4 robust ways to improve employees’ financial wellbeing
The cost-of-living crisis has put financial concerns at the forefront of employers’ and employees’ minds.
Historically, emotional and physical wellbeing were the key drivers of organisations’ benefits programmes.
More recently, however, financial wellbeing has been recognised as a significant determiner of employee health and productivity.
Implementing a robust financial wellbeing programme that addresses the short and long-term needs of employees should therefore be a priority for employers.
WTW’s 2023 Benefits Trends Survey showed that progressive UK employers recognise this need. More than one-third (36%) said they were looking to improve their long-term finance and retirement benefits. Almost half (50%) plan to improve the short-term financial benefits they offer.
1. What they never told us at school
Financial education aims to empower employees to make their own informed financial decisions by making materials available for employees to learn about financial concepts including budgeting, saving, investing, debt management. This can be via face-to-face seminars, online formats such as webcasts, interactive quizzes and more.
Employers can provide a good standard of financial education, even on a limited budget. WTW has produced free financial wellbeing guides for employees and employers, and these can be downloaded here:
However, financial education puts the onus on employees to access the materials and apply them to their own circumstances. Some employees, particularly those already feeling overwhelmed due to poor financial wellbeing, may not have the motivation or capacity to do this. If employers have budget, they could provide a more personalised coaching service alongside the financial education.
2. Financial coaching – a personal service
Financial coaching is a way of avoiding a ‘one-size-fits-all’ approach by offering employees a fully personalised benefit. Financial coaching focuses on the emotional and behavioural aspects of money management and, by doing so, helps employees identify and unlearn bad financial habits, and create effective and helpful ones.
Coaching takes into account the disparate financial experiences and money knowledge of all employees, allowing for acutely responsive assistance.
Financial coaches use their expertise to evaluate an employee’s financial situation, understand their values and priorities, identify strengths and weaknesses, and formulate an action plan to achieve specific financial objectives.
This will equip an employee with the knowhow to reflect on their money habits, create a budget, develop a financial plan, avoid common financial mistakes and learn how to avoid or manage debt.
There are a range of financial wellbeing providers in the market who can provide engaging educational apps or financial wellbeing platforms to corporate clients that include starter coaching sessions for all employees, for a relatively low cost per person. Further coaching sessions can be either subsidised by the employer or paid for by the employee.
3. Narrowing choices with guidance
Financial guidance can help employees make longer-term financial decisions. It is an impartial service which can help an employee narrow down their choices, but will often not be as specific as recommending a course of action or product.
It often focuses on specific areas, such as investment strategies, retirement planning, tax planning or insurance needs.
Not everyone will need financial guidance and most employees’ financial needs can be met by a combination of education and coaching. Financial guidance and financial advice tend to be required only by employees with high earnings or complex financial arrangements.
4. Advice - bringing recommendations
Financial advice involves providing comprehensive recommendations that take into account an individual’s complete financial picture and may cover multiple aspects like investment strategies, retirement planning, estate planning, risk management and tax optimisation. It is often more holistic than financial guidance which often focuses on a specific area.
Financial advice is not often provided as a standalone financial wellbeing benefit in the workplace because it will only be required by employees on the highest salaries. However, it can be featured as one of an employer’s financial wellbeing options, alongside financial coaching for the wider workforce.
Due to the potential consequences of their advice, such as insurance, tax planning, mortgages or pensions, financial advisers are regulated by the Financial Conduct Authority.
Wraparound support
Progressive employers recognise the need to enhance their financial wellbeing benefits. There is a wide range of solutions and providers that can be considered when employers are building a financial wellbeing programme.
WTW can guide employers on the solutions that will most meaningfully improve the financial health of their workforce, depending on employee demographics and budget.
Supplied by REBA Associate Member, WTW
WTW is a leading global advisory, broking and solutions company.
