Financial Fluency

By Kathryn Tyler Jul 1, 2006

HR Magazine, July 2006 Some employers are providing banking, health care and retirement education in Spanish to make their Hispanic workers savvier about money matters.

Oscar Destruge Sandoval had worked for Diversified Investment Advisors, a retirement investment company headquartered in Purchase, N.Y., for 17 years when his father retired from his job working on a loading dock. “When he came here from Ecuador at 35 years old, he intended to stay only a few years and then go home. He knew enough English to do his job, but not enough to [understand] the retirement plan. He received materials, but he never joined his company’s retirement plan,” Sandoval says.

When his father retired in 1991, he had no pension, and Social Security barely covered his rent. He no longer wanted to go back to South America, but he felt financially obligated to return. The younger Sandoval now wishes that he had done more to help his father learn to manage his money better. “I felt guilty being in the industry and never once talking about his retirement. Personal finance is one of those things Hispanics don’t talk about. Now he lives in South America, and I see him for only two weeks a year,” he says.

As a result, Sandoval made it his personal mission to educate fellow Hispanics about their retirement options. He wrote a proposal to create retirement literature and programs in Spanish and pitched it to the Diversified executives. They agreed, and Sandoval is now vice president of Spanish services. “For me, it is a passion. I don’t want anybody to get to retirement having not made a conscious choice” about retirement investments, says Sandoval.

He drives home the point to HR professionals as well: “The smallest decision as to how to communicate your HR policies [to Spanish-speaking employees] can make a huge impact.”

By providing financial education in Spanish, you can dramatically increase participation in your company’s retirement, health care and direct deposit programs, as well as boost morale and loyalty among your Hispanic workforce.

Overcoming Misconceptions

Hispanics are the fastest-growing ethnic group in the United States, according to the 2000 U.S. Census. Although metropolitan areas like Los Angeles still boast the highest Hispanic populations, Hispanics are increasingly moving to suburbs in the southern United States, according to Diversity Spreads Out, a March 2006 study by demographer William H. Frey at The Brookings Institution in Washington, D.C.

For instance, Charlotte, N.C., and Nashville, Tenn., have seen dramatic increases in their Hispanic populations over the past four years. (See chart.)

But while the Hispanic population has grown, the percentage of Hispanic workers participating in employer-provided financial programs has not. According to the 2005 study Retirement Security for Latinos by the National Council of La Raza, a nonprofit Latino advocacy organization based in Washington, D.C., only 29 percent of Hispanics participate in an employer-provided pension plan, as opposed to 53 percent of white non-Hispanics. More than half of all Hispanic heads of household ages 55 to 59 have no 401(k) or IRA plans. Only 50 percent of Hispanics have a basic checking or savings account.

Why don’t more Spanish-speakers in the United States have basic transaction accounts? The reason lies in the misconceptions Spanish-speakers hold about U.S. financial institutions. Sandoval explains: “In general, Latinos share a great aversion toward financial institutions. Many come from countries whose governments have confiscated land, homes, businesses and even bank accounts. This is compounded when they come to the United States, as so much is unfamiliar. When you come from a country that doesn’t have a sound banking system, putting money under your mattress might seem like the best choice.”

Chart 1 

Convincing Spanish-speaking employees to do otherwise requires the right approach. The benefits of doing so depend, in large part, on the type of financial education your organization offers, whether it focuses on checking and savings accounts, health insurance, or retirement.

Account Basics

For many Spanish-speakers, the most immediately useful financial education concerns transaction services. By helping Spanish-speaking employees open bank accounts, companies can streamline payroll. Some companies are actively approaching their employees to discuss the issue and to offer classes on opening an account or using a payroll debit card. Ellen Rinde, human resource manager at Big Creek Lumber Co. in Davenport, Calif., says training should cover banking basics. “We have a few employees who don’t cash their paychecks and hang onto the paper check as a means of saving,” she says. This can create accounting headaches for employers.

Some companies partner with nonprofit community organizations, such as CASA of Maryland, an immigrant advocacy organization headquartered in Washington, D.C., to provide financial literacy classes. “One important thing employees learn is to always pay bills on time to create good credit,” says Gustavo Torres, executive director of CASA of Maryland. Torres explains that before the classes many Spanish-speakers paid bills “when they could,” which resulted in high interest charges and poor credit scores.

Other employers partner with banks or credit unions. Directo Inc., an Atlanta-based paycard provider for employees without bank accounts, offers classes that “focus primarily on getting your pay and sending a portion of your earnings [to other countries] safely and at a low cost,” says Bob Howe, president and CEO.

“We focus on the mechanics of our payroll debit card and demonstrating an ATM” and point-of-sale keypad found at most stores to pay for items.

Champlain Stone Ltd., a stone quarrier with headquarters in Warrensburg, N.Y., recruits workers from Mexico on H-2B nonimmigrant visas, houses them and provides transportation. HR manager Vandra Dagles used to spend hours every week helping her Spanish-speaking employees cash their paychecks and wire money to Mexico.

