Helping employees get back to financial health

With so much financial uncertainty, from inflation to the cost-of-living crisis, it’s no surprise that people are tightening their belts and looking for ways to save money. In some companies, there are supports to help employees manage their finances and make the most of their salary – but is this an overstep by employers?

Benefits of employer support

The benefits to employers of supporting employees with financial stress are significant, says Stephen McCormack, senior director, head of financial planning in WTW. “Organisations have every reason to want their employees to be financially aware. An well designed employee financial wellness programme can help employers reduce a key barrier to productivity and motivation in the workplace.

“As we have seen in the past 12 months, interest rates have increased dramatically trying to combat high inflation and stabilise prices in the economy. Many mortgage holders have subsequently seen large increases in their monthly repayments which is alien to many as the initial ECB rate hikes in July were the first in 11 years. Employees are also dealing with the cost of living increasing escalated in 2022, driven by energy, fuel, and food costs primarily down to the supply disruption caused by the war in Ukraine.

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Ways employers can help

“I feel there is an onus on companies to support employees as employees spend so much of their working day busy it is difficult for them to find the time to get financial advice,” says Nicholas Charalambous, managing, Alpha Wealth. “An example is pensions where there is a legal obligation for all companies to provide the facility to advise staff but unfortunately a lot of companies don’t do this.

“Financial wellness weeks and clinics seem to be becoming more commonplace, particularly in larger companies, and I feel are useful for employees as it is during work time and generally covers relevant benefits for the employed.”

Potential setbacks

McCormack says that financial wellbeing and planning can be quite a complex area and the potential or existing distress can be specific to individuals. “One of the challenges is that it is a very sensitive area, where many employees don’t like to disclose their financial position, particularly if they are struggling to understand and come to terms with it.

“While general information sessions to employees are of great benefit, in some cases, it can be difficult to get employees to take on board the information provided and formulate their own plan of action. For this reason, it can be far more beneficial for employers to provide one-to-one advice sessions with an external adviser to allow employees to discuss their personal situation, confidentially, to get to the core of their financial distress. This will enable them to identify the issues, put a plan in place, specific to their needs and objectives, and monitor the progress on an ongoing basis.”

A win-win situation

Having a well-thought-through employee financial wellness programme is an invaluable tool to attract and retain staff, says McCormack. “While it’s impossible to keep everyone happy, financial wellness programmes have been seen to increase financial literacy and provide employee empowerment and workplace satisfaction. The relative cost to employers to provide this type of service is extremely beneficial and it is prudent to avail of expert external advisers to mitigate any perceived confidentiality issues.”

Stressors and relievers

A healthy, stress-free workforce is proven to reduce sick leave, lower staff turnover and boost productivity. “In several recent surveys, financial stress has been identified as the number one stress suffered by employees. Employees with money worries are more likely to have sleepless nights, not finish their daily tasks and have troubled relationships with colleagues. They are also more likely to be looking for a new job,” says McCormack.

He says the benefits to employers of supporting employees with financial stress are significant. Organisations have every reason to want their employees to be financially aware. “An effectively-designed employee financial wellness programme can help employers reduce a key barrier to productivity and motivation in the workplace.”

With one in three employees reporting financial issues as a distraction at work, it’s clear the workplace is a natural location for financial wellbeing initiatives to take place because it’s the location where people earn money. “As a result, financial wellbeing initiatives within the workplace create a mutually beneficial environment of education, engagement, motivation and increased financial security,” says McCormack.

Bank of Ireland says that the health of their colleagues’ finances can have a profound impact on their quality of life. “We’re committed to helping our colleagues to thrive by enabling them to build their financial resilience – putting tools and resources in place to help all colleagues make better financial decisions, for themselves and their loved ones.”

The bank has several resources and initiatives available to colleagues, on an continual basis, to support their financial wellbeing. These include colleague events, content curated by the financial wellbeing team on our internal hubs with information, articles and tools including calculators.

“Financial wellbeing is one of the three components of wellbeing that Bank of Ireland prioritises for our colleagues, which also includes physical and mental wellbeing.”

Working together for the best outcome

For any employer considering the introduction or enhancement of a financial wellness programme, they should look to obtain input from employees to ensure that the programme, that they have designed and are paying for, is in fitting with the needs of their employees, says McCormack. “Inclusion of employees in the process also helps to constantly hone the content based on what’s helpful, or unhelpful, and could help increase participation by others who may be hesitant to use them.

“Financial wellness is a very individual issue and depends on each employee’s circumstances, so getting engagement from the broader employee base at the early stages of developing any such programmes is an advisable and efficient way for companies to approach this issue.”