July 29, 2020
The employment market place is a competitive one and the employees of today have greater expectations on their employers to provide added value over and above the standard pay and benefits packages.
In this respect financial education and wellbeing services can provide a key missing ingredient to many workplaces, especially when considering the many further challenges, both employers and employees, have been faced with over these last few months during the COVID-19 pandemic.
Financial capability is the ability to manage money well, both day-to-day and through significant life events. Critically, financial capability is a key driver of consumers’ financial wellbeing – that is the ability to meet all their current commitments, without undue stress, and the resilience to cope with future income or expenditure shocks.
Initial findings from the Adult Financial Capability Survey back in 2018, commissioned by The Money Advice Service, revealed:
63 per cent of UK adults do not feel they can determine what happens in their lives when it comes to money
61 per cent do not focus on the long term when it comes to money
55 per cent of working-age adults do not feel that they understand enough about pensions to make decisions about saving for retirement
47 per cent do not feel confident making decisions about financial products and services
The Working People section of the study suggested, among other issues, that the key priority for people of working-age life is to focus on “building resilience, saving for the future, planning ahead and managing life events”. In particular,
the evidence showed people tend not to consider and plan for negative life events such as death or serious illness.
In recent years – before the COVID-19 crisis – we have seen a definite and deliberate shift in responsibility for finances and financial matters away from the state towards individuals. As a result, where people struggle with such matters, poor financial capability leads to increased stress, and the connection between physical, mental and financial wellbeing is now increasingly being understood.
The Money Advice Service website – provided by the Money and Pensions Service, an arm’s- length body sponsored by the Department for Work and Pensions – highlights that employees’ financial challenges can affect their performance at work and could therefore be costing many firms lost time and money. Statistics have been gathered from a range of sources with one saying that
59 per cent of employees with current financial worries state money concerns prevent them from performing their best at work [Willis Towers Watson 2016] and another that 89 per cent of employers agreed that financial concerns have an impact on employees’ workplace performance (FCA 2017).
As an employer, you want to attract and retain the best people for your business. Both the business and the employee tend to perform at their best when their values and behaviours are aligned, with an employee feeling supported by the firm they work for. As a responsible and progressive employer you may already offer a range of benefits you believe to be attractive to your workforce and, of course, firms now have to comply with the law and put in place a workplace pension scheme. With the shift, noted earlier, in the responsibility for finances moving away from the state, this is leading to employees paying closer attention to the full range of benefits they receive from their employer.
The more progressive and responsible employers also regularly engage with their staff through internal staff surveys to help understand their employees more. This helps shape the future of the business and further build engagement and loyalty from staff.
In these surveys, we have found that increasing numbers of employees now want more information about many different financial matters, not always directly connected to their benefit packages. Employees may want to know about a range of other areas too from buying their first home to when they can retire and how much is enough to retire on?
However, workplace pension schemes for example, can also often create additional questions and queries for firms thereby placing an additional challenge and burden on already busy HR departments, which of course also need to ensure they are not seen to be providing financial advice to their employees. This is a delicate balancing act for businesses to achieve to show support for their people without straying into the world of regulated financial advice.
Again The Money Advice Service website comments on this with 46 per cent of employees saying they would appreciate their employer providing access to financial awareness programmes (SMF, 2016), and 58 per cent of employees valuing, if available, employer facilitated support to help their financial wellbeing (Neyber, 2017).
As a result of the required need in this space, some financial advisory firms have started to develop their services to help businesses on their financial wellbeing journeys by creating financial wellbeing programmes around key life stages, specific to employer and employee needs. These can be tailored to the needs of the employer and can take the form of seminars, workshops and webinars covering a range of topics, bespoke communications and, where required, individual financial planning advice.
Engaging in such services helps to differentiate a business as one genuinely aiming to place its people first. As firms, across all sectors, move through to the next stage of the COVID-19 global pandemic – where millions of UK employees have been affected financially in many ways, including the furloughing of staff – personal financial matters are likely to be even more at the forefront of many employee’s minds.
For further information about financial education and wellbeing services, contact Dominic on 07850 953197. www.armstrongwatson.co.uk
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