- Financial education
- 4 minute read
This can result in financial stress impacting performance at work; low uptake of workplace benefits impacting productivity, engagement and retention; and difficulty in planning retirement dates creating people movement issues in the workplace. Employers are not only well placed to help solve the problem, but they also have a significant financial interest in doing so.
The Lifetime Savings Challenge Report 2017, which was carried out by Close Brothers in conjunction with the Pension and Lifetime Savings Association (PLSA), sought to understand how employees are saving, where they need help, and the level of support available to them from their employers.
The report revealed a significant savings shortfall. A third (33%) of UK employees were saving less than £50 a month, which includes one in five (20%) who admit to not saving anything at all. This lack of saving is alongside a lack of understanding about the best way place to save, with only two fifths (40%) of employees confident in their ability to choose the right financial product to help them achieve their savings ambitions.
Employers are aware of these issues. Three in five (60%) employers recognise that some of their staff don’t have sufficient savings, including pensions. Whilst they believe this is partly due to them finding saving unaffordable (29%) or them having too much debt (21%), it’s also because they find the savings landscape too complicated (20%) and don’t understand the choices available to them (15%). These latter issues are the ones employers are well placed to tackle.
Employers are also taking an active role in solving this problem. Two thirds of employers (65%) think the responsibility for improving employees’ financial wellbeing lies jointly with them and their employees, and one in four (27%) employers are looking to launch financial education initiatives for staff in the next three years.
It’s encouraging that employers are looking to take action, but it is critical that they plan support that will be most impactful. Currently, less than a quarter (22%) of employers who offer financial education do so via group face-to-face sessions, with 20% offering individual face-to-face meetings and 8% offering access to advice over the phone. However, of those who provide financial education, 62% believe face-to face is the most effective way to increase the understanding of personal saving and engagement amongst employees and 57% of employees say it is their preferred communication method. Interestingly, perhaps bucking the myth that younger employees prefer digital communications, these face to face preferences spanned all age groups with 59% of 18-34 year olds, 54% of 35-54 year olds and 62% of those aged 55 and above stating this preference.
Importantly, when it is applied, financial education in the workplace works. Of those employees that have received financial education, 70% said it had been useful with only 13% finding it was either too complicated to follow or was just not useful.
The question I’m often asked is ‘is it worth it’? And the answer is a resounding yes. Our 2017 research in conjunction with the CIPD found that at least quarter of people are suffering with money problems so substantial that it is affecting their ability to do their job. This isn’t surprising when as many as one in five employees (19%) are losing sleep due to financial concerns, and one in ten say they have find it hard to concentrate/ make decisions at work because of money worries.
Financial wellbeing impacts not just employee health but also workplace productivity, staff morale, and retention. Investment in financial education is therefore not just a decision based solely on responsibility towards your employees, but a simple step towards boosting your bottom line.
It’s a win-win.