What is financial education?
Financial education as a benefit can take many forms. At its simplest, it could simply mean providing online or workplace-based resources which employees can access in order to boost their understanding of their finances. At the higher end, financial education programmes can be holistic, providing multimedia resources, including individual guidance or advice, financial modelling and health checks, and targeted communications.
A decade ago, financial education was mostly product-focused, and accessed through a provider. This is still an option today; for example, most pension providers will be able to provide information or even workshops to help employees understand their retirement savings and the products on offer to them via their employer. This is also the case for other financial benefits, such as saving schemes.
In the time since, however, financial education has grown from being a supplemental provision to understand the benefits on offer, to a benefit in its own right. Employers are now more likely to provide an independent service, which does not steer employees toward a particular product.
Now, financial education can be broken down into three tranches: education, guidance and advice. The first provides generalised resources, such as seminars or video content, educating staff on financial topics such as income tax, savings schemes, general budgeting advice, or retirement. The second is more individualised, allowing staff to speak to an expert one-on-one, who can help them understand the particulars affecting their own situation; they cannot, however, steer the person towards a specific solution. The third is regulated, and takes it a step further than guidance. Advice means speaking with an accredited expert who can actively advise and help the individual through managing their finances. This can be particularly important at specific stages, such as for those individuals approaching retirement.
Certain providers, such as Wealth at Work, provide both guidance and regulated advice, and are therefore able to understand at which point the employee needs to move from one to the other.
How does financial education work?
Unlike other benefits, there is no end to the variety available in this market. An employer might choose to take the time to build a scheme for itself: a website with a bank of resources, benefit information and access to guidance, for example, entirely tailored to its own needs.
Alternatively, it could outsource to any number of providers with different schemes on offer, from on-site seminars and clinics, to personalised video content, or even access to habit-forming nudges through an app.
What are the costs involved?
Again, this entirely depends on what an employer thinks it needs, as well as the number of employees, and how it envisions delivering the education.
As a base point, it is worth checking what is already available at no extra cost. This means speaking with existing providers, such as for pensions, and discovering what they can offer. This does only provide a limited approach, however.
As an example of something more in-depth, using a video animation to deliver financial communications, with stock animation and no unique branding, might cost £3,000, while a bespoke, tailored and branded option could be £10,000.
When considering webcasts, a basic powerpoint with a voiceover could cost £6,000, the next step up with a talking head could be £7,500, whereas something fully engaging with a green screen and infographics, for example, might be between £25,000 and £30,000.
What are the benefits?
There are numerous potential benefits to providing a scheme which helps staff take control of their finances. For example, financial stress can be a significant cause behind sick leave, presenteeism and low productivity.
Simply using financial education to promote the benefits an employer provides can have its own value in increasing the return on investment (ROI) of those benefits, as well as helping staff shore up their financial wellbeing. This is only going to become more important in the face of the growing cost-of-living crisis.
In order to understand the value versus cost, it is worth commencing with a trial and measuring the outcomes against whichever metrics are most relevant and important to the business.
Are there any tax or legal implications?
Financial education schemes can face complications when it comes to the boundary between regulated advice and unregulated guidance. Employers should work with providers that understand the difference, and make it clear to employees that if they do choose to access financial advice, specifically, they do so, and enter into any actions as a result of this advice, such as investments or savings vehicles, at their own cost and risk.
As for tax, generic guidance, specific to the employer not the employee, does not have a benefit-in-kind implication. However, one-to-one sessions can be more complex. For example, employers can spend up to £500 per employee on pensions guidance without a tax charge, and there are also exceptions from benefit-in-kind implications for welfare counselling, which includes debt.
What are the current market trends?
This is a multifaceted industry with many moving parts, but one overarching trend is that financial education has been largely taken over as part of the wider ‘financial wellbeing’ picture and that, in turn, is only one facet of a holistic approach to employee wellbeing.
The link between financial wellbeing and elements like mental and even physical health is becoming clearer, and employers are looking for effective, engaging education programmes to do more than just tell staff about their pensions, but instead to feed into a wider approach to wellbeing and positive behaviours.
In terms of the education itself, a key trend is the increasing need for a multimedia approach. This means including in-person, or virtual, sessions, as well as resources to read, watch or even interact with.
Who are the main players?
The wide range of options open to employers, including providing their own resources, means that the list of providers is vast. Some key names, most likely to provide across the full scope of available options, include Close Brothers Asset Management, Wealth at Work, Chase de Vere, Nudge Global, Octopus Money, and Aon Employee Benefits.
