I’ve recently spent quite a bit of time with clients looking at the issue of Financial Wellness, which continues to emerge as a key part of employers’ Wellbeing Strategies.
There is a huge focus around the National Minimum Wage and National Living Wage, and rightly so. However, this can mean that Financial Wellness programmes are often solely geared towards those employees with lower earnings. However, Financial Wellness remains just as critical to employees who are perhaps the highest earners in your organisations. All your employees have financial commitments and pressures.
At a high level, across all employees surveyed during the most recent PwC Financial Wellness Survey, 52% confirmed they were stressed over their personal finances. Against a backdrop of continued financial uncertainty, it’s unsurprising that 45% said they felt more stressed over the past 12 months. Digging deeper into the responses for higher earners, there are some interesting headlines which caution against complacency:
- 20% of employees who are earning more than £100,000 find it hard to meet their monthly expenses.
- 32% of those same employees earning £100,000 consistently carry a credit card balance, and of those, 27% struggle to meet their credit card obligations on a monthly basis.
- 22% of employees earning more than £100,000 are using those credit cards for the monthly expenses they can otherwise not afford.
Within the most recent National Statistics report, there are significantly higher rates of work-related stress for employees who exceed this threshold of £100,000 than the rate for all occupations. Employers should consider not just their duty of care to their employees, but also the significant impact this stress can have on their productivity and general wellbeing. This stress should be no surprise when you consider the rates that are attached to even the mainstream credit routes, not to mention those that operate within the sub-prime environment such as pay day loans. Summed up, it is about ensuring we have engaged, happy and productive employees.
The focus then turns to the 'How'?
The most recent Close Brothers Financial Wellness survey highlighted that 59% of employers now include Financial Wellness as part of their Wellbeing strategy. The actions being taken by employers vary, but financial education (29%), debt counselling through an EAP (16%), and access to a financial advisor (14%) featured heavily. It is an area where greater focus is leading to the emergence of new entrants to the market, and innovative approaches being put forward by providers. The introduction of the LISA also reflects the emphasis the government are placing in this area.
Employees want assistance
What is apparent though, is that employees as an audience are keen to listen. More than half (55%) of employees have changed their spending behaviour in the past 12 months in order to save money on day-to-day necessities (up from 48% last year). There is a potential obstacle, however: whether employees can trust their employers when sharing their concerns around personal finances. There is a cynicism about what their financial information will be used for in those situations where it is captured with the support of an employer as a facilitator. The key will be building trust through clear messaging on the platform, where relevant, or in the communications strategy that underpins the roll out of the scheme.
Financial Education is a must
Education is key. Not just in the products that are available, but in the support being provided. The term “financial wellness” can be dangerous, as it implies you are either well or not. The binary nature of that description presents a potential root cause of any stigma around seeking financial help. The education must therefore be clear, that everyone has financial considerations and it is something that is relevant for all. This isn’t something that will feature in a performance review or is collated, it is something that is available for all employees to access not in a time of crisis, but as part of a normal approach to finances. You as the employer are enabling access to something that an employee might not have access to otherwise. We need to be clear we are not tracking, scoring or using this information. As an employer, you are simply creating an environment where people feel comfortable talking about their finances, and encouraging our employees to make use of it. Technology helps support both the method of communication and the timing of receipt to ensure relevance.
At Benefex we continue to work with businesses to help shape their strategy in this area. We regularly host workshop sessions to support senior management to develop a programme that taps into the power of the many products that are out there, rather than relying on any combination of products alone.