1. The Power
of
Workplace Financial Literacy
...why investing in your employees’ financial
capability makes good business sense
Abraham Okusanyai M Sc., Dip PFS
M ON£Y TM
AST£RCLASS
www.moneymasterclass.co.uk
...cutting-edge financial literacy for the 21st century !
info@moneymasterclass.co.uk Tel: 01 268 559 331
2. Financial literacy is increasingly being offered in the workplace. A CIPD research shows nearly one-fifth
(23%) of 466 employers surveyed offer some form of financial education to their employees. 1 Employers
across the global are realising the enormous benefits of equipping their workforce with the skills they
need to manage their personal finances and make informed financial decisions. However, the concept of
teaching people how to manage their personal financial affairs at work is still being met with cynicism in
some quarters and it is still a long way before financial literacy becomes a common practice in our work-
places.
According to the CIPD, UK businesses loose out to the tune of £9.6billion a year due to loss of employee
productivity caused largely by financial distress. (That is equivalent of £329.89 per employee per an-
num.2 ) This figure is supported by findings in the US. According to E. T. Garman, Professor Emeritus at
Virginia Tech University, financially stressed employee cost their employers an equivalent of £279 to
£1303 a year.3
It is not unusual for employers to be reluctant in involving themselves with employees’ personal finances
possibly because they feel that they are intruding on their employees personal lives. And while the bene-
fits to employees are obvious, employers may find it difficult to see the benefit to their business. How-
ever, given the abundance of evidence supporting the impact of financial worries on employee productiv-
ity and the effectiveness of workplace financial literacy, employers ignoring this powerful tool are only
doing so at their own peril. Here are a few benefits of workplace financial literacy to the employer.
Reducing Absenteeism and ‘Presenteeism’
Recent research undertaken by the charity Samaritans concluded that the biggest source of stress for
most people (51%) is money. Financial concerns can cause stress, anxiety and even depression, which
result in increased sickness absence. Employees preoccupied with their financial problems are known to
be disengaged, absent-minded and are more likely to make mistakes at work. Workplace financial liter-
acy is an effective tool in helping employees deal with their financial problems and seek help. This
should help reduce the amount of time taken off work as well as the amount of time spent dealing with
personal financial matters rather than working.
Improving employees’ awareness & appreciation of their benefit package
Financial literacy can help employees appreciate the value of their benefit package, which is a key in re-
cruiting, engaging and retaining best people. UK employers spend billons of pounds each year on provid-
ing benefits for their employees but a meaningful part of this is wasted because employees are unaware
of the value of their benefits. A research by AON found that the average benefit spent on an employee
earning £26,000 a year was equivalent to 21% of salary. However when surveyed, less than 2% of employ-
ees believed their employer spent an amount equivalent to 20% of salary on their benefit package – sug-
gesting a failure to understand the value of the rewards on the offer. Imagine what your employees
would feel when they realise their package is actually worth 20% more than they thought!
Abraham is a professional financial planner, an inspirational speaker and trainer. He founded Money MasterclassTM after several years
within the financial sector, working for global names such as Barclays & RBS. He now combines his expertise in personal finance with an
in-depth understanding of behavioural psychology to educate and motivate people to make intelligent financial decisions. He has an M Sc.
from Coventry University and a Diploma in Financial Planning from the Chartered Insurance Institute, alongside several other profes-
sional qualifications. He is also a member of the Society of Mortgage Professionals and the Chartered Institute for Securities & Invest-
ment. Email: abraham@moneymasterclass.co.uk mobile: 079 4098 5852
3. Increasing participation in employers’ sponsored benefits
Workplace financial literacy does not just improve employee appreciation of their package; it has also
been proven to increase participation and uptake of these schemes. It is an effective tool being used to
help employees make informed choices regarding their benefit package based on their personal circum-
stances. With increasing shift towards defined contribution and flexible benefit schemes, employees
are being asked to make decisions about their contribution levels, investment choices and a host of
other benefits options. The proposed changes to pension legislation due to commence in 2012 makes it
the employers’ responsibility to make their employee aware of what their options are . Failure to com-
ply with this requirement may result in a fine of up to £50,000, up to 2 years imprisonment and poten-
tial litigation from employees in the future.
Workplace Financial Literacy in itself is part of employees’ benefit package
It is a perk in itself and shows that the employer is genuinely interested in the financial wellbeing of its
people. This should have an impact on recruitment, retention and general employee engagement. The
insurance company Axa has also suggested that the ‘Investors in People’ accreditation to employer
should include investment in financial capability of the workforce in its criteria.