On Thursdays, Dagles would drive to the quarry with a backpack filled with paychecks where all of the Spanish- speaking workers would sign them. On Fridays, the local bank opened early for her to bring in the paychecks. She countersigned them, and then the bank doled out the cash. “I would drive 45 minutes to the quarries in my hard hat and steel-toed boots and pass out thousands of dollars in cash. Then our men would want to wire money home. They would hand me $1,000 in cash, and I would drive back to the bank and wire all that money,” explains Dagles. “Then the Patriot Act came, and the bank said, ‘You can’t do this anymore.’ ” (The Patriot Act prohibits this type of cash flow to reduce money laundering.)

The following season, the local bank, TD Banknorth, issued Spanish-speaking employees paycards, similar to debit cards, and helped to educate the workers about their use. A bilingual Spanish-speaking bank employee conducted the classes during work time over two days. The one-hour classes were small—a dozen workers in each—to give employees an opportunity to ask questions. The bank employee who led the classes explained PIN numbers and how employees could use their debit cards at the grocery store, keypads and ATMs, says Dagles.

The workers were issued companion cards they could send to Mexico where relatives could obtain money from local ATMs, eliminating the need to wire money home. “A couple of [Mexican] guys had experience with paycards,” which helped convince the other workers, says Dagles.

“Many of our men come from rural areas and are illiterate. One man cannot sign his own name,” she explains. But, “they have had no problems. The young guys thought the card was cool; it was a status symbol to have.”

Dagles also likes the safety of the new system. “A paycard allows them to travel from Chiapas, Mexico, where they live, to upstate New York with a limited amount of cash in their pockets.”

Premiums and Priorities

When employees have health insurance, they are more willing to go to the doctor when health issues are small and manageable, instead of when they become life-threatening. Thus, when companies educate their Spanish-speaking employees about health insurance, they get a healthier, more reliable workforce. Unfortunately, Spanish-speakers don’t always make enrolling in a health insurance plan a priority.

Melissa Burkhart, president of Futuro Solido USA, a Spanish-language service company in Denver, explains that fewer companies in Latin America offer health insurance than in the United States. “Health care costs are not so outrageous” in Latin America, she adds. “In Mexico, the average family can pull together [to pay] for an operation and make it work.”

She says it’s important to teach Spanish-speakers about the costs of the U.S. health care system and how to make financial priorities. “Obviously, a $6-per-hour janitorial worker won’t be able to buy health insurance, but a $20-per-hour drywaller should be thinking about protecting his family with health insurance before he’s buying a new car. If you make financial decisions based on wise priorities, your family is more stable and you are a more stable employee,” says Burkhart, whose company created a DVD, “The Importance of Health Insurance Explained for Your Spanish-Speaking Employees,” which presents the information in Spanish.

Big Creek Lumber Co., with a workforce that is 50 percent Hispanic, holds health insurance and retirement seminars in Spanish. “The educational meetings are conducted on-site during work hours twice a year; spouses are invited to attend, too,” says Rinde.

“Historically, most of the information in Spanish was passed down from long-term employees to new hires, so it was frequently clouded by the experiences and interpretation of the senior employee. We wanted to give people the tools to make their own decisions, based on accurate information,” Rinde adds.

Saving for Retirement

The majority of employers conducting financial education in Spanish provide retirement classes because it offers the greatest potential for immediate benefit to the company. The more rank-and-file employees a company enrolls, the more its executives can contribute to their plans. Also, higher enrollment lowers costs and taxes for the company.

“A benefit of higher participation rates from non-highly compensated employees is the plan is able to pass the annual nondiscrimination Average Deferral Percentage (ADP) tests by better margins. This means highly compensated employees can contribute more into their savings,” explains Sandoval, who cites an average 22 percent to 32 percent increase in retirement plan participation among Hispanics after Spanish-speaking education programs.

However, retirement education for Spanish-speakers is not just a matter of translating the enrollment seminar into Spanish; it requires clarifying investment terminology. “If you just translate the word ‘risk,’ you’ve lost them all,” warns Burkhart. “You have to explain that even the highest-risk mutual fund is a very safe investment. Explain the difference between single stock and mutual fund investments. It is a ‘risk’ because in some years the investment might go down,” she says.

“In Latino culture the word ‘stocks’ has the same connotation as ‘mansions.’ In Latin America, only the wealthiest segment of the population can invest in stocks. You have to say, ‘In this country, it doesn’t matter what level of income you’re at. You can participate in the stock market, [albeit] in a modest way.’ Also, there’s no Spanish word for ‘vesting.’ You need to clarify the concept,” says Burkhart.

At The Gallegos Corp., a construction company headquartered in Vail, Colo., Spanish-speaking employees receive training about the 401(k) plans in Spanish. “The seminars explain 401(k) plans, why Spanish-speaking employees don’t traditionally participate and why those perceptions are mistaken,” says HR director Lisa Ponder, who estimates that the seminars increased Hispanic participation by 25 percent.

