11 Aug 2021

Ways to help employees build their financial resilience

When examining the impact of the pandemic, LCP’s The changing dynamics of financial health (2021) report found that almost half of respondents (47%) said the pandemic had changed their ability to save. Of those, more than one in three (38%) were saving less or not at all, impacting their financial resilience.

Therefore it is not surprising that nearly 90% of employers believe that it’s becoming increasingly important to have a financial wellbeing strategy in the workplace.

With this in mind, we have prepared the following tips as the basis for a good financial wellbeing strategy.

1. Understand the needs of employees

Before any financial wellbeing initiatives are implemented in the workplace, it’s imperative that employers understand the needs of their employees. This is because each employee will have individual circumstances which are likely to result in different financial priorities.

They should start by assessing the various cohorts of the employee population and considering their different needs: younger groups may want help to save for a deposit for a first home, whereas that probably won’t be a priority for older groups, but a pension might be. It therefore helps to segment the workforce and research what these different groups of the employee population may want and need.

2. Develop an appealing benefits package

Once the needs of the workforce are understood, it’s then important to look at the employee benefits platform itself. A good starting point is to investigate if employees are taking up and using the benefits on offer. Making sure benefits are relevant and well-explained can really help take-up and improve personal money management.

3. Help with the basics

Many employees struggle to understand basic financial issues and often fail to realise the various benefits on offer in the workplace. Helping employees become more familiar with this is an important step in helping them to engage with their finances.

Getting employees to think about how they spend money on everyday items such as utility bills and insurance is essential. A great example of this is car insurance. It is extremely unlikely that you will get a better quote by remaining with your current provider than from shopping around, but many neglect to do this.

4. Good debt vs bad debt

Another important principle is helping employees understand the difference between good debt and bad debt. For example, a mortgage is a form of good debt – it makes sense to have a loan in order to own your home as it is a stable, easy to manage approach to long-term borrowing. However, it should still be reviewed occasionally to ensure you have a good deal. At the opposite end of the spectrum, debt with high interest payments, such as payday loans and credit cards, can get out of control if they are not repaid quickly.

5. Provide support

Increasing numbers of employers are putting in place a range of options from digital financial health checks, covering areas such as debt and savings, through to financial education seminars, interactive tools, video and animations covering everything from the employee benefit offering through to retirement planning. In addition, many are putting in place one-to-one financial guidance or regulated financial advice for those who need more support.

A number of delivery methods are also available to support staff depending on their preferred learning style and work environment. For example, do they work in an office or on a production line? This detail may change the method of delivery.

“The link between debt and money worries, lower productivity and absenteeism are increasingly recognised by employers and many are now looking for ways to support their employees following the pandemic,” explains Jonathan Watts-Lay, director at WEALTH at work.

“Building a good financial wellbeing programme is vitally important. The implementation of financial education sessions and the installation of an online platform such as the ‘Financial Healthcheck’ can play a key role, says Watts-Lay. “Both help to increase knowledge to understand some of the key issues which will help to build financial resilience in the future. This can include topics on a range of financial matters, such as debt and money management, managing savings, retirement and, health and financial protection.

“Not only can this implementation develop understanding and encourage employee engagement, it can also act as a catalyst for behavioural change and action – resulting in added value for both employers and employees,” concludes Watts-Lay.

This article is provided by WEALTH at work.