Financial wellbeing benefits most valued by Gen Z

The needs of younger employees is coming increasingly under the HR lens. Financial wellbeing is a key area of concern for this Gen Z – those born from 1996 to 2012, the eldest of which are in the early stages of their careers.

Student debt, high rental costs and house prices, combined with wage increases which haven’t kept up with inflated living costs, means outgoings are taking a much larger proportion of a young person’s income than ever.

So, as an employer, what financial wellness benefits can you offer that will help you attract and retain the best young talent?

Financial literacy

This should be employers’ biggest priority to help younger workers avoid the negative mental health impact of poor money management. Employers are facing increased pressure to help their employees make good financial decisions, make the most of their earnings and feel more in control of their money.

So, what challenges do Gen Z face that could be addressed by financial education?

1. New products, new risks

Exciting new financial products and platforms have taken off in the last few years. Many of them target young consumers, which is fine so long as their audience has the financial literacy to understand the risks as well as the advantages.

Cryptocurrency - its unregulated nature means that it is fertile ground for fraudsters. Technology makes it easy to impersonate celebrities’ emails or social media accounts and take advantage of unwary investors. Even if the scheme is not a scam, extreme price volatility and a lack of industry regulation still make cryptocurrency a risky investment.

Share-trading - instant-access share trading platforms have arguably revolutionised investing but pose a risk to Gen Z investors if they see investments as a ‘get rich quick’ scheme. Impulse buying stocks to follow trends on social media leaves young people vulnerable to huge losses if they are not financially literate enough to understand the risks.

Buy now, pay later (BNPL) – in theory these offer an accessible way for people to spread out the cost of purchases. However, evidence is growing that BNPL schemes can be a problem for vulnerable consumers, allowing them to pile up additional debt on top of other forms of credit such as credit cards and personal loans.

2. Fraud

It sounds patronising to say that younger workers lack the life experience to make good financial choices, especially as they’ve grown up with a wealth of financial information at their fingertips.

But despite being digital natives, the under-35s are consistently the most likely group to fall victims to scams. Research from Credit Karma shows that scammers target this age group via texts, emails and social media, with reputable names such as Royal Mail and the NHS used to reach victims.

Sadly, complacency does play a role. Two-thirds of those surveyed believe they would spot a scam and that older people are more at risk of being conned.

But the fact is that younger consumers are being swindled by bank impersonators, social media scammers and phoney online retailers as criminals shift their sights to younger targets, not least because of their poor financial knowledge.

Visa reports that the under-30s accounted for more than four in every 10 victims of fraud last year, with average losses of £6,000 per person. Nor are Gen Z clued up on the consumer protections in place to help them if they do become a statistic.

3. Misleading social media advice

Many Gen Zers turn to online resources to fill a gap left by formal education.

But a recent study by debt management company Lowell found that 20% of 16- to 24-year-olds rely on social media for financial advice. This is not inherently bad, as some influencers do have justified clout and experience, but young people should be financially literate before going to influencers for financial tips.

The solution? Financial education

Employers are well-placed to help their younger employees educate themselves about financial matters. Gen Zers will also welcome advice on traditional areas of personal finance like budgeting, how to save, and getting on the property ladder.

Consider how your audience wants to consume this information. They will be comfortable with online learning via webinars, apps, or assessments - but sometimes support delivered over the phone or face to face is the most effective. Clinics, 1:1 financial mentoring, support groups and budgeting advice can all be adapted to suit the communication preferences of your target audience.

With the right financial education, you can empower your younger employees to effectively manage their finances for the rest of their lives.

Other employee benefits that support financial wellness

A key selling point of your benefits package should be financial products that can only be accessed through an employer.

Tech benefits scheme

Staff can buy the latest home technology like iPads, smart TVs and fitness trackers with convenient, affordable payments via salary sacrifice, as well as saving on National Insurance contributions. Spreading the cost over 24 or 36 months means it’s a more reasonable way to make a large purchase.

Employers can set a maximum value of products per person so employees don’t overstretch themselves.

Pay on demand

This gives employees access to some of their wages once they have worked the hours, rather than waiting until the end of the month. The aim is to alleviate cash flow problems along with the resultant financial stress and potential for going into debt.

Accessing wages before payday gives employees a greater sense of control over their cash flow and budgets. As an employer, you set a limit on how much of their pay packet staff can stream per month – usually this is around 30%-40%.

For employees who want greater financial flexibility, wage streaming is a handy way to access funds without borrowing. Providers also offer fintech-enabled features like personalised financial advice, wage tracking (visibility of earnings in real time) and gamified savings accounts to encourage financial resilience.

Conclusion

Equipping your staff with the tools to help them avoid falling into financial difficulty will pay dividends when it comes to loyalty and productivity.

Employers can and should look beyond wellbeing perks – your benefits package can be vital in attracting the best and brightest talent now and in years to come.

The author is Charles Ashwell, new business development director at Personal Group.

This article is provided by Personal Group.