The workplace is pivotal in helping employees make good financial decisions, from the first day of their employment through to their retirement years. Research has shown that many employees are receptive to employer support, and are interested in receiving advice and guidance about financial issues. In fact, employees tend to trust their employers more than the financial services industry.
Greater trust in employers could be partly due to the perception that dedicated financial advisers are only for the wealthy. There is also the fact that many people don’t know where to start when it comes to improving their financial wellbeing, and may feel apprehensive about going to a financial adviser for the basics. Employers therefore have a great opportunity to provide financial advice and guidance that could really help their people, from improving fundamental understanding through to more complex matters.
Enhanced financial understanding and security has wider-reaching impacts, for both employees and employers. Employees who are worrying about managing their finances are likely to find that it affects their drive, motivation, and productivity at work. It may also manifest in mental and physical health problems, with stress having many psychological and physical ramifications. By reducing the stresses caused by money-related concerns, employers can improve their workforce’s overall wellbeing and in turn, their results. This also strengthens the employee value proposition, to better attract and retain talent.
So, there are obvious incentives for employers to ensure that the workplace is a good environment to engage people when it comes to financial wellbeing. There have, however, been concerns about offering guidance and advice services governed by such heavy regulations. Indeed, no business wants to expose itself to unnecessary risk in the shape of fines or legal costs. Unfortunately, concerns about the regulatory consequences of facilitating financial advice prevent some employers from providing such services, which could otherwise be such a strong addition to their wellbeing programme. To counter this, implementing a strategic framework that means employers can be confident that they are providing tools correctly is important.
So, how can employers and trustees provide advice or guidance to their employees or members?
By implementing the following tools backed by the right sources, employers can have confidence that they are helping their people in reliable ways:
- Offering seminars throughout the year on topics that are relevant for your people, in ways that are easy to understand and in line with their goals and objectives. These objectives can be better established through employee surveys – and being prompted to identify financial goals may in itself be helpful for employees, as well as for employers looking to better tailor the support they offer. Providing information can be immensely valuable as a starting point for employees who may feel overwhelmed, and those who need it can then be signposted to additional support such as guidance, financial coaching or advice.
- Individual guidance can help employees understand their options and put them in a better position to make educated decisions. Where advice is required, employers can consider directing employees to the Government’s MoneyHelper, which includes a free pension helpline together with a retirement adviser directory. Many workplace pension providers also offer free guidance to members, and can refer those who need advice to their own financial advisers where available.
- There are also cost-effective ways to help pay towards financial advice. For example, the pensions advice allowance enables individuals with DC savings to access up to £500 of their pension pot up to three times during their lifetime to pay for advice. This can prove more tax-efficient than paying for advice out of taxed salary.
A closer look at the benefits of offering financial advice and guidance
So, what are the positive impacts of offering such services in the workplace? Once such tools can be implemented more effectively, the following benefits can be seen:
- It’s a cost-effective addition to your employee benefits package, improving your overall benefits offering
- More productive employees: financial concerns can be a big worry for employees, impacting stress, absenteeism, performance and staff retention. Tools to better manage finances reduce these stresses and resulting difficulties, yielding positive outcomes for both employees and their employer.
- There is an ever-increasing concern about people not saving enough for their retirement, and therefore not being able to leave the workplace when anticipated. Helping people understand how much they need to save will help them get back on track.
- The cost-of-living crisis also means that many people are under bigger financial pressures; such benefits can therefore be all the more important now
- Having access to such tools means that employees will better understand and appreciate how their benefits package helps them achieve their goals and objectives, leading to an increased sense that their employer supports them. This improves overall wellbeing as well as employee retention.
Knowing where to start can be challenge shared by employees and employers, when it comes to financial advice and guidance. By implementing a clear framework through which to offer this, employers can confidently provide tools which improve their people’s lives. With several factors now meaning that there is greater demand for financial wellbeing-related benefits, employers have a great opportunity to drive positive changes for both their employees and their organisation.