Alarming statistics everywhere show that employees desperately need to combat an ever-worsening cost-of-living crisis. For example, energy supplier E.On has warned that up to 40 per cent of its customers will be in fuel poverty by October, and while the Bank of England is predicting 13 per cent inflation, US bank Citi has tipped it to hit 18.6 per cent by January.
As a result, financial wellbeing and its multiple negative spin-off consequences is fast becoming the agenda-topping preoccupation for employees, employers and their advisers.
David Williams, head of group risk at Towergate Health & Protection, says: “People, like machines, can break down, and financial stress is one of the big causes. So, just as you want to maintain your machinery, you want your staff in good condition and not distracted by their financial affairs.”
While it may not have all the answers, the employee benefits industry has never been in a better position to support employees and organisations – both through the provision of direct financial support and via broader wellbeing packages.
Sophie Money, group protection wellbeing manager at Aviva, says: “Our research has shown that working to improve mental, physical, or financial health creates a virtuous circle that enhances every element of overall wellbeing. So, if someone is feeling financially off track but is unsure how to address it directly, by nurturing another area of health they could reap rewards for their financial health too.
“We have found that there are multiple strategies for supporting employee financial wellbeing but, importantly, different personalities will have their own perception on the subject and will need tailored support. Technology makes a difference in ease of access and the ability to engage outside of the workplace, but financial advice may prove useful for those who choose to engage.”
Wellbeing solutions
At one end of the scale, intermediaries can simply make clients more aware of the tools already freely available on group risk products and via their embedded EAPs and other added-value features.
These range from anything that can enhance wellness and resilience to specific financial wellness tools like bite-size videos on managing finances, online financial assessments and budgeting tools, debt counselling helplines, and referrals to debt charities.
Also highly relevant are services that provide lower-cost solutions, like free initial legal guidance or help with finding childcare or elderly care, and retail discount vouchers. LifeWorks reports that the average household can save up to £1,900 a year on the immediate discounts it offers via group risk partners.
But, if clients can commit to a degree of financial outlay, intermediaries can go a step further and recommend financial education services. Generic seminars and workshops can prove particularly cost effective, and some employers may even be prepared to fund, or partially fund, one-to-one personal financial advice.
Some of the generic guidance modules can specifically address cutting expenditure and budgeting, but even those on subjects like pensions can help by, for example, introducing the idea of using salary sacrifice to unlock spare cash.
Intermediaries can also consider partnering with one or more of the specialist providers that proactively tailor individual wellness services for employees.
Whether these are holistic programmes that include financial wellbeing, offered by the likes of LifeWorks and YuLife, or more specific financial wellbeing services, provided by organisations like Moneyhub and Cushon, modern technology will feature heavily.
Technological progress
Steve Watson, director of policy & research at Cushon, says: “Technology enables organisations to educate people or offer solutions at a time that someone genuinely needs help. Running a live financial education seminar is all well and good, but it needs to be available to employees 24/7 so they can access it whenever they want or need it.
“Sometimes less is more when it comes to ensuring financial wellbeing in the workplace. Often all that’s needed is a nudge via a short message or reminder for employees to review their investments or savings or take a particular action. Technology can also make engagement easier, and our own research shows that 66 per cent of employees would engage more with their pension if they could manage it through a mobile app.
“If this is the case for pensions, then I would suggest that this would apply to anything financial,” continues Watson. “The industry talks about the advice gap but I feel it’s more an accessibility gap. I don’t feel most people require advice to achieve financial wellbeing, but what’s missing is accessibility to the information needed to manage their finances and act.”
Onwards and upwards
Such specialist services are expanding all the time. YuLife, for example, currently only operates on a B2B basis but is testing the concept of offering employees dental cover on a subsidised individual basis. It also sees opportunities to extend the approach to other cash plan-type benefits.
Any further such developments cannot come soon enough because, whilst employees are already feeling considerable short-term pain, we are probably still only somewhere near the beginning of this cost-of-living crisis.
BOX: PROFITING FROM AN AUTOMATED NUDGE
Moneyhub, which already partners with some intermediaries, provides the tools to enable employees to view all their finances in one place, and issues automated nudges to help them make beneficial decisions.
Dan Scholey, chief commercial officer at Moneyhub, says: “We get all the data without any form filling being required by employees. We then enrich it and clean it up and use it to provide individuals with lots of insights.
“For example, by monitoring the loan-to-value ratio on their house, we can tell them if they can get a better deal. And, if someone has been spending less than usual, we can offer to move the spare money into an Isa or other savings account. We are constantly finding people money they didn’t think they had, and can easily give them 10 per cent more disposable income.”
BOX: HOW ROBO DEBT ADVICE COULD HELP
Steve Herbert, wellbeing & benefits director at Partners&, feels that robo debt advice could have a major part to play with financial wellbeing because conventional debt advice is so expensive.
He says: “I’m not aware of anyone using such an automated service in the financial wellness area yet, but LV= has done it for pensions. Once available, I think it’s something that group risk advisers should be considering adding to their array of added-value features.”
The closest thing to date appears to be Wealth Wizard’s MyEva service – which is open to partnering with group risk providers. But this only gives automated guidance in relation to debt – not advice.
Launched in 2019, MyEva takes employees through a simple automated financial health check, asking non-intrusive questions that help to build an overview of their current financial wellbeing.
Employees are presented with a health check score and a personalised dashboard highlighting areas of strength and opportunities for improvement. They are then directed to financial topics relevant to them, including reducing debt, with bite-sized tasks to complete to help them get more from their finances.
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