Financial education: Sponsor’s comment: Wide strategy needed to get the financial message across

Jonathan Watts-Lay, director of Wealth at Work, says all employees must be made aware of their financial needs and opportunities

Insufficient retirement savings, over-indebtedness and lack of knowledge are all factors creating the need for financial education, but what are the considerations and benefits for an organisation in providing financial education to its employees?

The most significant factor is that employees must be made aware of the need to save. Many employees face the prospect of an uncertain financial future unless they take action to increase their long-term savings provision.

The benefits can be immediate when presented in a coherent manner. Financial education can ensure that employees make the most of the finance-related benefits available to them. As a consequence, greater value is derived from their employment while ensuring that the organisation remains competitive in the job market.

Providing financial education will reap rewards for the organisation only if its delivery meets the needs of the employee base, which may vary considerably from head office-based to production or client-facing employees. For example, seminars can be used to provide employees with an interactive learning experience, although these may not always be practical for all workforces. An online alternative provides greater flexibility and a forum for employers to respond quickly to specific events, such as tax changes.

Technical guidance and advice

Whatever the format, employees often have specific queries after the financial education and these can be dealt with where access is given to further technical guidance and advice. This offers employees the opportunity to turn the education into reality. Without this support, the full value of the education may not be realised.

Generic financial education may provide a useful introduction to the principles of personal finance, but to ensure its practical application, it must reflect the savings opportunities available to employees by virtue of their employment.

The value of these should be highlighted, whether they are pensions, share schemes or any other arrangements. A coherent message should be delivered on how these benefits can work effectively together to contribute to employees’ savings provision.

Reflect employees’ life stages

The content must be relevant to the intended audience and reflect the life stages and specific events an employee may be faced with. For example, earlier in their career, employees are likely to have shorter-term financial goals, such as paying off student debt or saving for a first home.

Others may have retirement as their key savings goal, so the importance of creating a diverse and balanced savings strategy will be foremost. Specific events, such as a maturing share or bonus scheme, are likely to be relevant to a wider range of employees, so the content should reflect this.

A thorough assessment should be made of the savings opportunities that are available to employees, the financial issues they are likely to face and how the business will succeed in securing employee engagement through providing financial education as an employee benefit.