Be honest, do you really know how to manage your own money? Given you are reading this blog, it’s reasonable to assume that you are probably more on top of this than most.
But does the same hold true for your employees and pension scheme members? A recent report by the OECD highlighted the ‘below average’ financial literacy of people in the UK. It found that only 38 per cent of people understand inflation and almost a third don’t carefully consider the purchases that they make. And isn’t it ironic, given its position as a global financial centre, that Londoners currently have the worst ‘financial wellness’ score. Probably has a lot to do with the costs of living in the capital but this is also true everywhere else, as people juggle financial commitments whilst trying to save.
Notice I didn’t qualify this last sentence by saying save “for the future”, because as soon as this terminology is introduced, problems start to surface, because whether they care to admit it or not, many people are afraid of money.
I’m assuming that those of you who are still reading want to learn more about how to make a difference because, like it or not, many now look to their employer as a primary source of advice and guidance, so you’ve just got to be savvier about how you deal with this. Not everyone is irrevocably indifferent – they just want to understand. And there are now many tools you can use to try and create a realistic framework around which a better savings culture can start to flourish.
So here’s my manifesto:
- Break your target audience and topics for engagement into bite-size chunks. Find out what’s grinding their gears. Is it debt? Our research shows that there is high quality support out there that can help your employees understand how to manage debt and re-structure finances. Is it getting on the housing ladder? Use Survey Monkeys to gauge interest.
- Lose the jargon. Forget “lifestyle defaults”, forget “adequacy in retirement”, forget “ESG” and forget “auto-enrolment opt-out rates”, to name but a few. Valuable concepts in themselves, but a complete turn-off for most unless they become more meaningful and relevant. Tell your providers (and consultants) to stop bamboozling you - use simpler language. Perhaps start by not mentioning the word ‘pension’ at all.
- Lose paper! Use the technology available, which has come a long way since the dark ages of the impenetrable paper-based pension statement. Many DC providers are now presenting this
information on video. The latest automated advice tools can provide cost–effective guidance for employees across all stages of the financial spectrum.
- Get your providers to work harder for you. Get them to explain and show how money is invested in a way that promotes good governance, social good and positive environmental issues. All of these themes now resonate with today’s investors.
You need to go back to basics – the appreciation you will garner and benefits you may reap by doing so cannot be underestimated.