Business Matters – Issue 23

Working for yourself, but not alone

As an entrepreneur, you’ll already have established structures and routines to help you reach your business goals. But making these strengths translate to your personal finances can be a challenge, especially when you’re pouring heart and soul into making a success of your company.

The pressure on business owners has intensified in recent years – and this can feel isolating, as your money concerns will be different from that of your employees. But it’s important to remember that financial worries can impact anyone, whatever their level of income. Research indicates that those who earn in excess of £90,000 a year have almost the same level of financial worries (24%) as those earning between £10,000-30,000 a year.³

This is where having trusted people within your senior leadership team, with whom you can have candid conversations about finance, can help. And other frank conversations, too – as our last issue discussed, it’s vital for business owners to have an exit plan in place, with key stakeholders kept in the loop.

What’s more, for a more objective chat, you could take the opportunity to network with other like-minded professionals – at one of our Business Matters events, for example. For the latest events, make sure you’re subscribed to our mailing list.

Feelings of isolation can be particularly pertinent for sole traders and the self-employed. Flying solo can give you a real sense of freedom, but it can also come with an uncertain workflow, fluctuating finances and a lack of employer pension contributions – meaning it can be difficult to firm up your retirement plans. Without a workplace pension scheme to rely upon, it falls to you to be proactive when it comes to ensuring you put enough aside for later in life.

With these challenges facing business owners and self-employed professionals, it’s easy to see why you might want to bury your head in the sand when it comes to talking about money matters. But you don’t need to face them on your own.

At Wellesley, we can help you make the decisions that are most beneficial for you, your family and your business’ finances.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

Talking = taking control

Perhaps some of the reluctance among business owners to talk about money is the notion that revealing your personal challenges puts you in a vulnerable place. But being open about your finances isn’t about losing control – it’s about taking it!

It’s time to push aside the embarrassment and be honest and open with your senior leadership team, family or friends about money. And if it feels too awkward to talk to a friend, talking to a financial adviser can also help.

As the saying goes, two pairs of eyes are better than one – as advisers, we’re there to support you in making your own choices. We help you understand what your options are, jargon-bust any tax implications and give you the tools and confidence you need to take control of your financial future.

The financial benefits of taking advice have been well documented. Research from the International Longevity Centre UK (ILC) showed that those who take advice are, on average, £47,706 better off in retirement (in pensions and financial assets) than those who don’t.⁴

But it isn’t simply about the numbers on a page. According to the ILC, the non-financial benefits may be at least as important as the more obvious financial ones. Those who took part in the study and had received financial advice reported that they felt less worried about the future and enjoyed the peace of mind that accompanies knowing they’ve made proper preparation for their later years.⁵

Leading from the front

A company’s biggest asset is its workforce, and savvy business owners are keen to seize any opportunity to support their team. And, as the statistic below shows, it’s clear that investing in employee well-being isn’t just common sense – it’s business sense, too.

It’s no secret that when we’re stressed or worried, our concentration levels aren’t at their best. Money can be a trigger for many mental health problems – and can therefore lead to lost worker days due to a lack of financial well-being.

So, we’ve established that supporting our employees’ financial well-being is not only a ‘good’ thing to do, but will ultimately support workplace culture and productivity. But it might not be that clear-cut for employers to know how best to do so.

Here are five ways that you can offer your employees emotional and practical support to help boost their financial confidence and well-being and help them feel on top form:

1. Engage with wider discussions about financial well-being and mental health to help normalise these conversations with your team. As well as Talk Money Week, there are various opportunities throughout the year for employers to take part in these discussions, such as Mental Health Awareness Week and Debt Awareness Week.
2. Launch a staff survey to help you understand your colleagues’ money worries and what support they’d find helpful. Use the responses to build financial well-being as part of your well-being strategy, involving your colleagues, leadership, finance and HR functions.
3. Promote the support your organisation offers at key life stages – such as retirement and parental leave. Translate these packages into real conversations so that employees can understand what it means for them.
4. Promote the financial well-being support you provide, such as employee assistance programmes, workplace pensions, childcare vouchers, season tickets or cycle to work loans, credit union partnerships or pre-retirement support.
5. Review your onboarding process – helping new team members understand and make the most of any employee benefits you offer, as well as making them aware of the support in the workplace.

