Laying the foundations for financial wellness

Laying the foundations for financial wellness
Laying the foundations for financial wellness

The UK labour market has gone through a wholesale transformation over the past 20 years driven by a combination of financial, business and social change. This transformation has seen the emergence of a transient, multi-generational workforce with more diverse needs and concerns than ever before.

This diversity is particularly apparent when it comes to financial health. Different generations display varying levels of financial security and very different financial aspirations. Baby Boomers for example may be preoccupied with saving into a pension, but for Generation X retirement is a distant dream. 

This financial pressure breeds stress. A recent study by CIPD revealed money worries are the number one cause of stress in the UK (22%). With 10 million working days lost to stress each year, the benefits to businesses in addressing this issue are clear.

But are employers really investing in financial wellness as part of a holistic wellness strategy?

We surveyed 700 employees and HR & reward professionals at large companies in the UK, and found that although 65% of employees cite financial wellness in the workplace as being important to them - a worryingly low 7% of employers provide any sort of retirement planning support.

Part of the problem is that financial wellness is a relatively new concept, and many employers do not know where to start. Furthermore, there is a worry that other financial benefit communications could detract from their efforts in getting their people bought into pensions. So the question is where to start? These three fundamentals should help form a holistic approach to financial wellness.     

Three fundamentals for improving your employees’ financial wellness

 1. Move the discussion beyond pensions

According to our research, over half (55%) of UK employers struggle to make benefits relevant to employees. And they’re not faring any better when it comes to financial benefits. Many employers still equate financial wellness with the provision of a pension plan and life assurance, but in an age of spiralling student debt and escalating property prices, these are simply not the most pressing financial concerns for many employees. 

This is certainly not a call for employers to abandon retirement planning. But those looking to engage their whole workforce in saving could consider a greater variety of products. For example, supplementing workplace pensions with lifetime or corporate ISAs is one solution. Not forgetting that debt consolidation products, budgeting tools, financial and mortgage advice or online financial education are also readily available options.

2. Prioritise making benefits convenient for employees to access

The largest single factor influencing employees’ perception of benefits is convenience, with almost 70% of employees wanting a single place to access all of their benefits. Simply put employees are looking for a consumer grade ‘Amazon or Uber experience’ when selecting and using their benefits, but only 16% of employers offer a single access point to all benefits.

If employers are to succeed in delivering an effective financial wellness strategy, it is vitally important that they make it accessible. Providing access to benefits, modelling tools and total reward statements via an online benefits portal ensures that employees can access information at a time and place that suits them. Alternatively, walk-in sessions where employees can ask external experts specific questions are incredibly popular.

3. Enable and educate your employees

Employees are far more likely to take control of their benefits if they feel empowered; if they understand the benefits they’re choosing from and how they can help their financial situation. Companies offering financial education report that 38% of their workforce is very engaged, while those that do not, see far lower engagement levels, with only 19% of employees reported as very engaged.

Communication also has an integral role to play here. Employers need to communicate why they’re supporting employees’ financial health, how employees can access this support and apply it to their personal situation. This communication is fundamental to educate employees and therefore empower them to make informed decisions about their benefits scheme.

Like any other part of the benefits strategy, engagement is essential to the success of financial wellness. Listen to your employees and take the time to analyse and fully understand your workforce, their demographics, life stages and financial needs. Then use this information to inform your short, medium and long-term financial wellness goals.

This blog was written by David Dodd, Consulting Director at Thomsons Online Benefits.

If you are interested in finding more ways to improve your financial wellness programs, read Thomsons’ future of financial wellness report

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