Employers attempting to educate staff on finances are quickly finding their employees are diverse, not just in their attitudes to technology, but also in their attitudes to money. It is all well and good to give a graduate information about student debt, using an online cartoon character, but this is not going to have any impact on an employee who was at work before the currency was decimalised.
Suddenly, sitting a group of employees down to watch a video about joining the company pension is no longer enough and employers are providing education on topics ranging from debt to mortgages, focusing the right messages to the right demographics - all the time making sure staff are getting information on what they need, without being bored by presentations on matters that do not have any bearing on their lifestyle.
Here is a roundup of the differing demographic groups that need to be taken into account.
Younger workers - both school leavers and graduates - are much more risk tolerant than their older colleagues and, according to Annette Cox, associate director at the Institute for Employment Studies, "live more for today". This demographic is likely to have entered into the workplace having accumulated student debt, but on the upside might have had better financial education while at school or college than their more senior colleagues.
Darren Laverty, director at pensions advisory firm Secondsight, explains these factors make it harder for employers to engage younger workers with long-term saving. "They don't want to save into pension schemes," he says. "It seems too much of a long-term concept for them, so they need to be sold on the concept that they will need money later in life and it will be cheaper for them to do this using an occupational pension."
Emma Watkins, director of business development at Metlife Assurance, agrees: "This age group will have become quite sceptical about whether the Government can provide for them like it did for their parents and grandparents - they need to know now that they have to save."
She advises employers not to talk to staff about 'pensions', but 'long-term saving'.
Another factor affecting their financial education is summed up by Watkins. "This group don't stop. They work hard - and they have busy social lives. They won't be looking to work emails to find out about their finances. Employers could consider using technology, such as iPhone apps, to engage them with financial education."
Cox explains this group often look to peers and to people they respect for advice.
Laverty advises: "Young people might see financial planning as boring, so they need someone to talk to who can engage with them. They need to be engaged with funny jokes, challenged by rhetorical questions - and informed about money in a confident and self-assured way."
Staff in their 30s and working parents
"This age group has young kids now," explains Darren Laverty, director at pensions advisory firm Secondsight, "but they are older than their parents would have been when they were children."
Jackie Harvey, professor in accounting and financial management at Newcastle Business School, says: "This group will invariably have a hefty mortgage. I read some research recently that it costs parents £180,000 to get children to the age of 18. There have been significant cultural shifts as well and planning for tertiary education is a reality for most parents - and they need to plan a fund now."
Recent news around potential launches of high interest (ISA) saving accounts for children may have attracted and confused parents in equal measure - so saving for the future, matched with mortgage worries, will be at the top of their list of financial worries.
On top of this, Emma Watkins, director of business development at Metlife Assurance, adds: "This age group are most probably in defined contribution pension schemes. Their parents will be in defined benefit schemes, will probably be comfortable in retirement and this causes their children to have become complacent. This demographic will need to be educated on the benefits of saving in a workplace pension and to contribute more than the 4% that will be required of them, when the NEST pension comes in 2012."
The experts agree for this demographic, the most effective method of financial education is face-to-face meetings or group presentations, but employers need to be careful to explain facts to this group, instead of advising them what to do.
Executives and managers
By definition, those in more senior roles, earning higher salaries, will be more financially savvy.
"This group are going to have a larger disposable income, generous benefits and would probably appreciate more information about involvement in flexible benefits options, or education on how company share schemes operate," explains Annette Cox, associate director at the Institute for Employment Studies.
But with more money come more choices about how to manage and invest it. Jackie Harvey, professor in accounting and financial management at Newcastle Business School, explains: "Until the recent recession and with the exception of the dot.com burst in 2000, there was a 15-year period when it became a given that people would make money by investing in shares and property. Investors have had a sharp shock over the past few years and are still continuing to seek out higher rewards for their investment."
Emma Watkins, director of business development at Metlife Assurance, says the challenge with this demographic of financially savvy employees is not to be patronising to them. They should feel information about finances is there for them should they need it, but should not be forced towards it.