Employee financial health checks

It’s also important to signpost your employees to helpful resources. One way of doing this is partnering with a financial organisation. At Wellesley, we offer a financial health check service, where we provide your employees with one-to-one personal finance advice, helping to give them confidence and support them to feel in control of their money.

Adviser insight

In this Q&A, Wellesley advisers Ian Howard and Samantha Kaye share their experiences with providing financial health checks at various organisations and why these bespoke clinics can benefit bosses and employees alike.

1. You both offer a ‘financial health check’ service for employees at corporate organisations. Please could you outline what this entails? Generally, what size organisations use this service?

Ian: I provide financial health checks to employees at two different corporate organisations, where the directors are clients of mine. Essentially, I’m available a couple of days a quarter, where employees can book a session with me via their HR department. I ask them to bring as much information as possible – pensions, investments, insurance and so on – and together we’ll talk through everything.

It’s a very holistic chat – we chat about where you are now and where you want to be. What’s working? What’s not? Is anything missing? Do your investments suit your attitude to risk? I’ve been doing this for over 13 years with one business, and the two companies I work with range from 70 employees to 400.

Samantha: I recently started working with a company to offer these financial well-being clinics. It’s a private business with 12 employees – so, smaller than the companies Ian deals with, but it’s great, as it shows different size organisations are aware of employee well-being. I was approached by the MDs, who were concerned that their employees might be worried about budgeting and planning for the future, given the stresses over the past few years.

As Ian described it, a financial health check is about looking at the whole picture. I also like to suggest ways that employees can empower themselves – for example, how they can check their credit file themselves and make sure their electoral role data is accurate. We’re also there for employees to ask any burning questions they may have or if they just want a bit of reassurance that they’re not missing a trick.

2. Can you give an example of a problem you’ve helped an employee with?

Samantha: I help people tackle a whole range of money-related issues, but one example stands out. Recently, an employee came to me saying he was struggling with budgeting – to the extent that he was worried about whether he could afford his train fare. I had a look at his finances and realised that he was incredibly over-insured – having chosen a premium rate on life insurance and other protection when taking out his mortgage. I simply said to him, “let’s start there”.

Together, we sat down and looked at what insurance he needed to give him and his family peace of mind and where he could scale back. He later told me he immediately felt much better and more in control after that first meeting.

3. What kind of response have you had from the employees who have come to you?

Ian: It’s clear that some people have never had these frank conversations before, and they really value having someone objective to talk to who’s not emotionally involved. I’m there to be a sounding board, if you like.

A lot of employees have praised their employers for offering this service, as it shows they care about their financial – and overall – well-being. People can put off long-term saving because they’re unsure how products work. But, by offering employees access to a professional, their employers play an important role in putting their minds at ease and helping them feel confident about the future.

4. Have you noticed any recurring themes?

Samantha: Some things are common sense, like sticking to a budget – knowing what’s essential and where you can tighten your belt. One theme I’m seeing recently is people are taking on credit very easily – for example, grabbing bargains on tech contracts – I often hear, “My smartphone was only £XX a month”. I’m finding people are more than happy to have those types of conversations, but it would be great to see more people talking about their pension or investment plans.

Ian: In one of the companies I support, about 70% of the employees are under 35, so a lot of them have similar goals, for example, getting on the property ladder. This is where having access to a holistic financial adviser – one that looks at the ‘bigger picture’ of your finances – is beneficial. At Wellesley, we have a dedicated mortgage team, who I can put them in touch with to help review what they can afford and the best mortgage approach for them.

5. What response have you had from the business owners? Do you think it’s encouraged more awareness of employee financial well-being?

Ian: We’ve had really positive feedback from the business owners. It really does benefit everyone. Obviously, any personal troubles could seep into the working day, so empowering their team with access to professional advice is priceless.

Samantha: There’s been a lot more focus on employee well-being in general since the pandemic, so it’s great to see employers investing in their teams in this way and encouraging healthier approaches to talking about money!

