Getting communications right can mean the difference between a financially aware, engaged staff, and those struggling to retire long-term
When Banafsheh Ghafoori, Kingfisher’s pensions communications manager, was tasked with communicating the arrival of auto-enrolment 2014, she knew pensions was only part of employees’ total financial education needs.
She has now identified 30 different financial education topics, with a key part of the plan to only introduce four or five of them a year to staff, and to keep the language as simple as possible (she even trialled it amongst a panel of test employees). The results have been so positive, plans are now afoot to keep regular communications going beyond the initial five year period, to keep staff engaged.
Without necessarily knowing it, the steps Kingfisher has taken fit perfectly with what’s often regarded as being exemplary in financial education best practice – by keeping the language simple, and communicating little, but often. Only 55% of respondents to the Aon/Reward survey said they provide financial education, but maybe more would do so if these simple rules were better understood.
So what are the details of these tenets?
The first rule is that simplicity should be emphasising that saving is a help, not a hindrance. Overly financial terminology (like income replacement ratios, for pensions), turns people off. It’s far better to encourage staff to try and contribute at a level that will create an annual income that is say, 50% or two-thirds of their current salary. Even simpler is to suggest a specific annual income target – NEST says £15,000pa is what savers will need to be ‘comfortable’ – and then what contribution level is needed to achieve it.
Make it relevant
A second rule of thumb is trying to make numbers more relevant to people. By using real-world illustrations, for example, communications can be dramatically brought to life, to encourage people to save more than the minimum without it appearing to ‘cost’ staff more. By saying drink one less coffee, and smoke one less packet of cigarettes a week (£12) and this could add £50,000 to someone’s pension pot, then very quickly employees can see that small sacrifices can turn into big gains.
A general rule of thumb is that using scare tactics is frowned upon. Use them, and older employers may disengage with the process, assuming they don’t have enough time to build anything meaningful up. But, those with predominantly young staff can carefully use the spectre of putting off saving to their advantage, by spelling out the opportunity cost of this – again, in a simple way. For instance, to achieve an annual pension income of £10,000 by the age of 65, a 25 year old would only need to save £105 a month; but wait till they’re 35 or 45 and they’ll have to find much more: £195 and £405 a month respectively.
For employers that do have a greater age-diversity of staff, best practice also dictates creating more bespoke, age-appropriate messages, so that each group feels listened to, or that their needs are being met.
A broader range of tools
Sticking to these communication rules can’t guarantee financial education success, and employers should not forget there is an emerging desire from staff to explore digital tools such as slider/calculator-style apps/portals online. But, even with this, it’s essential all communication channels share common rules, branding and attention to simplicity. And, if sticking to these rules means more employers will be more confident implementing financial education that surely can’t be a bad thing.
To read more, and join the conversation about whose responsibility financial awareness is, download Reward and Aon Employee Benefits’ free In-Depth Guide To Financial Education And Advice. CLICK HERE to download the guide.