Studies show that only one in three millennials is investing in the stock market. Ally Financial cited that 66 percent of people aged 18 to 29 find the stock market scary or intimidating. Unfortunately, that fear could have major implications toward their retirement.
The oldest millennials, or Generation Y, were in their late 20s at the time of the latest recession. They saw their parents affected by the plummeting stock market or struggled themselves to find adequate employment while tackling student debt.
With that said, your company’s ESPP could be a tool millennials need to catapult them toward greater financial security. Furthermore, providing education about the importance of long-term investing, and how your ESPP fits into that puzzle, could have a positive impact to your company.
Bolster ESPP participation: Start before Day One
Don’t resort to simply sending an email before the enrollment period or just once a year to recruit participants, but create a meaningful campaign around it.
“The best way to increase ESPP participation is to be communicating to employees year-round about its value,” said Linda Reiling, Vice President and Investment Plan Product Manager, EQ. “It’s especially important to take the time to educate employees who are new to either the workforce or your organization.”
Some ideas to engage millennials in your ESPP:
- Partner with a financial advisor to host webinars or lunch and learns on the importance of investing.
- Engage your ESPP provider to educate employees specifically on your unique offering and why it’s an important component of their benefit package.
- Feature Gen Y-er testimonials who are plan participants, sharing their experience with your stock plan.
- Create short tutorial videos covering a range of “Investing 101” topics, including explanations of your plan’s lookback provision, stock match or purchase discount features.
Use ESPPs as an attractive recruiting tool
Don’t assume that your ESPP offering, or long-term investing in general, is easy to understand or common practice. Bankrate.com found that just 33 percent of millennials own stock compared to 51 percent of their generational predecessors, Generation X.
This is an outstanding opportunity to provide life-changing education to new talent that additionally bolsters involvement in your company’s plan. A 2017 NASPP/Deloitte Survey found that 62 percent of respondents had ESPP participation less than 40 percent (for qualified plans, and lower for nonqualified plans.) Millennial involvement or not, there is room for greater participation across the board.
A Harris Poll for the Transamerica Center for Retirement Studies found that 71 percent of millennials are saving for retirement, starting around the age of 24. To that, take time to highlight how your employee stock plan is complementary to retirement savings. While they seem similar, ESPPs provide a more diverse, liquid savings options. Providing context around the long-term value of your ESPP could be the deciding factor for a recruit who’s weighing multiple employment opportunities.
Make sure that your ESPP is presented alongside benefits like medical and dental insurance and 401k.
ESPPs increase employee engagement and retention
The National Bureau of Economic Research found that ESPP participation – as well as stock options, employee stock ownership plans and cash incentives – positively impact employee loyalty and motivation. This is a clear win for both company culture and employees. ESPPs can help retain top talent, turning employees into shareowners who have a vested interest in organizational performance.
“Offering an ESPP really demonstrates a company’s investment and pride in its employees,” said Reiling. “Make sure you’re spotlighting it to the generation that will benefit from the education you provide for the rest of their careers.”