How to move beyond traditional segmentation to make financial wellbeing more inclusive

Broad financial assumptions are a barrier to getting everyone feeling more positive about their finances, which is why segmentation may not be the answer to greater engagement

The issue with traditional segmentation models is that they assume everyone within predefined segments have the same financial concerns and need the same support. Whereas in reality, each employee’s financial needs are incredibly diverse and there’s definitely no one-size-fits-all solution.

Any financial wellbeing programme predicated on homogenous segments is going to have winners and losers – it’s going to be useful for some people but totally miss the mark for others. Not all 30-year-olds are trying to get on the housing ladder and not all 55-year-olds are looking to access their pension.

Broad assumptions are a barrier to getting everyone feeling more positive about their finances and on the journey to becoming more financially resilient. They work for the few, not the many.

What’s the answer?

Forget about trying to segment employees and rather focus on building real subject matter expertise that employees can access when they need, and in a way that suits them the best. Each subject matter needs to cover absolutely everything that is needed to help someone on their individual financial journey.

For instance, let’s take employees trying to get on the housing ladder. First, don’t make the assumption that it’s only for younger people – the current economic reality is that people of all ages are looking to purchase their first home and older employees might be looking to help their children get on the first rung of the housing ladder.

It’s a scary enterprise and employees need access to a total A to Z of what they need to think about, what they need to do and what the financial implications are. They need help understanding how much they need for a deposit, legal and other connected expenses, how to improve their credit score, how to get the best mortgage deal etc.

There’s a lot to it and a single source of truth available from a trusted source i.e. the employer, is going to make it a lot less scarier.

But it can’t just be about information – solutions are equally important

We shouldn’t just tell employees about saving for a deposit, we need to give them access to a solution too. For instance, a workplace Lifetime ISA that benefits from a 25% government bonus of up to £1,000 a year. People are wary of free money and so miss out. But when it’s supported by the employer, and better still payroll enabled, employees feel more comfortable and they get that extra helping hand that can see them getting their first home a lot quicker.

Educating employees about mortgage deals and how to make themselves more attractive to prospective lenders is incredibly useful. But even more useful is having links to a trusted mortgage adviser who can scan the market for them and help them secure the right mortgage deal for them.

What we’re really talking about here is education in action. Listening to a webinar is useful but the chances are I walk away without taking any action. A webinar with strong signposts to immediate solutions is fertile ground for me to act immediately. It feels more comfortable and there is less friction.

When it comes to anything financial, the less friction the better. For a number of reasons, finances are one of those things that we all find easier to put to one side and are only really motivated to take action when it’s absolutely necessary – and in a lot of cases when it’s too late. And so appropriately timed nudges can really help to break inertia.

What if I’m under 40 and have quite a bit of money saved in a normal ISA? I receive a nudge through my mobile app from my savings provider to remind me that I am eligible for a Lifetime ISA that could add an extra £1,000 a year to my savings. If I’m saving for a deposit, this is the nudge that might get me to at least find out more. It’s delivering appropriate information at the right time.

Financial wellbeing is about supporting me, the employee, when I need it and helping me when I don’t realise I need it. It’s about information and solutions available at the right time – it’s definitely not about pushing out information just because I happen to be within a specific demographic.