WSB Debate: Making the case for financial education in the workplace

24th November 2014

Jonathan Watts-Lay Director, WEALTH at work, debated the issues of providing financial education in the workplace with the WSB panel.

Watts-Lay comments, “It probably depends on the size of the employer as well. I think a lot of big companies that already offer financial education will just continue to have a tailored offering, which is very much based around the benefits that they offer. With the very small companies, the Guidance Guarantee may be useful support for employees, particularly where there isn’t any formalised HR function or pension function, so I think it’s a good fall-back position. The Guidance Guarantee has also acted as a bit of a catalyst for those companies that didn’t have tailored financial education programmes in place before to start thinking that we do want to make sure that our employees can afford to retire, and that they make the right decisions when that point comes.”

Watts-Lay continued, “It’s about efficiency but also effectiveness, because you could certainly argue that putting some content online, maybe putting some tools online, could be very efficient but there might be a question about how effective it is in isolation. Our research, based on tens of thousands of people, shows seminars will always be the best way, and the reason for that is really just the interactivity, but of course, seminars are not necessarily the cheapest way. Other things that can work very well are live webinars, particularly when you’ve got either disparate employees or very remote employees. When it gets down to a lot of web tools, they are fantastic, but they really only behave as a support for something else you’ve already done, they tend to not work very well in isolation.”

Jonathan Watts-Lay continued by stating: “Yes, a quantifiable objective up front is absolutely paramount. So, setting an objective of can we get them to increase their contributions? Going through the financial education exercise, and then actually seeing what they do, and of course, you’ve got to make it easy. One of the other things why some people run financial education for certain cohorts, it’s also managing risk. We’ve certainly seen a lot of companies this year who have had maturing share schemes and the employer is very aware that there are potential tax implications so they want to make sure that employees understand what those tax implications are, so that they don’t have people knocking at their door in a year’s time, saying, hold on a minute, I’ve now got a tax bill that I can’t pay.”

Watts-Lay concluded with:”Picking up the point around people’s expenditure, the thing definitely to avoid, and I have seen this before, is where people say, look, you go down the pub every Friday night and buy three pints of beer, so why don’t you just go down and buy one pint of beer, or in fact don’t go to the pub at all. And as soon as you start going down that road, people will switch off, because what they see is that actually this is not about how to manage their money better. This is about sacrificing lifestyle, and that’s not to say that, at the extremes maybe lifestyle could or should be sacrificed, but it’s saying, when you get down to pints of beer, I’ve heard it about cups of coffee as well, don’t buy three cups of coffee a week. Cut it back to one, or something. That is just meaningless stuff; it doesn’t really impact on anything. So even though they’re easy examples to think about, they’re not really the right examples.”