Forty-nine per cent of employers currently have no defined financial wellbeing strategy in place, a recent survey has found, as experts urged corporate boards to tackle the subject formally.
Consultancy Barnett Waddingham’s survey of 243 organisations showed that 88 per cent of employers are worried about the financial issues their employees are struggling with.
You’ve got to understand your own workforce
John Chilman, National Grid
Forty-three per cent of employers saw the cost of housing as one of the top financial issues employees are facing, with day-to-day living costs coming second at 42 per cent, and building a pension third at 37 per cent.
However, 21 per cent of organisations do not have a defined financial wellbeing strategy in place, but are looking to introduce one in the future, while 28 per cent do not have a strategy in place and have no plans to introduce one.
Paul Leandro, partner, workplace health and wealth, at Barnett Waddingham, said: “There is a feeling that there is a problem, but employers are finding it hard to solve that problem.”
The research found that the three main obstacles to the implementation of wider financial provision, from an employer perspective, are cost, challenges around employee engagement, and expertise – which comes at a cost.
Investing in financial wellness can boost productivity
Despite the recognition of the money challenges facing employees, "getting financial wellbeing onto the board-level agenda is a challenge for HR professionals [and] reward professionals,” Leandro said.
He said boards often see things from a high level, “so how do you tangibly show that, if you improve the financial health of the workforce, it will improve productivity?”.
Financial wellness could be key to boosting workplace productivity. In 2017, a MetLife study found that 34 per cent of employees said they are distracted at work due to financial worries.
But only 34 per cent of employers surveyed by Barnett Waddingham use a formal method to measure the return on investment of financial benefits or interventions available to its employees.
While employers are doing a cost analysis, “they’re not doing a cost-benefit analysis”, Leandro said.
Mark Bingham, partner at financial education specialist Secondsight, agreed that it can be hard to convince colleagues at board level about the cost benefits of investing in a financial wellbeing strategy. “The difficulty for HR… is proving to the financial directors that spending a little bit of money on this is a good idea,” he said.
John Chilman, group head of pensions at National Grid, stressed the need for analysis to find out what employees want. “You’ve got to understand your own workforce,” he said, adding that there is no one-size-fits-all approach.
He also highlighted the importance of financial education. “We want employees to do the right thing for themselves,” Chilman noted. However, without financial education, this is a challenge, and the study found 60 per cent of employers do not provide this education.
Raise scam awareness before it is too late
The study also showed that 60 per cent of organisations have not raised any awareness among their employees to protect them from pension scams.
The Pensions Regulator and the Financial Conduct Authority have both launched a joint media campaign to combat scams. But schemes and employers also have an important role to play in safeguarding savers.
However, the Barnett Waddingham survey suggested that employers might only raise awareness once a specific scam threat had appeared.
Jon Parker, director of DC and financial wellbeing consulting at Redington, said financial wellbeing is still a relatively new concept.
“We’re only now starting to get good, reliable data around the impact that having poor financial wellbeing can have on individuals, and therefore the knock-on effect it has in the workplace,” he said.
Technology can help
Some companies introduce online tools to help staff. Virgin Money, for example, has introduced a financial wellbeing portal for employees, to help them think differently about their relationship with their own money, including retirement savings.
“Technology can be a great enabler,” said Parker. “For an individual to have one port of call… through which they can get a near complete picture of all aspects of their finances, I think is a really useful tool.”
However, he added that there always needs to be some sort of wider purpose to it, rather than an online tool being there as a “nice-to-have”.
Kate Smith, head of pensions at provider Aegon, said financial wellbeing “does have an impact on employee productivity, and I do think it’s going to be the buzzword for the next few years”.
She agreed that online portals are a good idea because they help employees plan for the future while managing day-to-day finances, but bringing in specialists to talk to employees about certain financial issues is also beneficial.
