The fear of ever-expanding regulation and the prospect of big bills for helping staff with financial matters has had a freezing impact on employers offering retirement guidance to their people.
Punter Southall surveyed more than 300 businesses during the pandemic to gauge how employers were faring; to see if concerns they had could be reflected fairly as shared experience. Despite eight out of 10 employers saying it would be good for business – and their staff – if their people were helped to achieve financial wellbeing, fewer than half actually offered any kind of assistance, even with an external specialist.
It would seem that a global health crisis has done little to dispel the ever-present dread represented by regulation and hidden cost.
Of the 37 per cent who were concerned about extending a helping hand, HR directors and other leaders cited these two, critical elements as the main reasons why, with cost as the primary reason in 61 per cent of cases and regulation in 58 per cent of answers. Add to the mix that six out of 10 employers don’t offer any support to those employees approaching 55 and able to access pensions and, it would seem, there’s a vacuum where there should be a recognition of being able to add value. Perhaps the handmaiden of a robust regulatory regime is its ability to instil caution before you’ve even digested its detail but, in this case, I ’d venture that this is counterproductive. You also need to take the two separate elements together to recognise that using a specialist consultant would, potentially address both threats.
Yes, regulation has mushroomed and as markets become even more complex, so, too, does the red-tape aimed at policing it to protect the interests of customers. And, for the unwary, there are undoubtedly concealed or unexpected costs poised to blow a hole in departmental budgets.
But if you combine an understanding of how to approach and overcome regulatory hurdles in a way that offers a cost-effective solution in the form of a programme that aims to improve the financial lives of employees, those concerns suddenly seem far less pressing.
So, as an industry, shouldn’t we be asking ourselves what we can do to make our case more effectively?
Given that the survey found retirement advice, debt management and help to save were the top three priorities for their employees, engagement would seem to be an open door.
I think the challenge remains the same: convincing companies that financial wellbeing is more than just the phrase of the moment.
Our industry is littered with examples of jargon which make little sense outside its confines. While I wouldn’t put financial wellbeing completely in that category, it doesn’t harm to articulate what it actually does mean to the majority of people for whom it would be a tangible benefit.
In my mind, financial wellbeing is not about great wealth or riches – for most people the goal is financial stability and the resilience to deal with a pitfall or two along the way, and rarely can that have been truer than this year. That goal should be attainable for many but managing money scares some people, with small problems being allowed to escalate until they become serious issues, which end up dominating people’s lives.
The way I view it, financial wellbeing isn’t so much about how much money someone has, it’s more about how they manage it. After all, we know of many instances of high earners who have got themselves into a terrible financial mess and lower earners who are good at finding ways to make ends meet and stay out of financial difficulty.
So, assisting employees to gain the right level of understanding of financial matters and providing them with access to some useful tools are ways that employers could have a positive impact on their financial wellbeing.
We may then find that ill-founded fears will fade in this area and other, related spaces. Because, as our research makes clear, both employer and employee, stand to benefit.