Worksite marketing has cost benefits for employers, but specialist education providers offer guidance without the sell.
No matter how good the employee benefits on offer are, their value can be undermined unless employers communicate them properly to staff.
Many employers, especially the larger ones, will produce literature and marketing materials to communicate their perks to their workforce. Yet survey after survey shows that widespread ignorance among employees about the benefits on offer remains. A survey carried out by YouGov on behalf of Oval Financial Services in 2005 found that only 24% of UK employees fully understood how their benefits work and just 18% how much their benefits cost their employer. It therefore appears that either employers are not communicating what benefits are available to staff or how valuable they are, or that the communication methods they are using are ineffective.
Today, many companies are turning to third parties to help them get the message across. One way to promote benefits and services to employees is through worksite marketing. Essentially, a product provider is invited by the employer to provide financial education to employees and is able to take the opportunity to sell its products to them. Worksite marketing effectively applies to voluntary benefits which are taken up and paid for by the employee alone, not the employer. However, because the product is available en masse to the workforce, the employee may benefit from some kind of discount on the cost.
The advantage for the employer is that it does not have to pay a penny for the financial education being offered to the workforce. So long as the product fulfils its purpose, employee perception is that it
comes via the employer, so it will contribute to recruitment, retention and employee engagement.
But one drawback with this form of service is that, while the employees may enjoy a discount, the product will be offered on a one-size-fits-all basis and may not be the best on the market for the individual’s circumstances. However, for employees there is the convenience factor of being able to access information about the product at work. Barry Dowman, business development manager, at Combined Benefits Services, which sells insurance, including term assurance, income protection and critical illness plans, via worksite marketing, believes this service helps fills the information gap left by the virtual disappearance of door-to-door insurance salesmen, who called once a week at peoples’ homes to collect insurance premiums. He says he now comes across huge swathes of people with no kind of insurance at all.
The alternative to worksite marketing is to engage the services of a specialist financial education provider, employee benefits consultant or an independent financial adviser (IFA) to provide financial education and possibly advice. Financial advice has to be given by an individual or organisation authorised by the Financial Services Authority. The provision of financial education, however, is usually much more cost effective than delivering advice.
Jonathan Watts-Lay, a director of financial education provider JPMorgan Invest, questions the value of employers paying for employees to go to an IFA for regulated advice before providing them with financial education. He argues that financial education can provide “signposting” for employees so that they can quickly establish whether they need more specialist advice. He thinks that out of an employee population of 5,000, probably 80% or 90% will not need regulated advice, but simply to be pointed in the right direction. “Going for regulated financial advice should not be a first step,” he says.
Graham Cooke, senior consultant in the private clients team at Jardine Lloyd Thompson, says that when financial education is done well, employees will recognise it. “There’s more appreciation per £1 spent on financial education than anything else. People appreciate having information imparted to them in a clear, simple way.
“We can put together a programme for employees depending on an employer’s budget. In order to make it financially viable, it’s probably best to do it for a large group. The larger the group, the more cost effective it can be, but it’s really best for larger companies with enough employees to run that kind of course in house,” he adds.
IFA firm Clarity provides different levels of service rising from £150 up to £1,500. Sessions may be conducted in groups or on a one-to-one basis, depending on the arrangement with the employer. The cost may also met by the employer in some cases, or by the employee, in others.†