28 Jul 2020

Why workplace financial guidance is more important now than ever

COVID-19 has highlighted the need for financial guidance more than ever before. In the world of financial services, the words ‘guidance’ and ‘advice’ take on very distinct meanings. It’s important not to confuse them. Guidance won’t recommend any products or tell an individual what to do with their money – and most of the time, it’s free. Financial advice is more in-depth. It’s an analysis by a regulated and qualified adviser giving a detailed recommendation based on an individual’s personal circumstances.

Nathan Long, senior analyst at Hargreaves Lansdown, will be speaking at the Employee Wellbeing Congress on Wednesday 9^th September at 11.45. His session will look at: Supporting financial wellbeing by helping employees build short-term cash savings.

A lot of the UK population shy away from actively seeking out financial guidance, perhaps equating it with the high price you can pay for good financial advice, even though this high price can be justified if you are looking for a highly personalised service. However, free, trusted financial guidance from an employer or an external provider can have a dramatically positive effect on an individual’s finances – particularly in this challenging time.

Taking this into account, what financial guidance topics could your employees benefit from?

Pensions

Around a quarter of employees admit that they never review their pension savings, according to Close Brothers Asset Management Financial Wellbeing Index (2019).

When planning pension and retirement income, financial guidance can help employees understand how their pensions are invested, choosing how they want to get their retirement income as well as the more near-term issues like how to plan their savings.

The problem is a lot of employees don’t know where to access financial guidance they can trust.

Katie Hooper, head of retirement savings at Hargreaves Lansdown recommends Pension Wise. She says it’s “a fantastic, free resource from the government to help find out about defined contribution pension retirement options if you’re aged 50 or over”.

Moreover, getting to the heart of how pensions are invested can be difficult for individuals, especially if they don’t know what they’re doing.

Employers can be part of the chain of answers and help provide financial guidance at work. You can set up bespoke financial guidance clinics for your employees and pension scheme members who have questions about their money. Additional guidance may also be required to navigate auto-enrolment and salary sacrifice in light of COVID-19 where an individual has accessed the Coronavirus Job Retention Scheme.

Day-to-day money management

If it’s not the boiler that’s broken down, it’s the washing machine. If it’s not your own hobbies that need paying for, it’s the kids’ recreational activities.

Last week, we reached 100 days of lockdown, which has led to fundamental financial behaviour changes across the board. Figures from the Bank of England show that households were saving 200% more during lockdown, which may soften the financial blow Coronavirus has inflicted on some households’ finances. So people have more money to put aside to fix that pesky washing machine, but how long can this last?

Financial experts recommend keeping between three to six months’ worth of living expenses in cash to cover unexpected bills. If we are barrelling into a recession, as the data seems to suggest we may be, financial guidance can help your employees know how to manage their finances and, more importantly, when they might need to reach into their pockets.

Financial resilience

Crisis can also present opportunity. With online video and digital training solutions having their heyday, it’s easier than ever to access financial guidance and build financial resilience.

According to Neil Greenberg, a professor of mental health at King’s College London: “Coronavirus has brought forward two years of technological change in two weeks.”

And that means employees can access free resources and services even more easily than before.

Presentations on financial topics are now online, so individuals can access these from home; financial Q&As can be held through webinars and there are many other online tools which can help to give people’s finances a spring clean!

This article is provided by Hargreaves Lansdown.

Workplace savings and financial resilience is one of the key themes at this years’ virtual Employee Wellbeing Congress. View the full agenda and opportunities to join discussion groups with your peers or register here to attend.