Many people under financial pressure haven’t got the knowledge to make informed decisions. According to the World Bank, one in three people in the UK is financially illiterate. As a result, people who were just about getting by are struggling to stay afloat in the cost of living crisis.
As a result, employees are turning to their employers for help and support — and they have high expectations. Mercer’s Inside Employees’ Minds study shows that people now place greater importance on wellbeing at work — with financial considerations at the top of the list.
The cost of living crisis isn't just a severe challenge for individuals: it’s a major concern for employers. The World Economic Forum’s Global Risks Report ranks the high cost of living as the most severe issue facing businesses over the next two years.
People are your greatest asset but they can also be your biggest risk if they are stressed and unhappy. And the connection between mental and financial wellbeing and business performance is well documented.
If your people feel on top of their finances, they will be happier, engaged and more productive. If they are worried about their financial situation they will be distracted, stressed and more likely to become absent.
The crisis is here for some time. Though inflation is expected to abate, prices will keep rising from levels that have put employees under severe stress. And interest rates are expected to remain at levels that put strain on people’s finances.
Financial wellbeing in the workplace is a business imperative and should be at the heart of your people strategy. We have the experience and understanding to help you to help your people build the financial resilience they need.
What is financial wellbeing?
Financial wellbeing is the state of feeling confident, secure and in control of your finances, both now and in the future. It sits alongside physical, mental and social wellbeing to comprise a person’s overall sense of wellbeing.
At Mercer we measure financial wellbeing using four pillars that help people on the path to feeling financially well.
Even before the cost of living crisis, most employers understood that money worries affected how their people performed and that this had an impact on productivity — yet relatively few took action. Financial wellbeing was seen as less important than physical, mental and social wellbeing in engaging and supporting employees.
The soaring cost of living combined with job shortages in many sectors has been a wake-up call. Employees want help with their finances — and to hold on to and attract the best people, organisations are under pressure to pay them more money.
Our Inside Employees’ Minds study shows that:
- Financial concerns are the biggest worry for employees across all age groups.
- Covering monthly expenses is people’s largest cause of stress — financial or otherwise.
- Two in five employees are seriously considering leaving their job — and pay is the biggest factor.
Whether it means getting the best from your employees day to day or holding on to talented workers, financial wellbeing is a core business concern as employers seek to support, engage and retain their people. However, few organisations can afford to award their people pay increases that keep pace with inflation that has been in double digits. And more pay often isn’t a sufficient answer for people who have lost control of their finances.
Therefore as an employer, you need to remind your employees about the benefits you provide and make sure they understand and make the most of these benefits. Your people are looking to you for help to manage short-term money worries and become more financially resilient.
Looking for Education, Guidance or Advice solutions to address a specific challenge that you have identified?
At Mercer, we have worked with employers to support their people’s wellbeing for many years, and we understand how financial wellbeing interacts with an individual’s mental, physical and social wellbeing.
We also understand that individuals need different levels of support on a range of topics. The financial wellbeing support we provide is a blended approach of in-person and online assistance that spans education, guidance and advice.
With our support, you can provide targeted solutions to get your employees on the right track quickly and let them know you’re on their side.
Supporting your people’s financial wellbeing
Financial education is the building of knowledge and understanding of core financial topics. It also means providing support through changes in benefits, career or life, and ensuring that your workforce is prepared for retirement.
How we deliver financial education — the four elements:
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Financial fundamentals
- All the things you should have learnt in school but didn’t. The aim is to improve understanding of high-level financial topics to empower people to make better choices when managing debt, dealing with budgeting and getting their savings on track.
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Pension scheme change
- We help people understand the impact of any changes to their pension scheme so that they have the information they need to make the best choices.
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Retirement journey
- We provide detailed pre-retirement workshops to ensure that people have a plan for their retirement and understand the appropriate next steps they should take.
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Employer support services
- We provide sessions to employees on a range of topics that support engagement and the employer’s strategic initiatives.
At Mercer we deliver education by combining traditional and digital methods. We can be onsite for face-to-face sessions or we can organise online sessions. We have also developed a cost of living digital solution featuring a range of videos and references to help people navigate the four pillars of financial wellbeing.
What is the outcome?
The benefits of financial education are wide-ranging and apply to the employer as well as employees. Workers who can manage their finances are healthier, more engaged and happier. These positives in turn support your corporate goals.
Employer
- Supports employer’s broader wellbeing initiatives
- Helps to reduce absenteeism and presenteeism
- Increases productivity and return on investment
- Retains and attracts quality people
- Supports diversity, equity and inclusion
- Improves engagement through communication
- Supports workforce transformation
Employee
- Improves understanding of company benefit strategy
- Improves financial skills
- Reduces financial stress
- Improves mental and physical health
- Increases engagement
- Allows employees to create plans for their future/explore options
- Allows employees to retire
Our financial guidance enables your people to make informed decisions about their finances and employee benefits — and what steps to take — through a personal conversation or online journey. Guidance provides people with the options available to them, detailing decisions they could make on a range of topics.
