Why Financial Wellbeing Drives Corporate Wellbeing. There’s an unprecedented opportunity for companies
to improve wellbeing, retain talent and attract the next generation of leaders.
It’s a perfect storm. Employees have acute financial needs, employers are best
positioned to help, by doing so the company will benefit financially and with technology
reducing admin, it’s never been easier. What do people want from their finances? For me personally, money has always meant
security and freedom. The ability to pay for and do what I needed, to look after myself.
It offered me a sense of control, in an otherwise chaotic world. That come what may, I’d be
able to tackle it. And our world really has been turned upside
down in recent year. The trust people had in financial institutions was shaken during
the global debt crisis. And we’ve similarly seen a loss of faith in our political leaders.
People want to take back control and we’ve been finding that money has been one of the
first areas they want to focus on. It’s the area where the need is felt most acutely,
in everything they do. When they fill up their grocery baskets at
the supermarket and find the same items are costing them more. When they put petrol in
their car and see the price tick up on the meter to beyond what they were hoping for.
Families are getting to the end of each month, and they don’t know where their hard-earned
salary has gone. We saw this on ITV’s “Eat, Shop, Save”. But this alone isn’t the problem, it’s the lack of a way out.
At Moola, we commissioned some research to reveal what people were talking about when it came to
money. And the results were overwhelming. Out of 18 million online discussions over
the past year, half were calls for help. What to do with their money, when, how, why?
The lack of places where people can go for help is startling.
The problem is lying at the feet of a company’s HR department. Already stretched, we’re
hearing how they’re the ‘go-to’ source of information and exhausted by being targeted
with people’s questions. Traditionally, financial advisors could be
called upon to step in. However, there’s a limited and shrinking number of advisors
in the UK. AXA Wealth estimates that there’s 1 advisor for every 2,700 people.
People are struggling to help themselves, due to the dramatic lack of financial literacy.
Even with our most popular savings accounts (ISAs), 9 out of 10 people surveyed by Barclays
didn’t know how much they were allowed to save. At Moola, we heard people thought saving £20,000 was a requirement not a maximum allowance. And it’s not their fault. Financial services are full of jargon & obstacles, rather than being understandable, simple and accessible.
There’s also an issue of fit. Historically there have just been two choices: “Do It
Yourself” or find someone to “Do It For You”. However, a new trend is emerging,
“Do It With You”. We’ve seen this with the rise in general
of digital solutions. Built to solve problems and enable people to live better lives. The British Banking Association predicts that
the demand for digital will means 90% all UK banking will be carried out online by 2020.
That’s not that far away! People value control, flexibility, access, ease of use, transparency. Enabling, guiding and empowering. If you listen carefully, the government is
making the same noises. There’s a move away from the “nanny state”, and a shift of
responsibility back to the individual. The government won’t finance your retirement
for you, people are struggling to achieve their financial goals themselves, so there’s
a need for employers to help. Employee benefits are evolving.
Benefits as we know them are changing. Employees are more interested in programmes that appeal
to their lifestyle rather than their future. Demand for flexible working, the ability to
buy and sell holiday, and savings in lieu of a pension is surprisingly high, and these
benefits are highly valued by employees. This stands in stark contrast to the traditional
programmes on offer, which focus more on fixed future support, such as insurance and pensions.
Just as good physical health is vital, so is mental health.
Barclays found that more than half of employees worry about their finances and one fifth lose
sleep over it. And this goes beyond those struggling with debt, as the CIPD discovered 58% of
employees face barriers in managing their finances as well as they would like.
Importantly for those in HR, the research also found that 1 in 5 employees want financial
guidance from their employer. Employees are turning to you for help more frequently than
ever before. As an industry, we’ve really struggled with
making finance appealing. Tips to cut down spending is one thing, but what to do with
that money that’d been saved is another. At the other end of the scale, pensions have struggled
to gain widespread appeal, which the Chancellor admitted was down to them being “too complicated
and inflexible”. So how do we make planning for the future
appealing? Financial wellbeing is the solution.
The beauty of financial wellbeing is that as a lifestyle benefit, life events can act
as a short-term motivator for a longer-term reward.
When major events happen in people’s lives, that’s the time they place importance and
value on achieving a longer-term goal. I remember that when I came back from university
and got my first job, that was when I started thinking about how to get onto that property
ladder. When my first child was born, suddenly saving enough money to send them to university
became pressing. But back to building a future, brick by brick.
Home ownership across the UK has fallen to a 30-year low. This is startling for a country
that places so much value on this, in contrast to Europe where renting is a cultural norm.
Young people still want the security of owning their own home, they just can’t afford the
deposit and fees required to do so. And while we’re aware of the reasons behind
this trend, such as house prices increasing more than salaries, the reaction of employees
is less well-known. Until now. Benefex, together with Barclays, identified that employees are not
just looking for advice, but monetary assistance. 42% want benefits that help with a mortgage
deposit, but only 2% of employers provide this. This is a benefit for all.
At their core, financial goals show a desire for security (a roof over my head) and freedom
(to send my kids to university), so I can sleep well at night. Positioned this way,
the ability to put money away so I can maintain a level of lifestyle when I stop working,
all on my own terms, is also a lot more appealing. Moreover, the way to achieve these goals is
simple too. With coaching, setting aside some payroll and growing these savings, a wide
range of needs and aspirations can be supported. And it’s not just employees that benefit,
the whole company does too. With 1 in 4 employees admitting that financial
worries have impacted their ability to do their job, a study identified that the loss
of productivity from poor financial wellbeing can impact the bottom line by 4%.
In contrast, in helping employees, there are far reaching benefits for the employer as
well. Healthier employees contribute to reduced absenteeism, lower healthcare costs, reduced
stress and more. Helping employees achieve financial milestones
they thought were out of reach, and creating a culture of wellbeing and engagement, can
increase the firm’s “likeability” and attract the leaders of tomorrow.
Moreover, lifestyle benefits with longer-term goals, can help retain existing talent. This
offers a competitive advantage with a compelling return on investment.
As saving for a deposit for a house will usually take multiple years, support offered encourages
staff to stay. This cuts recruitment and training costs for replacing staff, as well as allow
for a reduced intake, as staff hired are more likely to be retained. Attractive benefits that resonate and fit
people’s needs will increase take-up rates and drive greater alignment of interest across
the firm. Imagine offering a benefit that exceeds employees’
expectations, makes a tangible difference to their lives, and helps the company become
more profitable in the process. Moreover, with simple digital integrations,
such as “single sign on” and queries handled, admin is minimised, to beat HR expectations
as well. The bottom line.
Money underlies every decision we make in life as well as impacting how we feel and
how we perform at work. People crave security and freedom. The knowledge that they can do or
have what they need, in order to sleep well at night.
Flexibility and a degree of control in how their payroll is distributed, coaching that
takes them from saving to achieving these life events and improve their lifestyle, with
monetary contributions, is the order of the day.
Fortunately, technology can help reduce admin, and online and offline communication can raise
awareness. A culture of wellbeing and engagement can
attract the leaders of tomorrow. And longer-term goals can aid retention and
cut costs, for a compelling return on investment. Financial wellbeing. Improving both employee
and corporate wellbeing. To find out more, check out www.moo.la/employers