"Savvy employers might invest in bringing in independent financial advisers (IFAs) to talk to this group. But it might be just as advantageous to have great salary calculators or online finance tools and let staff know it is there for them should they choose to make use of it."
Darren Laverty, director at pensions advisory firm Secondsight, explains that within this demographic, few people will want to go online and will make better use of a qualified IFA. He says: "At this stage, employees will have questions about specific taxes, benefits provision, pension annuities and so on. A face-to-face meeting will work best to engage with them and help answer any questions they may have."
In a 2008 broadcast, Cambridge University geneticist Aubrey de Grey famously stated: "The first person to live to be 1,000 years old is certainly alive today." While it is unlikely these Methuselah-type figures are already approaching pension age, with the abolition of the default retirement age last month, employers are set to see older employees working well past the age of 65. But this age group will have serious fears about retirement - and their worries about retiring into poverty have been exacerbated by the Government's recent announcement of a 'two-tier' pension and the response by National Pensioners' Convention claiming one in five pensioners live below the poverty line.
There is a train of thought that employees need to be encouraged to plan for their retirement. If not, and as the default retirement age is removed, people may cling on to a job for purely financial reasons when they become less productive.
"Older workers underestimate how long they are going to live and considering longevity, education for this group needs to change considerably," says Watkins. "Employers need to communicate to this group about tax-efficient savings in pensions and the investment options older workers need to consider for their pension funds, to ensure they will retire with higher annuities."
Laverty elaborates: "When it comes to annuities, you can engage employers by explaining if they are smokers, they are not expected to live as long, so their annuities will be higher. Or if, for example, they live in Glasgow, their life expectancy would be lower, so therefore their annuities higher. This can help people understand a topic that can often be thought of as boring or complicated."
Annette Cox, associate director at the Institute for Employment Studies, warns increasing financial education communications should start as much as five to ten years before an employee even thinks about retiring. "Pension investments need to be attuned to the individual needs of employees and when employers talk to them about pensions, they tend to be highly responsive."
Experts agree the best strategy for communicating with employees approaching retirement is face-to-face conversations - preferably with a qualified financial adviser, as pension decisions are complicated and should be tailored to the individual.
Case study: Capital One
Working in the finance sector, it would be automatically assumed everyone in the organisation would be financially savvy by nature, but Capital One, which employs 800 staff (250 in a call centre), with an average age of 34, had to rise to the challenge of educating executives and young staff on financial education in very different ways.
Firstly, the company asked staff how much they knew about pensions, so it knew where to start.
Jill Cunniston, HR operations manager Capital One, explains: "In 2009, we started doing work with employee benefits advisory firm, Secondsight. We wanted to talk to our staff with real clarity about pensions governance, but we wanted to make sure they could take ownership of their own decisions.
"We kicked off with a presentation and followed that up with factsheets for staff, the opportunity for them to have an interview with an independent financial advisor. We gave them PINs for individual online accounts and encouraged them to get more information online."
For executives, the firm decided to give more information about the complexities of pension governance, allowing them more detail and the opportunity to ask questions.
Then in 2010, the firm increased its contributions into the company pension. "We wanted a high-impact campaign, " says Cunniston. "We put information everywhere - even in the toilets and stairs."
Given the firm operates in the financial sector, educating staff on credit benefits is of value to both its staff and its customers, so it produced 11 cartoon videos to tell staff about matters such as credit options and fraud. It also launched a cartoon character called 'Pensions Pete', to talk to staff about pensions - again in a "quirky" way.
The results speak for themselves: in August 2009, 28% of the organisation said they understood how much they needed to save for retirement. After the communication exercise, this increased to over 77% by December 2009. Similarly, just 36% of staff indicated they understood what their Capital One pension was likely to provide in August - and an increase to almost 80% was achieved by December. By the end of 2010, 89% of the workforce felt satisfied the pension provided by Capital One would assist them in saving for retirement.
"Whatever you do, you have to fit education with the culture of your workplace," explains Cunniston. "The next challenge for us is to keep the level of engagement up. But we are going to continue to be bold with what we do."