While employers are increasingly aware of the importance and value of helping their employees improve their financial well-being, it's another challenge to actually get employees engaging with the benefits on offer!
From workplace pensions to savings schemes - there are a lot of initiatives being rolled out, and yet we keep hearing from employers who are struggling to get employees to take advantage of them.
So what’s the Super Glue that will make financial well-being stick?
Employee’s care about goals, not products
To get most people to take a real interest in sorting out their finances, you have to talk to them about their goals, not products.
Let me illustrate. At VouchedFor (our parent company), we once advertised an offer for mortgage advice across one of the large property portals. The only page where the advert received notable engagement was the ‘thank you’ page, after someone submitted an enquiry about a property. When we advertised to those exact same people on the same website 24 hours later, the response fell 10-fold.
My point? We will often engage in our goals – finding a new home in this case – for months. However, the windows in which we are motivated to engage in the financial enablers can be tiny by comparison.
Whatever our life goals – property, children, retirement, other – we are far more inclined to engage in a conversation about those, and how to achieve them financially, than we are to directly engage in budgeting, savings, pensions or such like.
Translating information into action
Translating goals to financial actions isn’t simple, and this is where both group presentations and online content often falls down.
It’s absolutely the case that a good group presentation, talking about the cost of retirement, and how much you need to save, can leave employees highly motivated and inspired to take action.
Unfortunately, that energy will soon dissipate as people encounter the complexity of actually applying the information they’ve learned to their specific situation.
Working out how to best use the money you have today to balance short term wants with long term needs can be a daunting and difficult one, even for the most financially literate individuals. It’s no wonder that employees in general can find themselves overwhelmed by options and paralysed by indecision about what to do for the best.
Online articles might answer part of the puzzle, but no sufficiently-digestible knowledge bank can ever answer all questions for all people. For most people, one-to-one expert guidance is the best way to ensure the necessary direction and momentum to make the jump from financial goals to solutions.
Planning is the answer!
The proper way to translate goals into actions is with a financial plan. A good plan provides a powerful way to connect your hopes and dreams for the future with the reality of your current financial circumstances.
It all starts with a cashflow forecast which shows how your savings, investments and pensions are set to go up and/or down over the coming months and years, and therefore whether you are on track to achieve your goals.
Once you know, for example, that you’d like to buy a property in 5 years, but you’re not on track to have a big enough deposit, you can start exploring what it would take to make up the difference.
What if you were able to save a bit more each month? How much better off would you be if you moved your savings to an account with a better interest rate? By making changes to your financial plan, you’ll be able to see what it would take to achieve your goal.
As you might expect, it is far easier to follow through on actions like opening a new savings account when you’ve made the concrete connection to achieving a big financial goal, rather than vague promises of future benefit.
If you want your financial well-being benefits to stick, the only Super Glue I know of is to give your employees access to a financial expert who can build a financial plan for each of them.
Won’t that cost a lot? Historically, yes. Which is why we at Hatch are committed to democratising Financial Planning. We’d love to hear your thoughts on this topic.