How can stress caused by financial worries affect employees and employers?
If employees are worried and stressed about their finances, it’s more difficult for them to focus on and enjoy their work. Financial stress has a detrimental impact on productivity and employee wellbeing. Lack of financial understanding is a common cause of stress, so it’s good for both employers and employees to provide clear and engaging financial education and communication.
What role can technology play in helping to improve financial wellbeing?
In today’s mobile enabled workplace, employees expect to receive information that is relevant to them and easy to understand. We are seeing innovations such as personalised animated pensions statements, gamification and interactive tools to boost employee interest in financial topics. Technology also enables detailed measurement on who is engaging with content which can help inform future strategy.
How important is it that people receive education to improve their financial literacy?
We have graduates leaving university with a degree but very poor knowledge of financial matters. The lack of education when people are young can lead to poor financial choices. Financial education on topics such as pensions, the new LISA, debt and day-to-day budgeting can help to equip employees with the information they need to make good decisions.
Is the complexity of financial products impacting on employee engagement?
Yes. Complexity can lead to confusion which in turn impacts on engagement with financial matters. For example, the language companies use to explain pensions has an impact on engagement. Accessible language is crucial. Phrases such as ‘lifetime savings’ and using a ‘small change calculator’ on a website, or mentioning ‘free money from your employer’ when talking about pension contributions help to interest people. Illustrations are important too – a 21 year old contributing £50 a month would build a pension pot of £135,000 by the age of 65. If someone starts at 31 they need to contribute £95.42 a month to achieve the same value. These examples resonate and help to encourage positive actions.
What is the role of employers when communicating financial wellbeing advice to people with different attitudes towards money?
It is true some people bury their head in the sand about money while others squirrel money away and don’t like to spend. The role of an employer is to make help employees to make informed decisions about financial matters. This is not about preaching to employees but ensuring everyone is at least engaged with the debate and equipped with knowledge. Organisations are tackling physical, emotional and mental wellbeing and financial factors are just as important. Consider someone’s age and their specific needs. Are they thinking about buying a house, retirement or have they just entered the workplace? Line managers can play an important role too so they need to be equipped with the right tools to explain about the employee benefits on offer.
Chief Commercial Officer