Need to know:
- Employers should consider personalising the delivery and content of financial education to enable employees to take control of their own learning either at home or in the workplace.
- Technology, such as platforms that provide individuals with a full financial overview or financial education via WhatsApp, can empower employees to tackle personal financial matters they do not wish to discuss at work, for example debt.
- Financial education can be used to signpost employees to an employer’s benefit package. This can give the benefits more context and may increase their value, because employees better understand how benefits can support life events, such as saving for a wedding.
Employees’ financial priorities come in all shapes and sizes. For example, The financial wellness playbook 2018 report, published by Nudge in January 2018, found that 66% of employer respondents predict that borrowing and managing debt will be one of the main drivers behind financial wellness for 2018. Other such drivers predicted for 2018 include being able to budget to live within income levels (65%), childcare costs (57%), coping with the impact of Brexit on the UK economy (55%), saving towards financial goals (50%), and retirement planning (50%).
With so much on employees’ financial agenda, constructing an approach that can support all of their priorities can be tricky for employers, especially if they also want to respect that an individual’s financial situation can be perceived as a private and personal matter.
However, there are a number of reasons why employers may choose to support staff with their personal finances. Tim Perkins, co-founder and director at Nudge, explains: "An employer has the most to gain from having a commercially aware workforce and the most to lose from having a financially stressed workforce."
According to Capita Employee Benefits' Insight report, published in May 2017, 21% of employees admit that financial worries affect their work, while 34% of respondents feel stressed because of their current financial situation.
Different people, different prioritiesWith up to five different generations now present in the workforce, financial priorities can vary from paying off student debt, saving for a deposit on a first house or planning for retirement. This is why it is important for financial education to be delivered on a broad variety of different topics, says Perkins. “People need to feel like they are driving the agenda," he says. "Having somebody preaching about something [employees are] not interested in [is a turn] off.”
Jonathan Watts-Lay, director at Wealth at Work, adds: “It’s really important to think about the different segments of the employee population. There are certain industries [which have] a much younger profile, so […] there needs to be much more effort put in to what’s relevant to young people. They worry about the ability to save, particularly for a first property. They worry about the cost of rent and making the weekly or the monthly budget work. [It is] really important to help people with that because it’s about how to make [an employee’s] salary effectively go further. And [employers are] doing it in two ways; looking at the income side and the cost side.”
Therefore, topics that could be featured within a financial education programme can include how to control outgoings, the difference between good and bad debt, and the benefits of shopping around for insurances, such as car insurance.
Delivering financial educationTo ensure employees can maintain their privacy over their personal financial concerns, should they wish, employers should create a non-invasive programme that puts the employee in control of their learning, says Perkins. So, employers should not only consider personalising the content of financial education, but also its delivery.
For example, employers could deliver financial education via WhatsApp rather than through work emails or face-to-face workshops. This enables employees to educate themselves on personal financial matters away from the workplace and at a time that suits them. “If it’s topics about personal finances, [such as] mortgage or kids, actually receiving [that] education to [a] personal email [address] or even via WhatsApp is going to be on [the employee’s] terms and it’s putting [them] in more control,” says Perkins.
This style of delivery also facilitates private learning, which can be particularly useful for sensitive topics, such as debt, which an employee may not want to highlight that they are concerned about by attending a workplace-arranged workshop on the subject.
Joining the financial education and benefits dotsInitially, workplace financial education could be based around a generic theme, such as money management, explains Watts-Lay. Such sessions, whether delivered as seminars, webcasts or through animations, can pique employees’ interest and point them in the right direction to gain further information. This would allow employees a level of independence to explore financial topics without feeling as if their employer is looking over their shoulder.
“It basically allows people to select whether they want to engage in [financial education], but it’s non-specific because all the employer knows is that an individual is going to a seminar," says Watts-Lay. "That kind of thing allows people to select what they want. In terms of follow-up, […] education intervention really needs to have the next steps for an individual who chooses to take it up.”
These next steps could be passing employees on to a third party like the Money Advice Service, or using internal resources such as signposting them to the organisation’s benefits offering. This could include referencing retail discounts, workplace individual savings accounts (Isas), employee share schemes, an employee assistance programme (EAP), a lifetime Isa (Lisa) or workplace pension. Employers may also choose to highlight initiatives such as their organisation's approach to sick pay to enable employees to take steps to cover costs should they become absent, particularly in the long term. It may be that this is aimed at giving peace of mind, for example, by providing detail of the employer-paid policy, or by enabling employees to opt in and contribute to a corporate sick pay scheme, such as that provided by BHSF.