“We passed our [ADP test] with flying colors this year, and it was thanks to better participation from our Spanish- speakers,” she adds.

Cesar Sanchez, a second-generation Latino apprentice mason at The Gallegos Corp., says at first he didn’t like the idea of contributing to a 401(k). “I didn’t like the idea that it could go up or down. It’s not as sure as a savings account. But they explained to me in detail how it could benefit me in the long run. I stayed after the class, and I had a lot of questions. For me to do it, [the presenter] had to erase every little doubt.”

He says HR professionals should communicate in a way that encourages Latinos to participate, such as explaining the value of matching. “If we don’t feel comfortable with the person or we can’t understand it, we’ll just ignore it,” Sanchez says. (For more tips on creating successful Spanish financial training programs, see “Designing a Program”.)

Building Knowledge and Loyalty

An important byproduct of providing financial education in Spanish is that it builds employee morale, loyalty and retention. “We want our co-workers to have better financial security and earn their loyalty by being an employer who provides for them better than the competition would,” says Denise Haaser, SPHR, director of human resources at Baker Concrete Inc., a construction company headquartered in Monroe, Ohio, which provides retirement education in Spanish.

Howe agrees: “We work with a large number of companies that depend on seasonal help. Companies want to make sure the best workers return year after year. By offering these programs, the company greatly reduces its recruiting, hiring and training costs.”

Sandoval says he has seen what happens when employers don’t provide financial education that their workers understand. “It’s sad to see the number of Hispanic employees who miss out on benefits due to misgivings and a lack of culturally relevant education in Spanish,” he says.

Employers that educate Spanish-speaking employees about their health care, savings and investing choices can have an immediate effect on the company’s bottom line and impact an employee’s family for generations.

Kathryn Tyler, M.A., is a freelance writer and former HR generalist and trainer in Wixom, Mich..

Web Extras

​Designing a Program

For financial education to be successful, it is important to choose the right vendor to work with and to design a program that caters to employees needs. Experts offer these tips:

  • Training should be mandatory, on-site and during work hours. If its not, you dont get many people coming to the meetings, says Nancy Schafer, regional director of institutional trust services at Wells Fargo Bank in Denver.

  • Obtain buy-in from key Spanish-speakers. Its always important to get as many of the seasoned, senior workers involved as early in the process as possible so they become your chief promoters among the workers, says Bob Howe, president and CEO of Directo Inc.

  • Give Spanish-speakers the option to attend seminars in Spanish or English. Avoid joint meetings with simultaneous translation in the same room. This is quite annoying and distracting and doubles the presentation time, says Oscar Destruge Sandoval, vice president of Spanish services at Diversified Investment Advisors. Even among fluent bilingual Hispanics, when it comes to finances and medical issues, more than 70 percent prefer to learn in their native tongue, he adds.

  • Allow sufficient time for the meeting. Rushing through a PowerPoint presentation during a lunch break makes the employees feel pressured and leaves the impression that this isnt important, says Melissa Burkhart, president of Futuro Solido USA.

  • Use paper enrollment forms, rather than conducting enrollment online or over the phone. If the technology is prohibitive, employees may not sign up after leaving the meeting. Paper enrollment forms create positive peer pressure when they see co-workers participating, says Burkhart. Adds Sandoval: Presenters need to help them take action before they leave the seminar.

  • For basic financial education, seek help from nonprofit organizations. Howe recommends finding community organizations, advocacy groups, churches, schools and credit unionsthat are doing this type of training and with whom you can partner. Many of these types of organizations are grant-funded or willing to conduct training in exchange for a nominal donation.

  • Retirement and health care vendors should provide bilingual customer service, as well as bilingual literature. Look to a vendor offering fully integrated bilingual services, says Sandoval. Spanish services are more than just enrollment education. It means helping them to track and manage their account through bilingual customer service representatives.

  • Take advantage of audio and video media. Depending on the industry, [employers] may have Spanish-speaking employees for whom readin​g Spanish is not a strength, says Sandoval. Groups with lower literacy levels appreciate an audio explanation of their benefits. In the car, they are able to listen and easily share the information with their families.

  • Develop Spanish materials with lots of photos. First-generation Latinos are more apt to read educational materials that have more pictures and fewer words, called fotonovelas, which are popular in Latin American countries, says Sandoval.

  • Dont focus on the tax-deferral advantages. Tax deferral for Hispanics, with an average of four dependents and a household income of under $30,000, is meaningless, says Sandoval. The focus of the education is to save to gain the employers match and fulfill the dreams that brought them to America.  

Kathryn Tyler


Job Finder

Find an HR Job Near You
Post a Job


The SHRM Member Discounts program provides member-only access to discounts on products and services you can apply to your life and career, and share with your company.



Find the Right Vendor for Your HR Needs

SHRM’s HR Vendor Directory contains over 10,000 companies

Search & Connect