By Dr Serra Pitts - Scientific Director for 87% According to a recent BITC report,…
By Megan Smith – Senior Advisor, FLM Wealth Management
Mental health has been at the forefront of HR’s agendas over the last few years, but should this not go hand in hand with financial wellbeing?
Financial stress costs the UK economy £120.7 billion a year and over 17.5 million working hours are lost per year through employees being absent due to financial stress. Shockingly, 70% of employees admit to wasting 1/5th of their time at work worrying about their personal financial situation. (Neyber’s DNA of Financial Well-being report, 2018)
How has this financial stress come about?
The increase in financial anxiety stems in part from the fallout of the financial crisis in 2008, which has led to a society increasingly burdened with the heightened costs of education, housing, pension reforms, and depressed wages. Many workers find they can’t make ends meet and resort to debt to see themselves through the end of the month. Poor financial education from a young age, and the lack of guidance regarding financial advice, means that financial pressures are likely to intensify over the next decade. As employers seek to attract and retain talent with innovative, cost-effective benefits, financial education has become an obvious solution to genuine well-being concerns.
Employers are perfectly positioned to meaningfully impact the lives of their staff and likewise expect their staff to meaningfully impact their businesses. Unfortunately, this for the most part, has only been a recent trend as only 20% of employers, according to HR magazine, offer financial education or wellbeing, which is somewhat worrying when over 50% of staff have asked for help in this area.
To highlight the importance of this, Neyber’s DNA of Financial Well-being states that 67% of employees believe that their employer doesn’t care about their financial wellness. When you combine this with the fact that the number one cause of stress in the UK is one’s financial circumstances, there is an opportunity to offer a genuine benefit that develops and fosters financial literacy in your workforce, whilst also getting ahead of the competition from a recruitment and retention perspective.
Some key facts below further illustrate this point:
- 32% of Londoners say that money distractions have caused them work issues. (CIPD Outlook report, 2017)
- 38% of employees said they would move to a company which put financial wellbeing as a priority. (Barclays YouGov Survey, 2014)
- 61% of senior HR Executives reported a rise in financial well-being issues affecting employee mental health. (Employee Benefits, 2018)
What are the benefits to an employer of implementing a financial wellbeing offering?
If an employee has a clear financial strategy, this should free up their time and mental capacity. This should also lead to improved focus, performance and happiness which will have a direct impact on their day to day lives. Subsequently, this will have a positive correlation to a company’s bottom line.
There are plenty of reasons to offer financial education and wellbeing to staff, but in the interest of balance, what about reasons not to? Some of the major objections would include the following:
- Lack of time
- Lack of awareness/confidence of who to recommend for advice
- It’s the individual’s concern
These are all fair objections but there are solutions to these.
Awkwardness- discussions around money and finances have always been a tricky and sensitive conversation but offering one-to-one, tailored advice by experts in their field, all of which is completely confidential should allay these concerns.
Cost – there are flexible offerings where the cost can either fall to the individual or the employer depending on budgets available. Generally, there is no cost to the employer for offering seminars or one-to-one meetings and the employer receives praise for being pro-active in their approach to financial advice.
Lack of time – as previously stated statistics show that providing a financial wellbeing offering would save 17.5 million working hours if implemented correctly. Therefore a few hours to establish the service would be time well spent.
Lack of awareness/confidence of who to utilise for advice – No-one wants to deal with the fallout from a service that has proved to be sub-standard. The company recommended should be well established, FCA registered and be able to provide testimonials and case studies. They should also be able to offer guarantees for the advice provided.
It’s the individuals concern? Absolutely! A great example of this is the fact that 810,000 people won’t complete a tax return each year, even though they have an obligation to. People simply don’t know what all their obligations and options are! Ultimately it comes down to whether you want to help or hinder your company’s biggest asset – your talent.
What does a good financial wellbeing strategy look like?
It is one that encompasses the whole workforce; ranging from the concerns of a 25-year-old starting their career and looking to get on the property ladder to those of a 55-year-old planning for retirement.
Segmenting the audience and how they are engaged is crucial. If a company get this wrong, then the efficacy of the strategy will be much lower. Generally speaking, an e-learning resource or app is less likely to engage a senior audience than a face to face conversation. Likewise, retirement planning is not, on its own, going to inspire a 25-year-old to give up their lunch break to learn about their financial planning options. However, how to get a mortgage might!
A tailored strategy to your workforce is easy enough to create with the right provider.