Need to know:
- A multi-generational workforce will have myriad financial challenges, including home ownership, childcare and retirement savings, so it is important that employers address these issues within a flexible approach to financial wellbeing.
- Financial goals and life stages may not be clearly delineated by age, and employers should avoid assumptions.
- Life events, such as birthdays and marriages, can be a useful communications tool, to capture employees’ attention around relevant benefits.
Home improvements: Action to address the housing challenges faced by young people, published by the Resolution Foundation in April 2018, found that four in 10 individuals aged 30 privately rent because they cannot afford to purchase their own home. This is double the number of Generation X respondents that had to do this at age 30, and four times as many as the generation before.
On the other side of the coin, Bank of mum and dad, published by Legal and General in June 2019, found that parents provided £5.7 billion in 2018 to help children to buy a total of 317,000 homes. The majority (71%) used their cash savings to do this, but 20% downsized their own home and 16% cashed in their pension savings.
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Meanwhile, for working parents, the cost of 25 hours of nursery childcare for a child under the age of two has risen by 3% in the last year, reaching a total expenditure of £6,600 per year, according to the Childcare survey 2019 report, published by Coram Family and Childcare in February 2019.
Employees across each generation, then, are battling with wide-ranging financial pressures and goals.
Lynn Smith, chief people and operations officer at Wealth Wizards, says: “We have to make sure than an employer can actually tap in to an individual’s life journey, whether that’s helping them with debt and buying first homes, [or] saving for retirement; it needs to be little and often.”
“The outcome is [employers] have a less stressed and more rounded individual who’s up for doing [their] best in the workplace,” she explains. “One size doesn’t fit all; having a flexible approach around what’s relevant for one person might not be relevant to another.
“[Employers] want to make sure that financial wellbeing is absolutely fitted to the individual, not to the mass.”
Although an employee’s career trajectory, life choices and ambitions will often correlate to age, employers cannot assume that this will always be the case, says Jo Thresher, director at Better with Money. An employee may take a financial hit in their 40s due to a divorce, or a graduate may be more financially aware and stable than is assumed.
“We need to meet people where they are now,” she explains. “An employer can be more savvy and attract people with what’s going on [in their lives] rather than just pigeonholing them in to life stages.”
One method might be to think in terms of universal issues that hit employees in different ways throughout their journey.
“Rather than thinking about starting out, middle and end, [think] about getting them out of debt, getting them an emergency fund, getting them some savings [or] getting them in to [the employee] share plan,” Thresher explains. “It’s a different outcome than thinking about a more traditional journey.”
To build an effective strategy based on the reality of the employee journey, organisations should take advantage of the wealth of data they already have access to, says Karen Bolan, head of engagement at AHC.
“If [employers are] trying to encourage somebody to think about long-term savings, but they’re having difficulty paying this month’s rent, then [they are] not going to get any engagement because [they are] not dealing with the immediate problem,” she explains.
An online quiz, for example, could help determine employees’ most pressing financial needs. This might then be used to funnel them into the correct support systems, such as modelling tools for those on the road to retirement or a financial planning app if staff need help budgeting.
“Technology enables us to make really quick decisions and take quick action,” adds Bolan. “Employers need to embrace technology that is now within an employee’s hands.”
On-site financial clinics, which could be held monthly or quarterly, are another way of providing more tailored financial help, especially for time-poor employees who may struggle to fit financial admin around responsibilities such as childcare.
Communications relating to an employee’s life journey are vital in attaining engagement with financial wellbeing. Focusing on major life events, such as significant birthdays, marriage and starting a family, can attract employees to relevant interventions and support.
“All of those life events are good ones to use as hooks because [employers are] already on the front foot about getting [employees’] attention because it’s something that’s real for them,” Bolan says.
Communications can also be segmented by variables such as age, amount of savings, or life stages, allowing for specific, relevant and engaging messages that are more likely to be heard and acted on by the employee.
Language can also be a tool in ensuring that communications appeal to different varieties of employees; terminology such as financial wellbeing or wellness can often be more accessible and approachable for staff, especially those who would typically shy away from financial planning.
With 88% of HR and benefits professionals viewing it as their responsibility to provide financial wellbeing support to employees, according to Smarterly’s Realigning the workplace savings offered to meet the needs of millennials report, published in June 2019, it is important that these interventions hit the mark.
As Smith concludes: “[Financial wellbeing] is not a one and done thing. It has to be regular engagement, little and often, breaking down the journey into manageable chunks.”