The physical and mental effects of stress are well documented and are not to be taken lightly. We all experience stress in different ways but it is probably fair to say that financial difficulty is one of the most common causes of stress in the UK.
It can impact all areas of life from associated depression and sleep problems to more serious health issues like increased risk of heart attacks, migraines and digestive tract issues. All of these issues can adversely impact an individual’s drive and motivation and consequently their productivity at work, creating a vicious cycle of yet more stress as a result of under-performing at work. In this way, financial stress is detrimental to both employees and employers as it accounts for a large proportion of absenteeism in the workplace.
Recent significant economic change has made the future of the UK workplace unclear and issues such as Brexit and the recent pension reform have added to the financial uncertainty and anxiety amongst both employers and employees. Changing demographics suggests that employees will be working much later in life. Employees are therefore placing much more emphasis on financial planning and security and are looking for employers to do the same. Research carried out by Baring Asset Management showed increasing numbers of UK employees are relying on their employers for financial advice with those in the 18-24-year age bracket being twice as likely to seek financial advice from their employer than the over 50’s. Employers cannot afford to ignore this fact if they hope to maintain a strong rate of employee retention.
A report by Barclays Corporate and Employer Solutions indicated that almost half of employees worry about their finances with 20% of participants stating that financial angst interferes with their work. A study by Capita Employee Benefits found that almost half (44%) of UK workers know someone who has given up work due to stress. It is more crucial than ever before for business leaders to focus their efforts on maintaining the health and wellbeing of employees and minimising their financial stress.
Financial stress derives from various factors but for many people, it is not only the management of their finances, but a lack of understanding of the financial arena that causes distress. If we look in more detail at the area of pension reform, what we find is astonishing. A survey commissioned by the Pension and Lifetime Saving Association in December 2015 found that 90% of employees invest in the company default pension scheme illustrating that these employees are not making an investment choice, rather leaving the decision up to the trustees. For many, the complex area of pensions is a minefield and whilst a company may be able to guide an employee on where to obtain advice, it may be unable to provide sufficient information to enable an employee to make a sound investment decision. However, the research by Baring found that 13% of employees, equating to £4.8 million people, are looking to their employers for advice on retirement planning – needless to say employers who are failing to meet this need are missing a trick.
Often companies use generic presentations or online material which can be confusing and is not necessarily tailored to an individual’s needs. Current research suggests that less than half of companies are even offering their employees digital material on financial health. It is clear that more needs to be done by businesses to look after the interests of their employees by preventing finance related stress, so what can they do?
Companies should be seeking opportunities for their employees to access financial advice that will help them to assess and improve their financial health. Research suggests that employees expect this advice to be provided by their employer. This could be achieved via financial health questionnaires, online assistance and one to one advice. For the average UK employee, obtaining advice from a financial adviser is way too costly and therefore simply out of their reach. The provision of this type of financial advice as part of a company’s core benefits package would undoubtedly be welcomed by employees. This would generally result in retention of key employees, which in these times of economic change is more important than ever.
Employee benefits tend to be non-cash compensation and those most commonly thought of are private medical care, health insurance, life insurance, company cars and additional holiday, yet schemes nowadays can include a vast array of benefits. Recent research by Employee Benefits and Xerox HR services in May 2016 showed that 68% of employers now offer counselling or employee assistance services but the inclusion of financial assistance is key.
Research carried out by the Institute of Directors in April 2016 involving 191 UK companies showed that 70% of company directors considered employee benefits to be very important to their business. A recent survey conducted by Jobsite showed that over 80% of people take a company’s benefits package into consideration when job hunting, with 72% of respondents stating that an attractive benefits package would incentivise them to remain working for a company.
Wealth Wizards is one such solution. It is the UK’s first online independent financial adviser that offers tailored and affordable one to one advice for employees. By including this solution as part of a benefits package, employers will be arming their employees with a wealth of financial expertise that will enhance the health and well-being of their workforce. Whether a company has a ‘responsibility’ or not is perhaps a grey area but what is clear is that providing financial advice as part of a benefits package can reap rewards for employee and employer alike and we would not be surprised if this will form part of a standard benefits package in the not so distant future.
Phil Blows, Account Director at Wealth Wizards. [email protected]