Three key elements to get financial support to employees at the right time

"I am playing all the right notes. Just not necessarily in the right order." – Eric Morcambe to Andre Previn, whilst holding him by the lapels.

As I pondered writing my next Spotlight instalment, I couldn’t help thinking of this classic Morcambe and Wise sketch featuring the late, great composer, Andre Previn. If you haven’t seen the sketch, it is a YouTube must.

Let me share my definition of the three elements at play:

Financial Education
This is purely informative, high level and generic. It’s often best delivered via some form of web-based enlightenment functionality and supplemented by classroom, WebEx or workshop activity. We do lots of the latter and the ambition is simple. By the time people have finished digesting what’s in front of them, they will have moved a notch or two closer to a place of better financial knowledge. Additionally, they will take away a few practical tips to implement that can secure improved financial outcomes for themselves and their loved ones. We love this activity!

Guidance
This is the natural extension of financial education, where individuals seek more specific clarification of a personal financial conundrum. It’s rarely just about pensions anymore. On our last wellbeing outing (you may have seen the purple polo posing on LinkedIn), we were asked about death nomination forms, changing bank accounts, balance transferring credit cards, switching utility suppliers and starting a Lifetime ISA. The key component of “guidance” is the supply of information - where to go to learn more and a steer towards even more proactive self-fulfilment.

Advice
This is the most specialised element of the three. It’s almost always at the cost of the individual and is generally, of interest to only 5-10 per cent of the population. However, it delivers a hugely different customer journey. The recipient could expect a review of income, assets, expenditure and liabilities; a full exploration of personal attitudes to risk and volatility; and a written report detailing the formal and regulated advice given by a qualified and preferably experienced adviser.

From my many years of workplace activity, delivering across the UK to all manner of workforces, I have come to believe that education, guidance and advice should be deployed in the following order:

Education – should be available to every employee, at all times. I am a big fan of technology and there is some great stuff out there (on flex platforms, via the website and through the fintech community). But boost this occasionally with humans delivering engaging content. There is one enduring fact that we know to be true – most people ultimately prefer people!

Guidance – should be deployed to relevant and specific cohorts, using segmented messaging and covering a range of topics such as the very basics of budgeting, how a pension works, the different ISA options and beyond. Our most popular sessions are:

The 5As of financial fitness – basic entry level ideas on how to save, manage debt and budget
Financial fitness for women – specifically focussing on areas like maternity, life expectancy, and divorce
End of tax year planning – carrying forward unused relief, bonus waiver and planning around the ever-changing pension allowance landscape
Pre-Retirement workshops – all the considerations at this important (and often daunting) next stage, including the state pension, taxation, allowances, pension options, drawdown and inheritance tax planning

Advice – as this is required by a small minority in the workplace, it tends to be on very specific issues, such as Annual Allowance and Lifetime Allowance planning, complicated pension transfers, investment advice and at-retirement decision making.

At the risk of sounding like a broken record, it goes without saying that employees would be better equipped to deal with their money if financial education was taught AND EXAMINED in schools.

There is some progress to report here, but it’s way too little, too late for most. We need to ditch learning how to calculate the volume of a cylinder from maths lessons, and instead teach how to understand the numbers on a payslip. If I had to give an evaluation of where we are with this initiative, Morcambe and Wise-style, it would go like this:

“What do you think of the show so far?”

“Rubbish!”

The author is James Biggs, consultancy and wellbeing director at Lorica.

This article is provided by Lorica.