Financial wellbeing means stepping beyond pensions
From the blog: It is fair to say employers have been thinking about financial wellbeing for years – even before auto-enrolment most offered a workplace pension, and perhaps some other monetary protection benefits, such as life assurance or income protection.
But for many employees, this feeling that they are supported in their financial wellness is at best forgotten, and all too often invisible, soon after the initial orientation into their new job.
Your employee’s financial health has a huge impact on them, and in the long term poor financial health is likely to impact on your business. So, it makes perfect sense to support employees with their financial wellbeing.
We live in a culture where we are all used to getting what we want instantly, which is a big problem
It has been well documented that there is a link between financial health and mental wellbeing, productivity, and absenteeism and presenteeism rates. Workplace financial wellbeing therefore needs to evolve.
Good strategies consider long and short term
There are four distinct layers that define financial wellbeing:
- Living within your means.
- A manageable level of financial stress.
- Having financial goals and a plan to achieve them.
- A solid financial foundation including emergency money, low levels of high-interest debt and adequate insurance to protect loved ones.
These criteria mean a good financial wellbeing strategy does need to address the long-term pensions and retirement planning/saving needs of individuals.
But it also needs to go further in order for people to achieve the above. It needs to help people manage their short-term and medium-term financial health.
Behavioural change is needed
We live in a culture where we are all used to getting what we want instantly, which is a big problem. We need to work with employees to get them in the mindset that making sacrifices today and separating out their expenses from luxuries will benefit their financial wellbeing now and over the longer term.
So how can we make this happen? We need to find ways to influence positive behaviour and lock it in until it becomes a habit.
We need to grab employees’ attention and get them to visualise the future they will attain with their current habits. Then we must quickly focus them on what they want, set some realistic targets and provide easy-to-implement ways to change their behaviours around debt and savings. The workplace is the perfect place to facilitate this.
Where employers have struggled in the past is that there are so many tools available they do not know where to start. Employers need to have a clear strategy first and then they will automatically know which tools to utilise.
To make financial wellbeing programmes work, employers need initially to identify the most important needs and wants for their employees and then design the optimum strategy based on these and any budgetary constraints.
The strategy then needs to find a way of measuring improvement at milestones along the journey. Each time the progress is measured, the strategy can be adjusted and amended accordingly.
Darren Laverty is a partner specialising in financial wellbeing at employee benefits consultancy Secondsight.