F&TRC'S Jason Green argues the case for re-evaluating the use of Employee Assistance Programmes in financial wellbeing.
It is suggested that 15 million people in the UK are in debt (Debt-Medic, 2015) and struggling to cope financially in the current economic climate.
While we ‘officially' have zero inflation, it doesn't feel like that for many. As the cost of living rises, a large number of people are failing to manage their income, expenditure and debt effectively.
In turn, this has a significant knock-on effect to their daily working lives. Research carried out by Barclays in 2014 identified that:
• 46% of people worry about their finances;
• 25% of people are concerned about the amount of debt they have;
• Only two in ten employees are satisfied with their employer's efforts to support them with their financial well-being.
This is not only a problem for the employee. Barclays concluded the cost to companies of a lack of financial fitness in their workforce through loss of productivity and absenteeism is the equivalent to 4% of payroll. Let me repeat that so it sinks in: 4% of payroll.
How can employers help?
Group income protection (IP) is designed to replace income in the event of long-term illness or injury. Alongside this, insurers will often offer practical support to employees (and in many cases the employer) know as Employee Assistance Programmes (EAPs).
EAPs offer guidance and advice on a range of topics, usually at no extra cost to the employee, on a number of day-to-day problems, including health-related issues, legal support, civil issues, counselling and financial advice. These services are predominantly offered as online and telephone support, with some providers including face-to-face provision.
While these supplementary support services are welcome, I can't help but think that when focusing on the financial support and advice element, this symptomatic treatment is akin to shutting the stable door after the horse has bolted.
Thinking this through, are employees even aware that such services and support exist? And how many people will actually voluntarily engage with these services when they need them the most? I would hazard a guess at very few.
Many people, once in a hole financially, unfortunately, keep digging until the issue becomes all-consuming. Surely it would be better to offer people the opportunity to not pick up the ‘debt shovel' in the first place.
Having had a group IP policy in force from a leading insurer for the past four years, neither I, nor my employer have ever received any communications saying that, if needed, I have access to these services.
This makes me wonder: should we change our thinking and try to reach the route of the cause and stop it escalating? (ie, help the member manage their money better, rather than stepping in at the end, when for many they feel the battle may already be lost).
Auto-enrolment (AE) has led to an excellent opportunity for employers to help their employees to manage their money. In the same manner, software suppliers and life and pension providers can also provide propositions to assist their clients to better manage their income, expenditure and debt. Can we apply some of the new emerging technologies and thinking that we are seeing in the pension's world to the protection world?
Pension providers such as Aon with ‘Big Blue' and Barclays bank with ‘Money Tools' are integrating Personal Financial Management (PFM) tools into their member's journey.
Such services enrich the financial wellbeing of the user by providing the tools required to make better financial decisions and manage day-to-day money more effectively.
Personal Financial Management tools can provide many opportunities, including:
• Financial education;
• Helping to save towards long- and short-term goals;
• Helping to reduce and manage debt;
• Encouraging better spending habits;
• Building member engagement and trust.
I therefore see two problems. First, are the services currently offered via EAPs that attempt to combat financial stress and loss of productively being communicated to the scheme members effectively? And second, even if they are, is it enough?
I would suggest there is more that could be done. Some of the ‘solutions' to debt management and resulting productivity and stress-related work issues are merely sticking plasters.
There are some great examples of innovative technology being deployed in some workplaces that demonstrably increases scheme members' engagement in their own financial wellbeing, leading to fewer instances of debt-related work issues escalating out of control.
