10 ways to create budget for your workplace financial wellbeing strategy
Employer: “Hey, can you put together a financial wellbeing programme for our employees please?”
Wellbeing Manager: “Sure, that would be great! What budget do I have to work with?”
Employer: “Sorry, we have zero budget for financial wellbeing – just do what you can?”
Unfortunately, this situation is all too common. I heard this sort of conversation 4 times yesterday, and it really got me thinking. In my opinion, employers either truly want to improve the financial wellbeing of their employees of they don’t, and in order to achieve anything meaningful and worthwhile you will need to invest a few bob. Far too many just want to pay lip service because they feel they should be seen to something because wellbeing is very topical at the moment.
When it comes to financial wellbeing, prevention is definitely cheaper than cure, and naturally most employers are very aware of the cost to their bottom line if they have unhappy, stressed out, tired, worried employees. A proactive investment is this area is surely more economical than paying the price of low productivity?
In the meantime, I decided to put pen to paper and have come up with 10 ways in which employers can create some budget for their financial wellbeing strategy:
1. Salary sacrifice. If you haven’t done so already, think about converting your employee pension contributions over to salary sacrifice. A 6% employee pension contribution on a salary of £50k will not only make the net contribution feel cheaper for them, it will save you, the employer National Insurance of £414 per annum. You could spend that sort of money on financial coaching for employees each year!
2. Increased employee pension contributions. If you already offer your pension on a salary sacrifice basis, encourage your employees to save more. Let’s face it, most need to anyway. Get you pension provider, or benefits consultant to educate them to save more. If you could get 100 employees to save an extra £100 pm each (net cost £60 or £80 depending on their tax band) you would save £16,560 per annum extra employer NIC. You could do a lot with that and invest in helping your employees financial wellbeing.
3. EAPs. If you have a ‘paid for’ Employee Assistance Programme (EAP), compare it to those that are offered by the group risk product providers you use. If the extra benefit of the paid for one is negligible, you could save this money and use it for some financial wellbeing interventions.
4. Group income protection policy restructure. If you offer a group income protection benefit, most of these pay out claims until age 65 or older. Most claims only last for a few months. If you restructured it to restrict the claims payments to a maximum of 5 years, it could still cover almost all claims based on our experience and you could see the annual cost more than halved.
5. Group risk full market review. Many group risk products such as group income protection and death in service are annually renewed rather than fully reviewed. Obtaining a cheaper unit rate is commonplace, so go ask your broker to conduct a full market review, obtain numerous unit rate quotes to then get them to compete against each other on price. This doesn’t happen enough, and the saving can be spent on improving financial wellbeing.
6. Review your broker. If you are an SME with 100 or less UK employees, you might be using one of the big employee benefit consultants for your pension and benefits broking. Whilst these consultants are highly proficient and professional, they are also very often a lot more expensive than using a corporate employee benefits advisor type of firm. As an SME you might find you are better served by a smaller firm and you should also see significant savings in the annual fees that you can use going forward.
7. Discount shopping. If you pay for a discount shopping facility for your employees, you may wish to consider the ‘free’ options that are available on the market. Also, again talk to your benefits broker as often some of the group risk product providers offer discount shopping as a free bolt on.
8. Fees instead of commission. If you pay for your group risk broking via the product commission, consider agreeing a fixed arrangement fee instead. This can be much cheaper and also, if the broker is working on a % commission, you could argue that there may not be an incentive to keep costs down or suggest more cost-effective alternatives.
9. Leverage. Create some leverage with your leadership team by finding out what your employees want. I’ve found one of the best ways is to ask a financial adviser to run a high level financial awareness forum to a representative sample of employees. It’s essential to then request feedback from the group as to what areas are most important to them to learn more about of to take action on. You will be amazed at what they say, and so will the leadership team who will start to feel swayed towards investing in financial wellbeing.
10. Assess the needs of your employees. Ask your employees to take a financial wellbeing assessment. Not only can they obtain a personalised financial action plan, but they will also obtain a score to benchmark themselves against. You, as the employer, will also obtain the corporate score to benchmark against. You will also be able to strategically pinpoint exactly where the highest levels of financial stress sit within your organisation. This gives you valuable intel to help build your strategy and business case to take to the leadership team to secure budget. You can also have the assessment retaken a year or 2 later to show how financial wellbeing has improved and demonstrate a ROI which will inevitably secure some more justifiable and meaningful budget.
If you want to find out how to create an effective workplace financial wellbeing strategy and how to put together the business case, then there are a couple of options for you. As part of the Workplace Financial Wellbeing Group on LinkedIn I run a monthly webinar explaining all of this. You can register for the next one here.
Alternatively, if you can get to London for the morning of 27th February, you could attend the group’s Workplace Financial Wellbeing conference. It’s packed full of up to date relevant content, best practice, industry expert speakers and case studies. Its free to HR professional and you get 3 hrs CPD time. Details and registration here.
Secondsight is a trading name of Foster Denovo Limited, which is authorised and regulated by the Financial Conduct Authority.
Information correct as of 30/01/2020