Need to know:
- A good financial education scheme should help an organisation achieve its wider business objectives, increase engagement, improve financial wellbeing and improve the employee’s understanding of their benefits and their own personal finances.
- Employers can look to both in-house resources or external parties to provide financial education programmes.
- A financial education provider can tailor its services to reflect the specific needs and culture of an organisation and its people.
It is something of a boom time for financial education providers with a recent report revealing that the number of employers in the process of introducing or are considering introducing financial education has risen by 121% in the past year. The Financial education: the definitive guide 2015, published by Nudge Global in April 2015, which surveyed 252 HR and benefits professionals, found that 75% now offer, are in the process of offering or are considering financial education, compared to 45% in 2014. Three-quarters (74%) of respondents that took part in the study also believe that financial education improves business performance.
However, there is still a long way to go when it comes to financial education, says Robin Hames, head of marketing and research at Capita Employee Benefits. “While financial education is now on the school curriculum, it will be a considerable time before this initiative translates to a more financially savvy workforce,” he explains.
It could be argued that employers are spoilt for choice when considering who should deliver financial education to staff, with employee benefits consultants, pension advisers and in-house professionals all offering financial education expertise.
The pros and cons of using external providers are fairly straightforward, says Jo Thresher, head of money at work for Jelf Employee Benefits. “External financial education providers will be experts in their field, trained and experienced in money matters, and in conveying these to employees. Plus, they should have engaging material ready to go,” she notes. “On the minus side, the questions employers need to ask are, ‘do they know your people, culture and style? What about your benefits? Are they able to fully understand and explain these?’”
One of the main advantages of a strong financial education programme is that it can engage an employee in an area that is important to them, Thresher says: “Why do people come to work? Money. Therefore explaining the financial side of life, and giving tips and guidance can really engage and improve an employee’s wellbeing.”
There are a several advantages for employers in choosing to use an outside party. Jeanette Makings, head of financial education at Close Brothers Asset Management, says: “An external provider can add value by bringing and sharing relevant best practice from other industry sectors, therefore enhancing the overall service.”
However, time constraints and competing demands can mean that finding and choosing a good financial provider can be something of a challenge for employers. “Most decisions makers are positive about adding financial education for staff but have a million other projects with higher priority and so it slips down the ‘to-do’ list,” adds Makings.
So what other options are there if an employer does not have the budget to stretch to an external provider? “An organisation can deliver internal communications that help to highlight the particular benefit, opportunity or issue,” says Makings. “These communications can then refer individuals to further sources of information.”
Relying on in-house employees or leaving employees to their own devices can, however, be potentially risky, says Thresher. “Pension scams are on the rise and there is so much information out there that it is difficult to find what is right for the average employee. One option might be for the employer to look to provide the education online. This could work well for some.”
The benefits of a successful financial education programme are extensive, so choosing the right provider of information is essential. As Makings says: “A good scheme should help the organisation achieve its wider business objectives, increase engagement, improve financial wellbeing and improve the employee’s understanding of their benefits and the impact on their own finances.”