Rather than making sporadic gestures there can be real merit in providing ongoing financial education in your workplace.
Employers may find that instead of providing financial education as and when the need arises, they could find that a continuous programme is more beneficial for the organisation and staff.
Angus Jones, managing director of IFA firm Clarity, says:“Rather than fire fighting when a particular issue comes up, companies should have a financial education programme in place. It should be an intrinsic part of their business life.”
Graham Cooke, senior consultant in the private clients team at Jardine Lloyd Thompson, agrees and recommends that programmes should be run on an annual basis with sessions on different topics such as mortgages, debt management and of course, pensions. Websites and helplines can also be used to provide basic information on an ongoing basis.
However, there are a wide variety of events that will require some form of financial education for staff, for example, changes to the benefits available, including the introduction of flexible benefits, the closure of a defined benefit pension scheme and its substitution with a defined contribution scheme and a maturing share scheme. Legal changes can also act as important triggers. With pensions simplification last year, many firms had to adjust their schemes and also ensure that employees, especially senior ones, were equipped with the relevant knowledge to be able to make key decisions to protect their financial position.
Mergers and acquisitions can also spark a review of benefits as attempts are made to harmonise what is offered to employees across the newly-merged organisation. There are bound to be queries as staff take up their restructured benefits packages. However, streamlining may also be on the cards, prompting the need for employers to call in financial education providers to brief those employees who face redundancy. Providers can help with financial planning, particularly if the employee is about to endure a period of unemployment. They can also help with decisions around the pension scheme and the investment of any lump sum received as part of the redundancy package.
Pre-retirement schooling
When changes to perks are made, HR can end up being inundated with queries as staff seek to find out how they are affected. The HR department should avoid giving individual financial advice due to the risks of being sued if it is inappropriate. But group seminars, workshops, helplines and web work can be used to answer general queries.
Retirement is another trigger. Pre-retirement education is becoming increasingly popular among employers, however, there is debate about when exactly it should take place, with some saying it should occur at least five years before retirement, so giving employees time to review their options, maximise their pension pots and work out how they want to spend the last few years of their working lives. It is generally accepted that the minimum period of employment that should follow a pre-retirement planning course is around two years, so that people should still have some room for manoeuvre.
New joiners
Another opportunity for the provision of financial education is when new employees join. Many employers see it as a chance to give them a thorough introduction to the benefits on offer and to explain how they can make the most of them. Providing some kind of financial education induction course ensures that new staff face up to any benefits decisions that they may have to make straightaway and are informed enough to do so.
“People stand back from financial education and say it’s someone else’s responsibility. But you can’t offer flexible benefits and then expect individuals to be able to understand how to make the most of them,” says Jones.
He adds that employees reading corporate benefits brochures may well be frustrated when they notice the standard caveat about the information not constituting financial advice and the need to consult a financial adviser. However, he suggests that this could be eased if employers engage firms which offer both financial education and advice, so staff have a resource from which to draw on when necessary
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Key triggers
Events prompting financial education:
- Changes in benefits package
- Annual financial review
- New joiners
- Legal changes
- Mergers and acquisition
- Retirement
- Redundancy
- Launch or maturity of share schemes