Financial education on the rise
Hannah Jordan, January 31, 2018
While online provision might seem easier and cheaper for employers to provide, this could be a false economy experts warn
Half (50%) of employers responding to a new survey from Close Brothers Asset Management already offer financial education for employees and 20% plan to do so within the next 12 months.
The Lifetime Savings Challenge report, produced in partnership with the Pension and Lifetime Savings Association (PLSA), looks at how employees are saving, where and why they are struggling and how much support they get from their employers. The survey took in responses from 1,000 employers and 2,009 employees from companies with workforces of more than 200.
The results showed that 60% of employers believe some of their staff do not have enough savings. A range of reasons were cited by employees for this: 29% said saving was unaffordable, 21% were in too much debt, 20% said the savings landscape was too complicated, while 15% did not understand the packages on offer.
Regarding key reasons for already offering financial education to employees, employers cited reducing financial stress (30%), improving employee financial wellbeing (30%), offering a valued employee benefit (29%) and ensuring employees make the most of their benefits (28%).
PLSA senior policy advisor George Currie said that there was always more that could be done at every level from corporates, government and independent bodies, but that the report had thrown up some positive messages.
“It is encouraging that 50% of the businesses in this report are offering some sort of financial education,” he told HR magazine. “And there is a real success story here in that although Millennials are under great pressure, suffering low wage increases and high asset prices for example, surprisingly the results show that this group save more than the next age cohort."
The survey found that 23% of employers, however, had no intention of starting financial education. Half of those with no intention of providing financial education said it’s not a priority, 35% said there was no budget, and 20% felt it would be too expensive.
Of those that have already implemented initiatives, 55% did so via face-to-face sessions and 62% said they were the most effective compared to online or phone advice.
Head of financial education at Close Brothers, Jeanette Makings, said employers had a key role to play in helping their workforces become more confident in meeting the lifetime savings challenge.
“Those that have embraced it are already seeing a real impact,” she said. “But crucial to the effectiveness of a financial education programme is how and to whom it is delivered. While employers may find online provisions easier and cheaper to implement, [online's] lack of effectiveness means that both the company and employees are being short-changed."
Makings added: “For financial wellbeing to improve, employees must use the programme and be confident in applying that knowledge to make a positive change to their finances. Online is not delivering these results and so is a false economy."
She added: “For employers to add real value, they must engage with employees on the topics that matter most to them throughout their lifetime savings journey, delivered in the most effective way.”
HRD at IT firm Agilisys Simon Maunsey, who has recently overseen the roll-out of a payroll based lending system for employees, commented that ahead of implementing the initiative the firm had learnt that in some cases financial problems were causing employees stress to the point that it impacted their work.
“We realised that both from an employee welfare and a productivity loss perspective we should do something about it. It’s about educating, offering support and giving them the tools that are within the remit of the company," he told HR magazine.
“Businesses have a responsibility, to a certain degree, to give employees access to this information – if they don’t do that both sides can suffer.”