A new report form MetLife Employee Benefits, in partnership with Syntoniq, has found that investment in employee financial wellness initiatives is focusing in offering information instead of helping workers to change their financial behaviour.
The report, entitled ‘A Behavioural Approach to Employee Financial Wellness’, reveals that 36 per cent of employees have said that their work performance has suffered due to financial concerns, a finding that MetLife says highlights the ‘real and pressing need’ to address financial wellness.
Research carried out on employee benefit consultants (EBCs) shows that 75 per cent believe employee financial wellbeing programmes will be the biggest challenge for the industry over the next two years. The increased availability of financial wellbeing support for employees will drive product design in the group risk market, 82 per cent of EBCs said.
In response, the report suggests that employers should engage with benefit providers to design financial wellbeing programmes and adopt a behavioural approach, specifically one that is designed to motivate employees to create better financial habits.
Some of the techniques that MetLife’s report suggests are: increasing employee motivation through self-awareness; redesigning systems to enable good financial decisions; and encouraging ongoing dialogue between staff and employers. However, another major challenge the MetLife has found is the need to improve communication with staff, something that 83 per cent of EBCs said could be enhanced.
“Improving employee financial wellbeing has real value for employers and there is a strong business case for tackling the issue as financially healthy employees make for successful companies,” said Adrian Matthews, employee benefits director, MetLife UK. “Behavioural finance provides a framework for enhancing the effectiveness of financial wellbeing programmes and the report highlights how it can help businesses and their employees.”
Corporate profits can fall by four per cent due to employees worrying about their personal finances, with 38 per cent likely to move to an employer that priorities their financial wellbeing. Whilst generic financial education can help, the study stresses that this approach fails to take personal situations into account. Financial education needs to be sustained if it is to have a long-term effect, the study concluded.