Aligning an organisation’s benefits package to life events, such as getting married or having children, can give benefits context and purpose, says Perkins. This, in turn, will give benefits greater value for employees so they are more likely to take advantage of them to put themselves in a better position financially. “Every benefit, if [the employer presents] them in the context of dreams and goals, suddenly [has] an alignment and they have a value that they didn’t otherwise previously have,” says Perkins.
The role of technologyA non-invasive approach to supporting employees’ financial priorities should be underpinned by technology, says Jon Bryant, director at Aon Employee Benefits. This could include a platform that gives employees a holistic overview of their complete financial position, showcasing the benefits available through the employer, such as the value of their pension, the value of their income protection policy or which flexible benefits they have chosen, as well as enabling employees to add details about their personal finances. For example, employees could add information about their savings accounts or credit cards. This could be particularly useful if employees receive certain benefits through their personal financial products, for example, if their credit card arrangement provides access to dental insurance. Having this information readily available on such a platform ensures that employees do not inadvertently double up on cover, which could be costly for no additional gain. “It gives a holistic view of everything in place knowing full well that [the] employer can’t get access," says Bryant. It’s hugely beneficial [and] hugely automated."
This type of platform could also enable automated goal planning and budget planning notifications, send out financial reminder nudges, and give access to educational videos on financial subjects.
However, some employees may be dubious about logging on due to worries that their employer will be able to view their financial details. To counteract such perceptions, employers should ensure that they explain to staff why they are implementing financial education or any financial benefits and highlight their reasoning behind taking an interest in employees' financial concerns, says Perkins.
"Confidentiality is key," he says. "It's letting people know and setting their mind at rest around the independence and the confidentiality of this. Ultimately, what [employers are] trying to do is avoid cynicism, so it's really important explaining why the employer is showing an interest in financial education. [Be] very open and honest with that."
Having a senior leader within the organisation launch and promote the financial wellbeing strategy will also help to give it more gravitas and boost its effectiveness, adds Perkins. "The more senior the person who launches and [explains] why the [employer is offering] this programme, the more effective it is because people tend to sit up and listen to the [managing director] or the [chief executive officer] or the HR director," he says.
Communicating differentlyEmployers can also tie their financial education programme in to a push-and-pull communication strategy, says Watts-Lay. A push strategy is defined as messages that the employer really wants to push out to staff. This could include communications around the launch of a benefit that actively inform employees what it is and encourages them to sign up.
Pull communication strategies, on the other hand, rely on the employer signposting relevant financial education and benefits, then allowing employees to self-select. This approach could be particularly relevant for a non-invasive stance on financial education. “Pull strategies tend to be [used] where it is more of a sensitive matter, […] something like debt," explains Watts-Lay. "Pull strategies [tend] to be the employer saying ‘hey, we’ve done something for you, we realise it’s sensitive so if this is of relevance to you, please self-select’.” .
Case study examples can also prove useful when tackling financial issues, says Brian Hall, chief commercial officer at BHSF. These can help to dispel money myths employees may be harbouring, for example, raising awareness of how quickly savings can dissipate if an employee is unable to work due to ill health and has to rely on statutory sick pay. “The first thing employers need to do is to get examples out there of the difference between being at work full-time with potentially either overtime [payments] or productivity bonuses, and being on statutory sick pay,” says Hall.
A further option is to deliver communications in understandable and recognisable language in small, bite-sized chunks that employees can pick and mix depending on their wants and needs. “[Employers have] got to talk to them about stuff that they genuinely care about,” says Hall.
According to A high wire with no safety net report, published by BHSF in July 2017, 48% of employees lose sleep worrying about financial issues, and 13% find that sleep deprivation brought on by financial issues is a constant problem. Embracing a non-invasive approach can empower employees to tackle their private financial priorities and issues away from the workplace, using the benefits and support available to them.
Read more:
GVA uses online financial education as basis for financial wellbeing strategy
Helen Undy: How can employers help employees improve their financial resilience?
