17 Jan 2019

Is signposting enough when it comes to financial support for employees?

When is a signpost not a signpost? When it has been removed!

Sounds a bit odd, but during World War Two, all signposts were taken down. This fascinated me when I read about it. It was to confuse the marauding enemy forces if ever they invaded. But it did, of course, also cause some challenges for anyone else trying to find their way around the country.

Is a sign all you need?

In the world of communications, signposting has three key purposes:

Recap where you have come from
Confirm where you are
Show you the way forward

When navigating a journey, signposts are a great help on all three points. But if you’re going somewhere new or travelling a long way, you’re unlikely to do so using road signs alone. Route planners, guidance from others, sat navs, maps etc, will still have an essential role to play in helping you get to your destination. Plus, signposts can only show you the way if you already know where you are going. This is a crucial point when it comes to financial wellbeing – many people do not even know where to begin or what they should be aiming for.

Offering more than just a pointer

So, is signposting your employees towards financial support a good thing? Yes, absolutely. Is it enough? No.

Highlighting where employees can get financial support and pointing them in the right direction is a great start. But to be truly effective, your approach to financial wellbeing also needs to educate and equip people to take the necessary action. The easier you make it for someone to understand and act on something, the more likely they are to do it.

Having spent the last couple of decades specialising in workplace pensions and financial education, presenting to and meeting with thousands of employees across the country, I can conclude some key findings as follows:

a) There is a massive appetite for knowledge on all things financial. Whether looking at budgeting, debt-management, short-term savings or pensions, employees hugely welcome the opportunity to better understand how to manage their money

b) People don’t read most of the information they are sent by their financial product providers, especially on the subject of pensions. To be fair, most of it reads terribly and arrives in packs that are large enough to kill a small pet as they land through the letterbox. We often test a room on this subject by playing the ‘stay standing game’:

stay standing if you know who your pension is with
stay standing if you opened your last pension statement
stay standing if you read any more than the first page

By this point, there is nobody left standing. The pensions industry has a lot of work to do in terms of how they communicate information. Providers are taking steps to make annual pension statements easier to digest – but I fear they are still too handcuffed by regulatory and compliance requirements to make the kind of progress that is really needed in this respect. In the meantime, employers can help plug the information gap by providing employees with clear, meaningful communications.

c) Employees love having the opportunity to speak with someone about their money. This can be over the phone or even using the excellent live web chat functions now available. But, overwhelmingly, employees particularly love being able speak with someone about their money in person. This doesn’t mean you need to be offering all employees individual financial advice; support and guidance is enough for the vast majority. A 20-minute one-to-one session where an employee can ask questions about their financial plans and challenges typically delivers significant value. Good employers have realised the empowering nature of this type of support, and the positive vibe it creates for an employee to skip out of such a meeting, having cleared up a nagging doubt about something financial.

A combination of signs and education goes a long way

Signposting, of course, can help with each of these points, but it has to be combined with education. Then, once employees are clear on what they are aiming for and how to get there, anything employers can do to help facilitate this is the icing on the cake. Where you have benefits in place that can help – whether this is peer-to-peer lending, financial education workshops, your workplace pension or broader savings options – make sure you highlight these. For anything that isn’t covered by your benefits or wellbeing programme, clearly signposting employees to appropriate sources of external help can go a long way to helping them take decisive action.

Education and signposting can encourage employees to use a comparison site to check out transfer-only credit card deals; look at first-time buyer lending criteria; check their credit score; learn the nuances of the different ISA options. This is when the whole experience moves beyond just pointing. As the onus in these cases is on self-fulfilment, it’s not typically possible to fully track ‘action’. However, we do know that when we see people on site in follow-up visits, many are keen to tell us stories of their improved financial wellbeing in the making.

This is what it is all about. Signposting is a good starting place and let’s not stop doing it. But let us also ensure we encourage and nurture action.

The author is James Biggs, consultancy & wellbeing partner, Lorica.

This article was provided by Lorica.