families. So, the following year, he sent holiday dinners home to each employee. He got a great deal of grief from his employees, many of whom used last year’s bonus to buy gifts for family members. He spent the following year listening. At the holiday party, before the holidays, he had a wall full of balloons with cash in them.

One by one, each employee was given the chance to throw a dart at the balloons and keep whatever cash they received. Everyone loved it. What did he hear when he listened? His employees loved to buy lottery tickets, and play Bingo. And, yes, for the accountants who are reading this, someone kept track of how much each employee received and it was added to their W-2. By the way, he spent less on the filled balloons that he did on bonuses or dinners.

You Have To Listen To Your Employees

I know a financial services business whose managing partner bids at charity auctions. When he bought basketball practice time on the parquet floor in Boston, he knew which employees and which employee’s children to invite. When he bought baseball practice time, again, he knew which employees and which of their children would appreciate that the most. Not only did he provide benefits to the beneficiaries of the charities, but he also provided benefits for his own employees.
As businesses get larger and larger, they do not need to lose their connection to individual employees. You just need to have a next level of managers understand the importance of knowing their clients, the employees. ◊








   Base plus Bonus


   Qualified Plans

    ETFs and Indices

    Roth Alternatives

     Non-Qualified (NQ)


Flexible Time

   Work from home

Four-day work week

Commuting and Transportation

     Charlie Card

Taxi direct billing

Parking Assistance

Event Tickets

Sports and Entertainment

Season Tickets

Fitness Center

Health – for employee & family




     Options:  Qualified and NQ

     Stock Purchase Plans

     Phantom Equity


Paid Time Off

Vacation and Sick Leave


Floating Days

your birthday

your choice

Marathon Monday

Day Care

For children and parents

Personal Financial Planning

Tax Prep

using corp CPA

Legal Work

using corp Atty

Estate Planning

   Purchase and Sale

Life: Basic and Carveout

Disability: Basic and Carveout

  short and long term

Long Term Custodial Care


For employees and family

  In-house seminars

Outside continuing ed.

Paid Maternity and Paternity Leave

Paid time to assist parents

CPR Training,

including the use of a

portable defibrillator

Self-defense training

Subsidized food service

Property & Casualty

Auto and Home

Liability Umbrella