Financial education has probably never been more relevant to employees, and organisations can tailor it to the needs of their workforce in various ways.
Jonathan Watts-Lay, director at provider
WEALTH at work, puts
financial education into three categories: managing risk for the employer and
employee, employee engagement, and changing policy and regulation. "We have seen situations like
the collapse of the bank HBOS, where a number of staff who were probably on quite modest salaries
had quite a large proportion of their liquid wealth tied up in the company's shares. Then the
company went bust, and they lost all that money. The message there is: do not put all your eggs in
one basket."
Financial education tends to be well executed when staff take up a financial
benefit, but that is not always the case when the investment matures. "Companies are always telling
people about joining their share schemes and such like, but it very much needs to be an ongoing
process. It is no good doing it once and saying 'we have done that'," says
Watts-Lay.
Employers can choose to undertake
financial education in-house or employ the services of a third-party provider. If
they want to provide staff with financial advice however, they need to ensure they comply with the
law by only using a qualified independent financial adviser (IFA). Whatever route they choose,
financial education can be delivered in a number of ways, including posting basic
information on the organisation's intranet or internet sites, benefits brochures, posters and
flyers, group seminars, and workshops. More innovative employers could also use web or podcasts for
staff to download and watch or listen to. The type of education given will vary, depending on
the type and size of the organisation involved, as well as the objectives it is hoping to achieve.
When employers opt to use an IFA, they must decide whether to go for an adviser that is
remunerated on a fee or commission basis. Both routes have their pros and cons for the sponsoring
organisation.
Angus Jones, managing director of provider Clarity, says: "The more you come back to fees,
the more strategic your advice tends to be, whereas if you go by commission, you become
product-focused."
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