Need to know:
- Financial education is being increasingly influenced by machine learning, which predicts what education employees need based on previous choices.
- More employers are looking to support financial education programmes with regulated financial advice, although financial coaching could be a more affordable alternative.
- Digital communications and tools are being used to signpost and support face-to-face education, creating a hybrid approach.
According to Beyond pensions: pension and the provision of wider financial wellbeing, an employer’s perspective, published by pensions and investment consultancy Barnett Waddingham in August 2018, 84% of the 200 UK employers surveyed feel there is a need to provide financial education and guidance for their employees.
With this in mind, what trends does 2018 offer organisations in terms of their financial education approaches and strategies?
Strategy trumps tools
Although financial employee benefits, in terms of products, services and education, are booming in the current economic climate, it is the implementation of overall financial wellbeing strategies that has been the focus for employers, says Darren Laverty, partner at benefits provider Secondsight. This includes being able to measure where employees are struggling, and tracking whether an organisation’s financial education approach is having an impact.
Laverty says: “Financial wellbeing needs to be packaged as a benefit. It’s really about the strategy and then knowing which tools to apply, which [are] going to have the most impact now, and building them into an ongoing strategy for each employer.” This, of course, includes financial education. Tim Perkins, co-founder and director at online financial education provider Nudge, adds: “[Employers] need that financial education as an underpin.”
Incorporating advice
Within this overarching strategy, increasing numbers of employers are looking to regulated financial advice as a way to support their financial education provision, which can only provide guidance to employees under current regulations.
Jonathan Watts-Lay, director at financial education organisation Wealth at Work, explains: “We’re seeing a lot more firms now wanting to have advice capability to support that education. For people that want advice, they can get it and they know the employer’s done the due diligence, they know it’s a reputable [organisation]. Whether they as the employer pay for that advice or the [employee] pays for it can be decided, but the point is they’ve negotiated a preferential rate that is transparent.”
Nevertheless, regulated financial advice can be costly, regardless of who pays for it. One cost-efficient alternative is financial coaching, says Laverty. This is where employees have a face-to-face, one-to-one meeting with a financial coach, who can talk through adjustments that could optimise their short-term, medium-term and long-term financial position. “It’s a halfway house between [talking] to a human being [but not spending] money on advice,” Laverty says. “It is a very affordable way for either the employee or the employer to pay for a real, valuable service.”
Machine influences
Technology is facilitating increasingly innovative ways for employees to receive financial education, as well as helping tailor content so that it is relevant and personalised, says Perkins. This includes the use of machine learning.
“It’s basically using the technology to learn more about [employees] and then tailor [their] education accordingly,” Perkins explains. “[It] is predictive financial education. [It provides] people with education that perhaps they don’t know they need to know, based on what they’ve previously been learning about.”
Signposting with technology
A further key development is the hybrid relationship between offline and online delivery. Financial education in the past tended to focus solely on face-to-face presentations, and while some employers have since moved to purely digital approaches, incorporating gamification, the latest trend is for a combination of techniques. This includes using digital nudges and communications to motivate employees to attend relevant face-to-face masterclasses or seminars; these are then followed up and supported by further digital communications and tools, such as calculators or videos.
Hot topics
By August 2018, the most popular financial education topics were savings, mortgages and investing, according to Nudge, with holidays and travel dropping out of the top three areas of interest. Wealth at Work, on the other hand, has noted an increase in employers wanting financial education specifically around retirement options, while Laverty at Secondsight is seeing education being delivered around debt, budgeting and planning.
Because of this broadening in the topics covered by financial education, data analysis has a vital role in ensuring the right education reaches the right employees. Watts-Lay says: “It’s ridiculous to send the same thing to what is quite a diverse range of people with different situations. Now, a lot of financial education programmes [use] data analysis; that allows messages to be far more targeted, and therefore far more relevant.”