Dan Scholey: Fostering financial wellness in the workplace - actionable steps for employers

UK Savings Week (9th-15th September) offers leaders a moment to reflect on how we can better support our employees’ financial wellness. Financial stress impacts a huge portion of the workforce, affecting not only personal lives but also productivity and engagement at work.

The Financial Wellness Landscape

Financial wellness means being in control of your finances, having the capacity to absorb financial shocks – like needing a new boiler, or emergency car repairs – being on track to meet financial goals, and having the freedom to make choices. Research from the Financial Conduct Authority (FCA) found that, in the UK:

34% of adults had either no savings, or less than £1000, in a savings account
Another 18% have less than £5,000
One in four (12.9 million) UK adults have low financial resilience
50% of under 25s have no savings at all, as do 25% of over 65s

The Impact of Financial Stress

Financial stress costs UK employers around £10.3 billion annually in lost productivity. Which can be down to people being distracted by financial worries, to employees being unable to afford to physically get into work on time or even staying in employment longer than expected.

Employees dealing with financial pressures are more likely to experience anxiety, depression, and other health issues, leading to increased absenteeism and reduced performance at work. Employees struggling with their finances are nine times more likely to have troubled relationships with co-workers and are twice as likely to be searching for a new job, leading to increased HR and training burdens for employers.

Actionable Steps for Employers to Encourage Financial Wellness

1. Leverage Financial Technology

Implement tools and platforms that help employees manage their finances effectively. Financial tools can be rolled out at scale and provide real-time insights and personalised nudges to help employees make informed financial decisions in a timely manner. In fact, 46% of employees specifically want financial apps as a core part of their benefits. And these apps really do have an impact, at Moneyhub for example automatically matching employees to discounts generates an average saving of over £72 a month, the equivalent of an inflation-beating pay rise. 84% of our users told us that after just 3 months of using our app, they feel they have better control of their finances.

2. Promote Financial Literacy Education

Financial literacy is the foundation of financial wellbeing. Employers can organise workshops or provide access to online courses and tools, apps or content covering topics such as budgeting, saving, investing, and managing debt, with the aim of improving employee saving and spending habits.

3. Implement Flexible Pay Options

Providing flexible pay options such as salary advances or on-demand pay can alleviate the burden of unexpected expenses, such as a broken down car. Earned Wage Access is a scheme that enables employees to access their wages as soon as they’ve earned them and the Chartered Institute of Payroll Professionals research found that 90% of UK employees who choose to be paid more frequently with Earned Wage Access say their finances are stable or improved.

4. Offer Retirement Planning Resources

Auto-enrollment means many more people have a pension but it is often seen as an additional tax rather than a true investment into the future. Understanding pensions and the impact on retirement planning is a significant employee benefit that is often overlooked. Retirement planning should start early, and employers can support this by highlighting the impact of their pension contributions and providing resources to help employees understand their retirement options.

Additionally, due to auto-enrolment, choosing a pension scheme now lies with an employer. Providers such as Mercer, Standard Life and Scottish Widows are taking a proactive approach to helping members engage with their pensions and understand what they have, and what they might need for a comfortable retirement. By using Open Finance to position pensions alongside daily spending, savings, investments, properties and all other financial accounts, these firms are increasing pensions engagement and enabling better financial futures for their members.

The Pensions and Lifetime Savings Association found that 77% of people don’t feel they are saving enough for retirement, while 1 in 5 pensioners are living in relative poverty – underlining the need for better support and education in this area.

5. Create a Supportive Environment

Cultivate an open and supportive culture around financial discussions. Encourage employees to speak about their financial concerns and normalise these conversations within the workplace. This will reduce stigma and make it easier for employees to seek help. A survey by Salary Finance showed that 44% of employees would feel comfortable talking to their line manager about their mental health compared with just 29% who would feel okay talking about their financial wellness with their line manager. Concerningly, 50% believe their employer doesn’t care about their wellbeing. Given the well-established links between financial and mental wellbeing, employers should be focusing on an integrated approach.

6. Provide Access to Financial Advisors

Offering access to professional financial advice can be invaluable, especially during significant life events such as buying a home, starting a family, or dealing with debt. The FCA found that 57% of employees want financial advice in the workplace, and 33% would actually pay for an in-house financial adviser provided by their employer. With technology the cost of advice drops significantly with digital tirage and automated fact finds and makes this an attractive perk to help significantly more people achieve better outcomes.

Healthier, Wealthier Futures

Supporting employees’ financial wellness is not just about providing resources; it’s about creating a holistic and inclusive environment where financial health is prioritised alongside physical and mental health. As leaders, we have the responsibility and the power to implement changes that can significantly improve the lives of our employees.

UK Savings Week offers the perfect opportunity to kickstart or reinforce your commitment to financial wellness. By taking actionable steps and leveraging both education and technology, we can foster a more resilient, engaged, and productive workforce – leading to a happier, healthier and wealthier future for all.

Sources:

Dan Scholey

Chief Commercial Officer at Moneyhub

Dan Scholey is the Chief Commercial Officer at Moneyhub, a company on a mission to use technology to help enhance the financial wellness of people, their businesses and their communities through Open Finance technology.