6. How has the current cost-of-living crisis highlighted the need for people to have access to someone they can talk to?

Ian: Lots of people are feeling the pressure right now, and psychologically speaking, we humans tend to prioritise current needs. So it’s brilliant to see employers offering their teams access to a trusted source of financial information, giving them the confidence to create those long-term plans and therefore cope with life’s twists and turns.

I firmly believe financial advice is something everyone can benefit from, and the more we’re open to talking about it, the more people who will reach a place of financial well-being. That’s why I’m extremely proud to offer these financial health checks.

Samantha: Money is a very emotive subject, which is perhaps why so many of us shy away from talking about it. Or, at least, talking about it properly. How often do you hear your own friends confess that they’re not good with money? This can take a huge toll on both your financial and emotional well-being.

That’s why we need to talk more about money in a constructive way. These health checks give the reassurance of having someone in your corner – talking you through the financial implications of what you’re doing and empowering you to make more complex financial decisions.

I love being able to offer these financial health checks to employees. Making a difference to individual people’s lives is why I got into financial planning. For example, seeing the relief on the face of the ‘over-insured’ employee I mentioned earlier – it was a really good feeling.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Closer to home

So, we’ve covered the importance of financial well-being at all levels of the workplace, but it’s also essential to carry on these conversations about money at home.

There are a few topics that are still considered to be off-limits at the dinner table, and even with the current spotlight on household finances, money remains an elephant in the room. But these discussions are important for you and your loved ones – there’s a reason that money is a common cause of marriage breakdowns! Keeping money worries or concerns to yourself means you only see solutions from your perspective, so broaching this seemingly contentious topic will strengthen your relationships – with your spouse, partner, parents and children.

For example, if you or your spouse is female, it’s worth reviewing both your retirement plans to ensure there’s a fair split. The reality of the gender pay gap means that women often aren’t in a position to contribute as much to a workplace pension. A good starting point is seeing if your family budget and general financial plan allow for a pension pot to be topped up. It’s also vital to talk about the importance of protecting ourselves and our family – so it’s important to take stock of any financial risks you face and take steps to mitigate them.

Of course, some family conversations about money are easier than others. For those who have elderly parents, it’s all too easy to avoid discussions about later life care or death – but planning their legacy is essential to avoid uncertainty and Will disputes later on.

Talk Money Week is all about encouraging people to have more open conversations about their money – from pocket money to pensions. So it’s important to include the next generation in this new era of financial conversation. Nearly half of people in the UK say they would be in fitter shape financially if they were better taught how to manage their budgets and bills⁶ – so by talking to your children about money, you can help them make a positive start to their savings journey.

Well-being within reach

To summarise, running your own business can be both lucrative and empowering, but there’s no doubt that the pressures can be all-consuming at times. And it can sometimes feel like there’s not enough time in the day to consider your own well-being, as well as the health of your business.

But as we’ve seen, it can pay for entrepreneurs, business owners and freelancers to get into the habit of normalising those money conversations. Taking a proactive approach to talking about financial matters can have a positive effect on your mental health – plus, the benefits of championing your employees’ financial well-being are clear to see!

Business owners often feel they have to do everything themselves, but outsourcing financial planning – just as you would with any other business need – can mean you have one less thing to organise. Talking to an adviser can help you feel well-equipped to make the best financial decisions – the value of which can be priceless.

So let’s use this Talk Money Week as a springboard to keep the conversation going all year!

Sources:

^1,2 Talk Money Week Participation Pack 2022, Money and Pensions Service (MaPS), accessed 31 October 2022
³ The Employer’s Guide to Financial Wellbeing 2020-21 (copies can be requested from salaryfinance.com)
^4,5 ILC, ‘What it’s worth – Revisiting the value of financial advice’, November 2019, based on receiving professional financial advice between 2001 and 2006 resulted in a boost to wealth (in pensions and financial assets) of £47,706 in 2014/16
⁶ Half of Brits Want Urgent Help Managing Their Cash, New Poll Finds, The Centre for Social Justice and Lowell, January 2022 (Based on a sample size of 4,000 people)

SJP Approved 19/12/2022