In 2017, the financial wellness market exploded as more employers grasped the extent of the UK’s problem and how it impacts both the productivity and health of their people.

A quarter of respondents (27.5%) to our latest research (The Financial Wellness Playbook 2018) reported that levels of financial stress in their organisation were greater than 12 months ago, and seven in 10 (71.9%) said that financial stress levels had not improved in the past year.

Financial wellbeing at work: what trends are driving the need for action?

In the playbook, we brought together research from organisations employing 1,516,733 UK employees, data analysis from the Nudge community and tips from leaders in the HR and reward community, assessed these drivers and outlined how to put in place a strategy to address them.

The first thing to note is that contrary to some media reports, financial wellness isn’t only an issue that affects young people, those on lower salaries, or the vulnerable. In fact, although the issues may differ, money stresses apply throughout our lives. An effective financial education programme will provide the skills and capabilities needed, whilst also providing recipients with the ‘3 Cs’ (clarity, context and confidence) to take control of their finances and improve their financial wellness.

Financial wellbeing: how to build the business case for investment  

When building your business case, you won’t be short of supporting statistics but it’s imperative that you focus on your people’s real-life needs.

Our research showed just how broad the employee demands are driving these needs. Respondents outlined 16 different factors as diverse as higher auto-enrolment contributions (28.4%) kicking in from April, the impact of increased interest rates (42.0%) and eldercare costs (40.8%).

However, there were five drivers which the majority of respondents agreed upon: borrowing and managing debt (65.7%), being able to budget to live within income levels (65.1%), childcare costs (58.7%), the impact of Brexit on the UK economy (55.0%), and savings towards their financial goals (50.3%).

Let’s briefly look at each in turn.

Financial wellness factors: debt

People in the UK owed £1.566 trillion at the end of November 2017, up from £1.512 trillion at the end of November 2016. The complex links between mental health issues and debt are only just being fully understood.

Findings from the Clinical Psychological Review demonstrated that mental health issues are three times more prevalent in those that have debt. At the extreme, those that commit suicide are eight times more likely to have debt, and more likely to have problem drink and drug problems, further exacerbating financial issues.

Although employers can and should offer counselling, access to debt advice and financial education to support those in serious debt, access to a proactive programme of financial education can also help employees manage their money more effectively and avoid the debt trap to begin with. Employers have a great opportunity to be proactive and not wait until it is too late.

Financial wellness factors: budgeting

Research from the Money Advice Service found that 19 million people in the UK don’t have an approach to budgeting that they feel works, and that they just lack the basic skills needed. By giving your people a nudge and access to simple budgeting tools, you can have a big impact on their day-to-day money management.

Financial wellness factors: childcare costs

The launch of the government’s flagship new childcare policy has been beset by problems not only with the basic delivery of the IT systems, but the availability of places with only around a third of providers offering the Government-funded 30-hours childcare completely free to parents.

Add to that the closure of the childcare voucher scheme to new entrants from April 2018 and the complexities of determining which scheme parents are better off using  and you get a potentially stressful headache for working parents!

Financial wellness factors: Brexit impact

18 months on from the momentous decision to leave the EU, there’s been little progress made in understanding the longer-term implications of Brexit for employers and their people.

However, we’ve already seen an impact on personal finances and how employees are consuming their financial education. The Brexit-associated fall in the value of the pound has driven many to holiday in the UK or choose a cost-controlled all-inclusive break.

It’s also driven up inflation with increasing costs particularly seen for energy, recreation, food and drink – all items that directly impact our disposable income.

Financial wellness factors: saving towards financial goals

The UK is currently experiencing a record low savings ratio caused by a wide-range of factors combined with low interest rates.

Although there’s a lack of engagement with saving, opportunities remain for employers to engage with their people to help them achieve their dreams and goals.

Plans with clear, achievable steps work. Just the simple act of regularly writing down a plan means people are up to 50% more likely to achieve their goal!

Financial wellbeing: where you can get further help 

A good financial wellbeing strategy should pull together all the great employee benefits you offer that can help an employee in their life (from childcare vouchers to critical illness, to EAP, to pension) into a coherent strategy that employees understand, and which helps reduce anxiety and concern around their lives.

A well-communicated wellbeing strategy, including access to physical, mental and financial wellness resources and benefits will say a lot about the culture your company is trying to create.

Get your copy of The Financial Wellness Playbook!

The Financial Wellness Playbook brings together the HR and Reward community’s tips and tricks on how to design, build and maximise a successful financial wellness strategy – get your copy here.

Here’s a taster from Thomas Hiles, Group Benefits Manager at BNP Paribas:

“The take-up of benefits and the interests of people don’t necessarily always correlate to their age, job grade or gender. Its therefore essential that a financial education solution is personalised to the needs of each individual, whilst communicating relevant benefits in a way that helps them come to life”.