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Over the past couple of years, there has been a significant rise in businesses adopting wellbeing strategies for their team.

As well as a general consensus that it’s the right thing to do, a focus on wellbeing can provide several benefits including reducing conflict, obtaining and retaining the best staff and boosting productivity and profits.

While nice to have, true wellbeing initiatives aren’t about ping pong tables in the staff room, inspirational quotes on walls or discount vouchers for gyms, shops and restaurants. Instead, they are the things which improve communication amongst teammates, allow better balance between personal lives and work and that impact both physical and mental health positively.

While overall, things are moving in the right direction, one aspect which has been largely ignored is employee financial wellbeing. In fact, this area has been so overlooked that the Chartered Institute for Personnel and Development has called on employers to specifically include this when designing wellbeing strategies for their team.


READ: Why Financial Wellbeing Pays Off 


One reason suggested for the lack of focus on financial wellbeing is that business owners and HR professionals don’t know where to turn for help and are unsure how to implement meaningful schemes to deliver a return on investment.

That said, money can have such a large impact on so many other of life and therefore has a knock-on effect on things such as mental and physical health. Having enough money allows freedom to enjoy hobbies, buy nice things and treat our loved ones, yet people receive so little formal education around managing it effectively.

Given the link between employment and pay, it makes sense for employers to take on the challenge of growing knowledge about finances to help people to make the most of their lives.


The Cost of Poor Financial Wellbeing

Statistics show that 36%* of us worry about money. Those that do are also five times more likely to suffer from mental health issues and four times more likely to experience panic attacks.

Helping employees manage their money means tackling issues at the root cause – before they go on to cause distress or ultimately, breakdown.


Money worries can contribute directly to employee mental stress, and the financially stressed are more likely to suffer conditions such as fatigue and heart attacks as well as alcohol and drug abuse. A quarter of people taking part in our 2019 survey believe that poor financial well-being is a significant cause of employee stress. And yet over a third disagree that employees in their organisation demonstrate the knowledge and skills to make the right reward and benefit choices to meet their financial needs.

Rachel Suff, CIPD


Research also shows that 28%* of people find it difficult to talk about money. This means that if an employee does have problems, you’re unlikely to hear about it. Instead, when things get tough, the employee may present a range of issues such as low mood, conflict with teammates or absenteeism, masking the root cause of the problem.

As it is likely that most, if not all, of the employee’s money comes directly from you as the employer and therefore you are well placed to help the employee to manage it effectively.

That said, many employers are guilty of box-ticking in this regard, ensuring that the legal requirements are met but not exceeded. They’ll pay the required salary, provide a payslip, invest pension contributions and deduct taxes, but ultimately, very few go the last 10% to help employees understand what these benefits mean for them as individuals.


It’s not about Pay Rises

What is interesting is that financial wellbeing doesn’t just affect those at the lower end of the pay scale. In fact, it’s reported that those who earn over £100,000 experience the same level of stress as those who earn under £10,000*.

This is because those earning significant sums of money are likely to have higher outgoings such as bigger mortgages and more complicated taxation issues.  They are also perhaps more likely to be the sole earner in the household which comes with added pressure.

This shows that financial wellbeing isn’t about pay rises. While it is important to ensure that you are paying your team a fair wage and are ideally open and transparent about salary, giving people more money is unlikely to lead to long-term financial wellbeing.


What does Employee Financial Wellbeing look like?

As we’ve already discovered, true financial wellbeing is about financial education and empowerment for your team.

As an employer, you are well placed to understand when an employee might need access to knowledge and advice and there are a number of significant milestones that take place throughout employment which can have a large impact on the direction of the rest of the employee’s life. These are:


When a new employee joins the company. They may be earning more money, earning in a different way or at a different frequency than before. They will need to make decisions around their pension and there may be other financial benefits on offer such as life insurance or medical cover which they should understand properly

The mid-life MOT. The government encourages everyone to undertake a ‘mid-life MOT’ by reflecting on their health, wealth and career which as an employer you are well placed to support. https://www.yourpension.gov.uk/mid-life-mot/

Retirement. While active retirement planning may not start until later life, saving for retirement, whether through a pension or not, starts much earlier. Financial planning can help open up conversations about retirement sooner, giving both you and your employee more options.


While these areas are key, there may be others that you can think of that are specific to your business.


READ: When to talk to your employees about their financial wellbeing.


It is also worth considering the varying needs of your team. Those starting out in their careers may benefit from more general information regarding interest rates, inflation, payslips and pensions whereas those who earn more may have more complex needs requiring one-to-one guidance.

