Face-to-face advice sessions are by far the most effective channel for financial education, preferred by 62 per cent of employers, while web based services such as webinars and online education/intranet are only backed by 9 per cent of firms, according to research from Close Brothers and the PLSA.
The research found 55 per cent of employers who offer financial education do so via group face-to-face sessions, with 49 per cent offering individual face-to-face meetings and 21 per cent offering access to advice over the phone. Of the employers that are already providing financial education, 30 per cent do so as a way of reducing employee financial stress, 30 per cent do so to improve employee financial wellbeing, 29 per cent believe it is a valued employee benefit, and 28 per cent do so to ensure employees understand and make the most of their workplace benefits.
More than a quarter of employers are aiming to launch financial education initiatives for staff in the next three years, with 20 per cent planning a launch within the next 12 months, according to research.
The research found 46 per cent who provide financial education tailor it by either career stage or age
Close Brothers’ Lifetime Savings Challenge report, written in conjunction with the PLSA, found affordability, debt, a complex savings landscape and a general lack of understanding as the key barriers to saving.
Of those employers who have no plans to provide financial education, 50 per cent said it is not a priority, 35 per cent say that there is no budget for it, and 20 per cent believed that financial education would be too expensive to provide.
Close Brothers head of financial education Jeanette Makings says: “Employers have a key role to play in helping their workforce to become more confident when it comes to meeting the lifetime savings challenge. Those that have embraced it are already seeing a real impact. Of those employees that have received financial education, over a third said that it had been useful in guiding their immediate, medium, and long-term saving decisions. This means a happier, more secure and more productive workforce. It’s a win-win for both employers and employees.
“But crucial to the effectiveness of a financial education programme is how and to whom it is delivered. While employers may find online provisions easier and cheaper to implement, its lack of effectiveness means that both the company and employees are being short-changed. For financial wellbeing to improve, employees must use the programme and be confident in applying that knowledge to make a positive change to their finances. Online is not delivering these results and so is a false economy. Employers need to utilise the impact of face to face delivery and provide a programme that is tailored to its people in terms of need and interest as well as career stage and age. For employers to add real value, they must engage with employees on the topics that matter most to them throughout their lifetime savings journey, delivered in the most effective way.”
PLSA deputy director of DC, lifetime savings and research Nigel Peaple says: “When you consider salaries, pension contributions and other benefits, UK employers make a significant contribution to their employees’ financial wellbeing. Financial literacy has long been an issue that the UK has struggled with so it is good news that an increasing number of employers are realising the important role they can play in helping employees tackle the lifetime savings challenge.
“Looking to the future, providers, schemes and government also have a role to play in helping people to make the most of their finances. The PLSA is currently consulting on the creation of a set of retirement income targets which will provide savers with tangible goals to take into account as they plan their finances.”