Face up to it, group financial education sessions don’t disappoint

Written material or an intranet will for the most part not suffice as financial education, staff often need to talk and ask questions, and face-to-face education – not advice – in group sessions can often be effective, says Harper Wright, financial education service manager, MBNA

No business is an island. Yes, I know the original quote was “No man is an island”. However, successful organisations recognise that they operate within and as part of a community. Organisations that survive in the long run are ones that are aware that in addition to a competitive product or service they must have customers and suppliers that are also successful.

Employees in any enterprise, public or private, should be considered part of the supplier network as their input is vital to the success of the employer. We know that people bring their personal issues with them to work. The “good” parts of a person’s life may help improve their performance; certainly if they have financial issues at home, these can adversely affect their performance at work.

Studies in America have proved that financially capable employees are more productive than colleagues who have financial problems or who are not financially capable. Therefore, an employer’s interest in improving the financial capability of employees is not simply altruistic or paternalistic, but rather based in part on self interest.

Very few of us find the modern maze of pensions, endowments, ISAs, credit cards, mortgages and other financial products to be understandable or self explanatory. This is due in part to a lack of practical financial education while at school or in further education, and as adults we don’t know where to turn for unbiased help. Employers are often perceived as trusted sources of information, and therefore financial education can be a mutually attractive staff perk.

This does not mean that employers need to become involved in the personal lives of their employees, but rather provide the opportunities for their staff to take control and make the most of their money. The mechanisms will depend on the characteristics of the business and the employees.

Employers are often surprised by the poor take up on pension plans or share ownership schemes. Seven years experience in this field providing financial education to MBNA’s employees has driven home to me that the simple provision of information in either written materials or on an intranet is not enough; people want to talk and ask questions. That is a fact of human nature. Simple face-to-face education (not advice) in group sessions is often very effective if pitched at the right level.

However, we must also recognise that lack of interest in pension or share schemes is an indication that employees are focused further down the financial ladder. Workers aged under 35 years today are more concerned with more immediate issues: student debt, lifestyle debt, getting on the property ladder and starting families. This complex mix of personal issues is difficult to resolve and prioritise. For example, many young adults focus on reducing student debt without understanding the benefits of pension contributions that attract matching contributions and tax relief. Any help or guidance in making the difficult choices is always greatly appreciated, and the sense of relief is often palpable.

Pre-retirement courses are also very popular with employees who plan to retire in the next five or 10 years. These courses cover not only the financial aspects of planning for retirement but also deal with the social and personal considerations of a major change in lifestyle.

Financial education is available in an increasing variety of formats and from a growing number of providers. The Financial Services Authority offers “Make the Most of Your Money” as part of its national financial capability strategy. A number of charities also have courses and materials suitable for use in the workplace. And finally, a sign that financial education is coming of age is the number of financial services companies that now offer financial education either on a fee basis or with the anticipation of obtaining sales opportunities.

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Employers can achieve a win-win result by helping their employees gain control of their personal finances. There are many different ways that this can be achieved, but the outcome should be mutually beneficial to all concerned

Harper Wright, financial education service manager, MBNA