Business owners’ or directors’ finances can often be intricately entwined with those of the company and therefore are likely to benefit from advice specific to their own individual circumstances.

The advantage of financial wellbeing is that it can be as far-reaching as you would like it to be and therefore a simple and cost-effective option might involve knowing when and where to signpost your colleagues to for advice and guidance.

At the opposite end of the scale, for maximum benefit, you could invest in a bespoke financial plan for each employee (or senior employees) taking into account their lifestyle aspirations for now and in the future.



Financial Wellbeing in Practise

Think of a questionnaire that might be provided to enroll an employee into the company pension scheme. It might ask what percentage of their salary they want to contribute, what level of risk they want to take and whether they would like a salary sacrifice arrangement.

Admittedly, in their induction period, it’s unlikely that an employee’s mind is on their retirement but the answers to these questions can have huge consequences for their life in the future. It can make a difference in when they can retire, whether they can put the heating on without worry and how much they might have left over to enjoy or leave to their loved ones.

Giving people no context for their answers on this form may mean that they choose the default, copy someone else that they deem to be more knowledgeable or opt-out altogether, rather than making informed decisions. Without guidance, all they can do is guess and hope that the outcome is right at the end of it.

What employers could do instead, is signpost employees to a financial planner, who can help them make better decisions for their individual circumstances.

By doing this, you allow the employee to understand the trade-off between money in their pocket today versus for their future self. It’s about finding the balance between the two.


What else can help achieve financial wellbeing for your team?

Predominantly, it is about education. Having someone your team can talk to about their finances is a great start. You can have group educational or informational sessions that can be tailored to the demographics of your workforce.

You can also provide opportunities within the working day for employees to speak to a financial planner about their individual situation. This helps them tackle money queries early before they become an issue and affect motivation at work.

It may also be a good time to review the benefits that you offer such as insurance or private medical cover to ensure they’re still fit for purpose and that they are providing value to you. A good example of this is your company auto-enrolment scheme which may not have been reviewed since its set-up.

Other areas to look at might include sick pay so that your team can meet their financial obligations if they fall ill – avoiding a potential snowballing effect of debt and borrowing.

Ultimately, having a financial planner review the situation as a whole and provide recommendations is a good first step.


READ: Ten Steps to Financial Wellbeing for your Employees


Who should you trust to deliver financial wellbeing to your team?

When finding someone to deliver a financial wellbeing package to your team, thankfully the number of options available is starting to rise. That said, we believe that an independent financial planner, charging a flat fee for their work is the best option.


Paid upfront vs free advice. 

While there are firms who will offer their services for free, the danger is that such firms may need to provide a financial product to the employee in order to make a return on their time spent. Paying a flat fee upfront means there is no chance of bias.

True financial planning advice is about understanding the person beyond their money. Before recommending anything, an adviser must understand the employee’s family structure, full financial situation, ambitions for the future, attitude to risk and capacity for loss.

A full analysis of this information and research of all options should be done before any recommendations are made – this is not something that can be done in a 20-minute meeting.


Information, guidance or advice? 

To gain true value for money when implementing a financial wellbeing strategy, it is best to understand what you are getting. Is the firm you are using offering information, guidance or advice? While these sound the same, in regulatory terms they differ.


Information may take the form of a group session or factsheet given generically to each individual to interpret on their own. It does not take into account personal circumstances.

Guidance is where an employee might sit with a financial planner and ask questions about their own situation. The planner can provide information on the options available, as well as benefits and drawbacks of each, but cannot provide an individual recommendation as to what the employee should do.

Advice is where a full analysis is carried out and recommendations are made regarding the best course of action for that person based on their individual circumstances. Advice provided by someone authorised by the Financial Conduct Authority comes with certain guarantees such as that the person giving the advice is qualified to do so.


Restricted, tied and independent advice

Some firms may be restricted in the types of products that they can offer or the providers they can use, choosing from only a handful of pre-selected products. This means that there could be a better option out there for your staff.

An independent financial planner, on the other hand, has access to a large selection of products from the whole of the market to make sure that, after advice, if a financial product is needed, it is most suitable for the employee from all available.


How much does a financial wellbeing strategy for my team cost?

In reality, the answer to this question is as individual as the business itself. There are plenty of options for smaller and even non-existent budgets to get on the right path towards financial wellbeing. For those who want to pack more punch and see results, the costs will be higher, but there is something for everyone.


What to do next?

If you’d like to explore a financial wellbeing strategy for your team, we’d be happy to help. Simply contact us on 01642 525050 or email support@vintage-fp.com.


(*Salary Finance – Employers Guide to Financial Wellbeing 2019-20).

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This post was written by Karen Parker