Why financial wellbeing advice is the latest work perk trend

More employers are looking for ways to help employees improve their financial wellbeing during the cost-of-living crisis, seeing benefits both for staff and their productivity
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As companies battle the cost-of-living crisis, most employers are unable to hand out inflation-busting pay rises at the moment. So instead, employers are highlighting their range of employee benefits, and even adding to them. Top of the popular list of new perks is, perhaps surprisingly, financial education. And because it helps staff to become more financially resilient at a time of high inflation, it’s a win-win for firms and workers.

According to Alexandra Loydon, director of partner engagement and consultancy at St James’s Place, it’s a growing trend. “Employers are engaging workforces in financial awareness programmes, and this has been driving conversations with advisers as they look for qualified experts to talk to their employees. And advisers also feel a sense of duty during the cost-of-living crisis to provide support and help workers raise their financial understanding.”

Of course, this is not purely altruistic. Partnering with employers can produce lucrative leads for wealth managers. Loydon notes that some St James’s Place advisers have seen “upwards of 40% of new referrals via this route”. Financial wellbeing and retirement specialist Wealth at Work says demand for its advice offering from employees-turned-clients has “gone through the roof”.

Time for a financial advisory service in the workplace?

Tapping into employees as a growth channel is arguably part of a wider shift in the wealth management industry to service fewer wealthy clients, such as lower high-net-worth and mass-affluent individuals.

The US is further ahead on this than the UK. Across the pond, many wealth managers have already established partnerships with employers. Historically, this has often been focused on providing tax and wealth advice to senior executives, but some are now expanding. For example, Ayco, part of Goldman Sachs, rolled out a wider financial advisory service to workforces in 2019.

In the UK, wealth manager Evelyn Partners is gearing up to launch an employee financial wellbeing service next month. Jason Hollands, the firm’s managing director, corporate affairs, says this will “enable employers to improve their engagement with their workforce and support their staff in gaining more confidence about their financial future”.

The service will include a digital platform and coaching sessions and the employer will typically cover the cost. Hollands says employees who need personalised financial planning or tax advice “will have the opportunity to engage us directly”.

Other wealth managers active in this space include the robo-adviser Nutmeg, which has partnerships with businesses that include top accountancy firms and John Lewis, providing investment management services to staff.

Why demand for financial education at work is rising

Numerous studies show that improving financial wellbeing can boost productivity and help companies retain staff, so providing financial literacy and investment education is a win-win-win for the employee, employer and the wealth manager.

Working with employers will introduce advisers to people who may go on to become clients

As Jonathan Watts-Lay, director of Wealth at Work, points out, the financial wellbeing agenda has been gathering momentum for a while. “It started during the 2008-09 financial crisis, when employers couldn’t afford to give pay rises but wanted to educate their staff about the value of their employee benefits. The 2015 ‘freedom and choice’ pension policy [which allowed savers to access their pensions flexibly, rather than being forced to buy an annuity] was another catalyst, as employers called in experts to explain the retirement choices to their staff.” Now the high cost of living has reinvigorated the demand for financial education at work. 

The explosion of financial products in the workplace is another driver. For instance, when launching anything from a share scheme to a corporate ISA or even salary advances, employers often draft in an independent financial expert to explain the pros and cons to employees. 

“There are lots of providers selling all sorts of products in the workplace, but employees need to understand them. It’s a growing market for wealth managers and money coaches to come in and do this,” notes Watts-Lay.

Why service levels will differ

Where businesses choose to work with a wealth manager as an ongoing employee benefit – as opposed to simply consulting them for a specific event such as a share scheme maturing – service levels may look quite different to what is offered to a wealth manager’s private clients.

It’s unusual to offer regulated financial advice to the whole workplace. Instead, the focus is typically on financial wellbeing. 

“We have a financial wellbeing programme that can be delivered to businesses through workplace sessions and workshops,” Loydon explains. “We help people to define their short, medium and long-term goals and understand their options. They’re educational and not about financial advice.”

Technology has a role to play: online platforms allow employees to access and engage as they wish, and video-conferencing materials can reach a wide audience. Financial coaching may be done via a Teams meeting or on the phone.

For instance, at Evelyn Partners, digital support includes goal tracking, budgeting tools and financial health checks. Open banking tools are used to create an app where employees can see all their finances – such as their bank account and pension – in one place.

Mind for the advice gap 

There’s undoubtedly a significant need for guidance of this kind. According to Boring Money, the advice gap in the UK stands at 13.2 million adults. That is, people with investments or large amounts of savings who have low confidence in managing their money.

That need could translate into a huge opportunity for wealth managers to educate these people in the workplace. “Working with employers will undoubtedly put advisers in touch with new networks of people who may go on to become clients. There’s no consistent figure for this, though, and it will depend on factors such as how much time an adviser is dedicating to these programmes and the size of the organisations they’re working with,” says Loydon.

Wealth at Work has seen a big jump in employees wanting to pay for advice; it is currently averaging 2,000 advice meetings a month.

But Watts-Lay cautions against seeing the workplace as a quick place to generate leads. “It can be a slow process. Sometimes an employee may instantly realise they need paid-for advice – or it may be five or 10 years later that they decide they want it.”