Improving Productivity and a host of other benefits
A financially capable workforce is more likely to take a positive view of their lives, their jobs and their
employers. They are better able to appreciate business pressures on owners and managers. Needless to
say, a more productive and less stressed workforce can provide competitive advantage, most notably in
helping to unlock the additional discretionary effort required for optimum performance.
Workplace financial education is great investment proposition to employers. Dr Garman estimated
that the return on investment from investing in financial education is at a ratio of 3 to 1 on the basis of
reduced employer costs such as lower absence levels due to lower levels of financial worry related
stress. But if there is any truth in the cliché that ‘people are the biggest asset of any business,’ then in-
vesting in their financial capability is not just a way to keep costs down, it a business tool to get the
best out of your most important asset – your people!
Money MasterclassTM @ Work is a provider of cutting-edge and custom-made financial literacy in the workplace. Using a wide
range of multimedia technologies & accelerated learning techniques, we work with employers to design and deliver bespoke finan-
cial education for their workforce. A list of popular topics in workplace financial literacy offered by Money Masterclass TM can be
found on the back page.
Why use us?
Custom-made:
At Money MasterclassTM, our financial literacy programmes are designed around employers’ specific goals as well as the demo-
graphics, needs, and interests of the workforce. We achieve excellent results & impact by tailoring our content, timing and deliv-
ery to the specific requirement of both the employer and the workforce.
Independence:
Money MasterclassTM is a completely independent outfit. Our interests are aligned with those of our client and this makes us a
trusted source of unbiased financial education.
Learning, not selling:
At Money MasterclassTM, we don’t sell any financial products or provide personal recommendation. However, we are able to sign-
post our clients to where they can get specific personal recommendation if they choose to do so. This is a key part of getting the
best from workplace financial literacy.
4. Popular Topics in Workplace Financial Literacy
The Psychology of Money: why you earn, spend and save Employee Benefits
the way you do. Share Ownership Schemes (Sharesave/SAYE)
Hyperbole Discounting Death in Service Benefits
Time Value of Money Concept Give As You Earn/Payroll Giving
Money Habits Group Permanent Health Insurance
Personal Financial Statement: (Asset & Liability Group Personal Pension Plans
Analysis) Childcare Vouchers
Budgeting &Personal Spending Plans Company Retirement Schemes
Financial Goal Setting Intelligent Investing
Learn to Earn: How to maximize your income Risk & Reward
Types of income: Asset Classes & Asset Allocation
Taxation of Income: PAYE. Investment Products: ISAs, Bond etc
Developing Multi-stream of Income Education/School Fees Funding
Passive Vs Active Income Retire Rich
State Benefits Defined Benefits Vs Defined Contribution
Charitable Giving & Gift Aid State Pension
Take Cover: Essentials of financial protection Employers sponsored schemes
Personal/Financial Risk Assessment Retirement products: Stakeholder, Personal etc
Income Protection Personal Accounts & You
Life Cover Annuity
Critical illness Cover Long term care Planning
Mortgage Repayment Plan Equity Release/Home Equity Plans
Tax Planning: IP, CGT & IHT Real Estate Riches
Health Insurance Home Ownership
General insurance First Time Buyer Schemes
Debt Management Property as an Investment( BTL)
Types of Debts and How to use them Property Finance (Mortgages, Home Loans, Eq-
Common Mistakes uity Release)
Credit Scoring & Reference Event/ Lifestage Driven Sessions
Dealing with Problem Debt Dealing With Redundancy
The Financial Sector: Facing Retirement
Financial Markets: Global Game of Money Expectant Parents & Money
Players, roles & responsibilities
Economic Crises: History, Causes & Effects
Financial Advice: Bancassurance, IFAs etc
Jargon Buster: APR, RPI,
1
Workplace Financial Education: A Win-Win Proposition. CIPD, 2007
2
Based on CIPD 2007 and Office of National Statistics figure on total employee workforce of 29.1 million
3
Based on Garman, E. T, (1999) Financial education partnerships in the workplace – views of satisfied researchers, Employers and Outside
4
Providers, Proceedings of Association for Financial Counselling and Planning Education 1999 (exchange rate of $1 =£0.620600)
5
Roadmap to Stability: Consumer Financial Education, 2009. AXA
Garman, E T, Kim, J, Kratzer, Y Bunson, B and Joo, S-H (2000), Workplace financial education improves personal financial wellness, per-
sonal finances and worker productivity 2(2) 145-149
M ON£Y TM
AST£RCLASS
www.moneymasterclass.co.uk
...cutting-edge financial literacy for the 21st century !
info@moneymasterclass.co.uk Tel: 01 268 559 331
