At the IFW we receive a lot of queries about Workplace Financial Wellbeing. Charlie Goodman, a Board member at the Institute for Financial Wellbeing and head of the IFW’s Workplace Financial Wellbeing offering, has written a 4-part article on this topic.
In Part one of this introduction to workplace financial wellbeing I examined the motivations of employers offering this workplace benefit, and the multitude of options available.
Now I’d like to remind you that this is not a new idea.
Workplace Financial Wellbeing products have been around for a long time. Death in service and employer-run pension schemes had their foundations in a desire to provide security for employees’ families and reassurance that they’d have something when they could no longer physically work.
What do you already offer employees?
When talking to employers formulating their workplace financial wellbeing strategy, I advise them to start with workplace pensions and what they already offer in terms of employee benefits. Many things already in place come with additional services that support their strategy.
Modern contract-based workplace pension schemes often include workplace savings features, free planning tools and materials for members. Many providers also offer access to generic (and dependent on size, bespoke) financial education webinars.
Workplace protection such as group life and income protection policies can be promoted as providing employees with reassurance that in the event of sickness or death there will be support for them and/or their dependents – vital for providing piece of mind.
Again, many of these policies come with additional benefits such as bereavement helplines, health support, and employee assistance programs – which can offer debt support and legal guidance too.
Senior management often focus on Private Medical Insurance schemes to improve the experience of the healthcare system, but Health Cash Plans are particularly helpful in meeting the costs of everyday medical expenses for employees and their families.
Not all things branded as financial wellbeing provide financial wellbeing without further intervention.
In the last article, I mentioned that there are four subcategories of workplace financial wellbeing solutions: financial products, financial platforms, financial education, and financial coaching.
The first of these, financial products, covers a new breed of branded ‘financial wellbeing product solutions’ that could more accurately be described as lower cost loans paid through payroll deduction, either to pay off existing lump sums of debt or enable early drawdown of regular income.
Typically they achieve lower interest rates because through an employer they have a large pool of potential clients and risks of missed or defaulted payments or minimised by deducting loan repayments as employees get paid via payroll.
Most of these solutions now recognise that simply getting people out of debt won’t necessarily stop them from getting back into it from a behavioural perspective, so education platforms are often included to support the transition. These can be for ‘free’, although ultimately, as with additional services offered by workplace pension and insurance providers, costs are covered in the charges.
As a money coach, I expect financial wellbeing workplace policies to consider what can be offered to help employees overcome the mindsets and more practical realities of why they’re in debt in the first place.
In the next article, I’ll dive into the workplace financial wellbeing subcategories financial platforms and financial education.
Currently a Partner at the Employee Benefits Collective LLP, Charlie Goodman specialises in financial wellbeing in the workplace. He is a qualified IFA, Financial Coach, and Reward Specialist.
At 9am on Thursday 15th December 2022, Charlie joined Lorraine McFall to talk about Workplace Financial Wellbeing at the monthly online Forum for Coaches & Planners. Look out for future events like this.