Mark Fenton-O’Creevy: Is there a case for workplace financial education?


In difficult financial times any employer will think twice before incurring additional costs, and training budgets are notorious for being trimmed in hard times. So why would an employer seek to invest precious training resources in a topic without apparent direct relevance to performance?

Many employers do not. Consumer market research commissioned by True Potential Pufin found that while 81% of employees say they would value workplace personal finance learning, only 7% of employees report receiving this support from their employer. It is easy to see this as someone else’s responsibility. After all, since September 2014, personal finance has been on the school curriculum across the UK. So why have major organisations such as Marks and Spencer, GlaxoSmithKline, Carrefour and Intel invested in personal finance education?

First, there is good evidence that workplace learning about personal finance has a much greater impact than learning in school. Research studies suggest that many financial education initiatives in school fail to affect behaviour. Research on workplace initiatives tends to show better outcomes. In our own research, we found young people have a much more positive view of their own financial capability in the period before leaving home than when they became independent. A high proportion of people also indicate that their most important learning about personal finance happened when they hit significant life events. The most effective learning happens when individuals are ready to learn and have encountered the real challenges of independent living.

Second, there is a good business case.

Financial education can support productivity

Financial worries are a major source of stress and this stress can be a major contributor to employee absence, presenteeism and productivity problems. There is good research evidence of the link between financial capability and wellbeing.

Financial education can reduce risks of employee crime 

A frequent factor in theft from employers is employee indebtedness and despair about finding a way out. In a difficult economic climate, financial risks to employees increase. Financial education and counselling can help fix such problems early.

Employers are increasingly shifting financial risks to employees 

With the demise of defined benefit pension schemes, employees have a stronger need to understand the complexities of their pension provision. At the same time, by 2018 all employers will have responsibility for offering access to pension schemes. What is not understood is often not valued; and any employer should be interested in employees understanding the value of benefits they receive.

Employee engagement

Employee engagement arises when there is a two-way commitment between employer and employee to what matters to each other. Supporting employees’ understanding of their personal finances offers significant benefits at modest cost to the employer.

So, what should personal financial education cover? Many employers will wish to start simply and focus on the issues that matter most to their employees. One important starting point is pensions. The introduction of auto-enrolment workplace pensions increases the need for guidance on schemes offered and the need for employees to augment their pensions, particularly with the state pension age rising. For older employees, new pension freedoms magnify choices and risks as they approach retirement. Guidance on saving for retirement can also provide an important bridge to wider financial education.

Finally, good personal finance education is not just about facts and figures, it is about individuals’ anxieties, fears, hopes and dreams. To really engage employees in a deeper understanding of their personal finances, it is important to also engage with the emotions they generate.

Mark Fenton-O’Creevy is a professor of organisational behaviour at the Open University Business School and a member of the True Potential Centre for the Public Understanding of Finance (Pufin).

This article has been co-authored by Martin Upton, director of True Potential Pufin and a senior lecturer in finance.