Three ways to improve the long-term financial resilience of your employees
“Build back better”. You might be familiar with this slogan, the latest phrase used by the UK government to articulate their coronavirus recovery plan. And the slogan got us thinking; can it be applied to personal finances as well?
Supporting financial wellbeing by helping employees build short-term cash savings will be discussed by Hargreaves Lansdown’s Nathan Long on 9September at 11:45 at REBA’s Employee Wellbeing Congress. Register here to attend.
According to the Institute for Fiscal Studies, national income fell by 20% in April to a level last seen in the early 2000s. In addition, non-payment of household bills increased sharply after lockdown, so much so that by May, the number of households making mortgage, rental and council tax payments were 14%, 11% and 9% lower than predicted on pre-crisis trends respectively. These numbers suggest that some households were increasingly struggling to make ends meet during the crisis.
These statistics are thought provoking. However, the good news is you can play a role in helping employees build their finances back. And better than ever before.
Start with your employees
Helping your employees with their financial wellness is not about creating a burden for business. Rather it’s about creating the tools that help employees improve their own finances. Start by understanding what your workforce are struggling with. Don’t always assume you know what their issues are. If you address their concerns, you’ll get a far higher level of participation and engagement.
Research can be done through a simple online survey you can create for free (or for a small monthly fee) online. Or, make your data more qualitative and conduct interviews with your workforce. Although this method takes time, collecting data in this manner can be invaluable in helping you understand what’s really affecting your employees’ finances and how you can provide a tailored solution for them.
How to make it happen
So, once you’ve collected your data, how do you actually go about making financial resilience happen?
The first step will be to work out who is going to deliver the resources; do you feel comfortable with offering this in-house, or will you work with an external provider? If you’re doing it in-house, review the resources you already have to hand. You could find your existing advisors have some really helpful content – be it tools, calculators or webinars. Pension Wise and the Money and Pensions Service also provide some excellent resources for those approaching retirement.
When choosing an external provider, opt for one that provides tailored information and resources for your workforce. Make sure they’ll have discussions with your stakeholders, and provide you with up to date feedback on how your employees’ are accessing their service. This will ensure you provide a top class financial education service to your employees.
Start with the end
What does ‘better’ actually look like for your workforce and employees? It may be they just want to save a little bit extra each month to help them cover those difficult moments in life. Or they might want to overhaul their finances completely, looking to you, as their employer, to help guide them through this process.
With this in mind, remove any barrier to action you can think of for your employees. For example, if you’re suggesting starting a savings habit, you should direct them to somewhere they could begin saving. In the same vein, if your workforce want to know about budgeting, give them a link to the tools to help them budget effectively.
Incorporating a measure of effectiveness can also help you monitor the long term financial resilience of your employees. Things like learning how many people have taken action as a result of your interventions can be really helpful to inform your next steps and help you feed back to your stakeholders.
Ultimately, aim for progress not perfection. Financial education is a marathon, not a sprint. For most members, it’s all about marginal gains. But over the long term, this can benefit you as an employer, and help your employees build their financial foundation back bigger, and better than ever.
This article is provided by Hargreaves Lansdown.
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