Financial education is integral to employees’ understanding of the importance of saving and managing their money.
If you read nothing else, read this…
- To engage staff with financial education tools, employers should highlight the importance of financial planning.
- Financial education can help predict an employee’s future financial needs.
- Financial education can improve employee wellbeing.
However, 52% of employers do not provide financial education, according to a study of 1,013 workers by employee benefits adviser Secondsight.
But this number has increased following recent legislation, says Jeremy Beament, director at financial education provider Nudge. “The amount of organisations considering or actively implementing financial education has doubled from 2014 to 2015, and auto-enrolment has boosted engagement around finances,” he says.
In addition, only 6% of employees are on track for the retirement income they want, according to the Aegon UK Readiness report, published in November 2014.
Darren Philp, director of policy and market engagement at The People’s Pension, says: “With employees having more pension freedoms since April, it has never been more important to engage with savings. These changes put employees in the driving seat, so employers need to help them make the most of it.”
1. Emphasise importance of financial planning
One of the first things employers must consider when engaging employees with financial education tools is why they want their workforce to be interested in these. Jo Thresher, head of money at work at Jelf Employee Benefits, explains that employers need to get staff interested in the benefits offered, then use tools available to maintain interest. “One of the worst things for an employer is to have an older member of staff they do not need, who they are unable to legally dismiss,” she says. ”But if workers do not save adequately for retirement and are not educated to do so, this may be the situation for many employers and staff.”
If a workplace has an intranet highlighting employee benefits, including financial education tools, employers need to show their workforce why they should log in, says Thresher.
Philp adds: “A pensions register, an online hub where employees can see their pension savings, has huge potential to drive engagement and give staff control over their savings.”
2. Tailored communications
One way of engaging employees with their savings is to use financial education to predict how an employee might manage their money. Predictive financial education involves an employer predicting the topics for seminars, talks or discussions that might be most ideal for its employee base.
Beament highlights the importance of workforce planning and why predictive financial education can be valuable. “Workforce planning reflects that so many of us are looking to the future,” he says. ”Planning ahead is valuable, but staff tend to bury their heads in the sand and have as little as one to three months’ emergency funds should they have to stop working.”
Employers need to tailor both the communications highlighting the availability of financial education and the way in which the education is delivered in order to fit employees’ requirements. “A key challenge with staff is getting them to turn up for financial seminars, because not everyone is very proactive, so to rely on employees to log in to a financial education system will not see much engagement,” says Beament. ”Education needs to be brought to staff, rather than expecting them to find it.
“Employers must also assess the financial expertise that their staff have through data collection, and find out what their workers are interested in and give them what they want.”
3. Keep messages simple
Philp believes that the key to engaging staff is simplicity. “Giving employees irrelevant information is a good way to lose their interest and goodwill,” he says. ”It is important to focus on clear messages and stick to simplistic language everyone understands.”
Too much information can lead to disengaged employees. Howard Gannaway, senior associate at the National Institute of Adult Continuing Education, says: “Staff’s financial lives are getting more complicated rather than less so. There are so many tools; it can be overwhelming. It’s all dependent on what suits their workforce.
“The Money Advice Service or Citizen’s Advice Bureau, as well as mobile apps, can be priceless in engaging employees with savings.”
4. Improve employee wellbeing
Engaging employees with their financial needs can have a profound effect on their emotional wellbeing, so providing financial education alongside wellbeing initiatives can help to combat stress.
Nearly a quarter (22%) of employees say that the stress of their current financial situation impacts their productivity negatively, according to a white paper titled Financial stress is impacting productivity for nearly a quarter of UK employees by Sodexo Benefits and Rewards Services, which was published in May 2014.
Nudge’s Beament agrees: “Financial education should be slotted in with health and wellbeing benefits, because it makes employees less stressed and more productive.”
The aforementioned research from Secondsight also found that less than 20% of employees have a solid financial plan for their future and only 11% know how much they need for retirement. This clearly illustrates the significance of engaging staff with financial education tools.