Financial education in the workplace

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Sean McSweeney

Written by Sean McSweeney, Corporate Advice Manager at Chase de Vere

Chase de Vere has undertaken research with employers to understand their attitudes on employee benefits and providing financial education and advice in the workplace. This involved holding in-depth interviews with senior HR decision makers in 300 businesses which are representative of the UK business population.

We asked, “Who has the main responsibility to provide financial education for your employees?”

When we asked this question in 2016, 65% of respondents said that the Government had the main responsibility, with 14% saying the employer has and only 4% answering that the individual employees themselves should be responsible for their own financial education.

This gives the perception that employers didn’t give a high priority to financial education, to the extent that it should be provided to their employees by the Government.

However, in our 2017 research, the number of HR professionals who said the Government should be responsible was slashed to just 35%. Equally startling is that 29% of employers now say that individual employees should take responsibility.

Interestingly there was a sizeable increase, from 14% to 20%, in the number of HR decision makers who thought that employers should take responsibility for the financial education of their employees.

We then asked, “Is financial advice something you feel your employees would value and benefit from?”

An overwhelming majority of the HR decision makers we asked, at 85%, said their employees would benefit.

This is very encouraging. The introduction of pension freedoms in April 2015 has given employees far more choice about what they can do with their workplace pensions and how they take benefits. However, it has also given them far more complexity and increased the likelihood that they will make the wrong decisions which could have a detrimental effect on their standard of living in retirement.

We then asked, “Do you plan to do more to help your employees make more informed choices regarding their retirement?”

Following on from the question above. we found that 58% of employers plan to help their employees make more informed decisions about their retirement choices.

However, we then asked, “Would your company have the appetite to pay for financial advice for your employees?”

We found that 42% of employers said their company would. This does, of course, mean that the majority of companies still don’t have an appetite to pay for financial advice for their employees.

Finally we asked, “Do you anticipate including a cost for financial advice for your employees in your 2017/18 budgets?”

In response, 36% of HR decision makers said yes.

So we have a continual reduction in numbers, from 85% of employers who understand that their employees would value and benefit from financial advice, to 58% who plan to do more to help their employees make more informed choices about their retirement, to 42% who would have an appetite to pay for financial advice for their employees and finally to 36% who are actually expecting to pay in the coming year.

However, it is still very encouraging that over one-third of employers are expecting to spend money on financial education and advice services.

Employers are ideally placed to help their employees plan for their own financial futures and there may be a further vested interest in them doing so. Employers who don’t help could be faced with an ageing workforce which hasn’t planned ahead and cannot afford to retire. This could have a knock-on effect in terms of the business suffering from lower productivity, succession planning issues and losing younger talent to competitors that provide more opportunity for advancement.

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