How to deliver financial wellbeing that works
Alice Evans, January 17, 2019
Financial wellbeing is now seen as having an important role to play in the workplace. But it isn’t without issues
This is the fourth in our series of articles looking at the changing face of employment. In it we’ve examined how a multi-aged workforce is presenting challenges and opportunities, the impact this is having on the future development of reward and recognition, and how these are further affecting the way employers communicate complex issues to their employees. In each case it’s clear that the issues facing HR have become more complex. This article carries on examining that trend, this time focusing on employee wellbeing.
The importance of mental and physical wellbeing for employee performance is well established as an issue that employers need to address. Financial wellbeing is now joining that agenda too; with an understanding that employees are grappling with both their current and future financial worries, which may limit their ability to work effectively. It’s an agenda item that looks set to stay. Addressing this issue is not straightforward and employers need to consider (among other things) how much help is appropriate, given the balance that needs to be struck between the cost of delivery and the perceived benefit of any assistance to employee and employer.
Our research shows that for 80% of employers the answer is clearly seminars and/or benefit fairs. Not only are these seen as cost efficient, but they also deal to some extent with the dilemma faced by many employers – worried that in years to come they might face legal action should any ‘assistance’ turn out to be judged as ‘advice’ that was incorrect and has led to poor outcomes. Nevertheless, a further two-thirds expect to offer financial assistance, budgeting and planning tools in some form over the next two years.
In stark contrast, for employees the traditional approach of using seminars and benefit fairs is the least popular way to learn about planning their own financial futures. What they want are the apps and technological tools they are familiar with in everyday life. They want control and the tools to manage their own finances. That doesn't mean that some will not welcome a seminar or a chance to discuss their situation at a fair, but if they want to truly meet the financial wellbeing needs of their employees employers are going to have to find a way to develop more powerful tools to meet the needs of their workforce. The challenge is how to do so in a cost-effective way.
These tools are going to have to be able to cope with a wide range of circumstances; including life stage, age, employee status, and differing levels of financial sophistication. They are going to have to be able to ask the right questions to guide the employee to the most appropriate answers for them, whatever their situation.
The tools need to give employees useful, relevant and actionable outputs that are also safe. If employees are going to provide detailed data on salary, mortgages, investments and so forth those have to be held securely. The downside of significant financial risk if that data were ever to be hacked looms. There’s already a reluctance on the part of employees to share personal financial details with anyone, which will have to be overcome to ensure that online tools can be effective.
No wonder then that increasingly the provision of pensions, and all the support that goes with that including advice and planning tools, is being provided by third parties. Outsourced providers who already have the expertise and who have made the investment to provide these technological solutions.
As the world of work continues to change, and the level of complexity continues to grow, demand for assistance to improve employee wellbeing is going to grow. Employers are going to want and need to address that desire, but in ways that are cost-effective and provide flexible and relevant assistance that meets the unique requirements of each employee. For the increasing number of employers recognising the need to provide assistance and planning tools over the coming years, the good news is that these tools are increasingly becoming available and AI developments will mean that this trend continues.
The solutions are out there. But that still requires a lot of hard thinking from HR – and others – to find the most effective ways to ensure that these deliver in the best way forward for employee and employer alike.
Alice Evans is global head of LifeSight strategy and markets at Willis Towers Watson