Selling a financial wellness strategy to the board
But mention financial wellness to any employee, be they management or junior level, and the assumption is often the same: a financial wellness strategy is just applicable for low earners.
Yet we know that financial mismanagement is a considerable cause of stress and people are spending huge amounts of time at work worrying about their finances. And with ever-changing legislation – auto enrolment, erosion of official retirement age, the reduction of lifetime allowance to name but a few, financial wellbeing is absolutely an issue for all, young and old, high or low earner, male and female.
An issue for all
I’ve come across countless examples of chief executives, partners and other high earners being unaware of the impact legislation could have on their finances or indeed, how well they are managing their finances in the first place.
Some did not realise they were affected by the reduced annual allowance or the lifetime allowance and did not even have a financial adviser to tell them otherwise, whilst others have been unable to retire at 60, despite company rules stating that they must, simply because they had no pension provision in place.
It’s why making assumptions around an individual’s financial wellbeing is so misguided. High earners won’t necessarily be well-catered for financially, whilst millennials and subsequent generations won’t necessarily be disinterested in pension provision or wider financial matters.
Yes, debt management for low earners is vitally important. It'll be no surprise to anyone that increasing numbers of people are entering the workplace with debt - especially student debt - but looking at the bigger picture, financial mismanagement affects everyone, regardless of pay bracket.
Make it personal
All this however, gives us a clue on how to successfully sell financial wellbeing strategies to the board: you make it personal.
With HR under pressure to demonstrate ROI on benefit spend, presenting the facts and data analysis in a way which board members can relate to is key. The most successful buy-ins have been when HR have targeted senior executives first – legislation has helped make this an immediate issue.
Senior staff may well have seen a reduction in how much they themselves can save and hold in a pension scheme without getting punitive tax implications. There are ageing workforce concerns, too: with no fixed retirement date, staff should be financially healthy enough to retire as and when they want to.
Realising the wider implications of financial wellbeing, executives are then aware of the value in applying it to the workforce – they can see the huge difference it can have. Considering the number of working hours taken up with staff worrying about financial issues, the workplace can be an ideal place to start delivering better financial education.
Another undeniably important part of financial wellbeing and a real challenge for HR, is to ensure that board members have a better understanding of the range of key benefits they are spending money on, whilst ensuring that employees get the best use out of them.
For instance, do people understand what level of life insurance is required for their family? How can they best use their maturing share plan for longer-term benefit rather than just cashing it in? Do they know how to access debt management tools?
Employers are all too aware of the burden on them, driven by government and society to do more for their employees. Younger generations too, are expecting more support. So firms are acutely aware of their duty of care – indeed, it’s an important discussion point at board level. But are these same firms preparing a plan?
At a time when a raft of legislation is bringing significant change to employees’ lives and the cost of living continues to increase, with the right approach and strategy HR can achieve buy-in from the board and commitment towards sustainable financial wellbeing programmes.
Martin Parish is area director of Aon Employee Benefits.
This article was provided by Aon Employee Benefits.