To help members achieve the financial outcome that is right for them, we offer a range of one-to-one guidance. This can build on education sessions they may have been to, and can also be one of the specific solutions in place to support the retirement journey.
Here area some of the guidance services we offer:
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One-to-one conversations
- A broad range of topics can be covered in a one-to-one conversation. People usually have these discussions with one of our financial education consultants after a group session. The personal conversation allows employees to discuss their specific circumstances and ask questions to make sure their plan is right for them.
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Pension Decision Service
- Mercer’s Pension Decision Service provides information and guidance to pension scheme members about the options available to them when considering their retirement.
- Members have a tailored call with one of our retirement relationship managers who will talk them through the options available to them from their scheme, and, if appropriate, alternatives outside the scheme.
We want to ensure that after speaking with a retirement relationship manager members are in a position to make a more informed decision about their retirement.
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Annuity Broking Service
- Mercer’s annuity service provides a whole-of-market non-advised annuity service to pension scheme members and trustees and directly to individuals. We deliver fully researched and individually tailored solutions to find the best annuity rate if that is the route people prefer for their retirement.
Our financial advice provides your people with a recommendation for what they should do, based on their specific circumstances, to achieve the best financial outcome.
Financial advice isn’t just for people who have a high net worth. Anyone could benefit from financial advice if they have complex financial needs. One of our advisors holds an initial call with the person to make sure that advice is suitable and beneficial to them. The advisor then goes through a fact-finding exercise and analyses their finances and lifestyle holistically before proposing and implementing a plan.
Each financial journey is unique to an individual. To us it’s personal, and our advisors work to build a relationship with each of their clients. Employers can contribute to or pay for advice provided to their employees.
Need help designing, implementing and measuring the impact of your financial wellbeing programme?
If you need help constructing a financial wellbeing programme and putting it into practice, we can show you how to build on what you already have to achieve the best value for you and your people — on a budget to suit you.
Developing a financial wellbeing strategy doesn’t have to require deep pockets and more benefits. Most organisations already offer benefits that support their employees’ financial wellbeing — they just haven’t communicated them that way. The hidden value of traditional benefits such as life assurance and income protection has long been overlooked and is rarely understood by employees.
We encounter employers who are paying for financial wellbeing services that have little impact because their employees don’t know about them. And the people in most urgent need often lack the confidence to seek help or don't know who to ask. Assessing and reordering what you already do with a better understanding and intention is a great start.
Research from Mercer’s Financial Wellbeing Index shows that employers with a financial wellbeing strategy consistently receive higher FW Index rating scores across each of the four elements of financial wellbeing, and overall their programmes score 30% higher than employers without a strategy. Furthermore, organisations that have listened to their employees while developing their strategy have a more effective and highly rated financial wellbeing programme than those that have not.
We work closely with you to build a programme that suits you and your people.
Here are the three elements of our approach:
- Understanding the challenges you and your workforce are facing.
- Proposing a targeted and personalised approach to address these issues — from re-marketing what you already have to deploying new and additional solutions.
- Measure ongoing success and amend the approach as required.
Understanding the challenges
- 1 Employee survey
- 2 Employee listening programme
- 3 Financial Wellbeing Index
Proposing an approach
Once we’ve helped you understand the challenges you and your workforce are facing, we can help you build a holistic strategy that covers:
- The right solutions and interventions to support your employees — either by identifying and re-marketing existing solutions and services and/or deploying new solutions or benefits depending on your employees’ needs and your budget.
- How you communicate and signpost these to help your employees understand their needs and how the solutions can support them.
- How you measure impact and evolve your strategy to meet the changing needs of your workforce and the world around us.
We can then support you in building the business case for budget, advise on selecting the right partners and services from a crowded market, and support implementation, communication to employees and continuing governance oversight. As well as improving employee financial wellbeing, this strategy will help to maximise the value you obtain from the money you spend on benefits.
Measuring success
To ensure that your programme is making a difference and adding value to your people strategy, you need to keep measuring usage and impact.
How does coverage and usage fit with needs and your diversity, equity and inclusion values? Who is accessing and using the benefits? What is employee behaviour telling you? Are the people most in need accessing the support you provide? Do you need a more targeted engagement approach?
We have the tools and expertise available to help you navigate these issues, measuring impact and ensuring you are delivering against your business commitments to continue to build a better programme.
Next steps
Money worries are the biggest concern for your people, and supporting individuals in this period can no longer be something that is nice to do. Financial wellbeing is a business imperative and one of the biggest people risks you will need to manage. Now is the time to take action.
Financial Wellbeing Leader, Mercer UK