In my February blog ‘How to Support Your Team With the Cost of Living’, I highlighted that rising financial costs are a cause of stress for both employers and employees. The article suggested some steps that businesses could take to lower this stress and improve employee well-being. One of the points raised was to arrange financial advice workshops.

Reducing Finance Related Stress

Providing employees with access to financial advice can help them balance income and outgoings. In addition, it might open the door to opportunities to protect their savings or access any benefits they might be entitled to. This can reduce finance related stress.

One of my contacts, Sam Wilson is a financial adviser at FLM. FLM is dedicated to removing the stress from financial affairs. They achieve this by providing an open, helpful and plain English approach. Sam has kindly provided answers to questions that you might have about working with a financial adviser.

How can financial advice help people to cope with the cost of living increases?

A good financial adviser should help you improve your relationship with money, with the ultimate aim of helping you achieve financial independence. One of the first steps to follow to become financially independent is understanding spending, and of course, spending less than you earn.

This does not have to be an exercise of simply spending less. Rather, having a relationship with money might see you choose to spend more on the things that truly matter.

The sad reality is that most of us will unconsciously spend money (quite often a lot) on stuff that we don’t value. Marketers spend trillions per year to get us to buy stuff, so this should come as no surprise.

Most of us will only be able to list a small number of things. If we add up these costs, it will likely only represent just a fraction of what we spent in the last 12 months or five years.

Understanding where your money goes now, choosing to focus spending on things you value and cutting spending on things you don’t should not only help you cope with the recent cost of living increase, but it should also set you on the path towards true financial independence.

Why is it beneficial for employers to arrange financial advice sessions for their employees?

70% of employees admit to wasting around 20% of their time at work worrying about their personal financial situation according to Neyber’s DNA of Financial Well-being report on the UK workforce, 2016.

Further, money has been identified as the most common cause of stress – Forth with Life 2018.

An employee who feels confident in their financial well-being as a result of having a well thought out plan in place is less likely to suffer from stress or waste time at work worrying about their personal financial situation.

Are financial advice services only offered to companies with wealthy employees who have money to invest?

Sadly, this is increasingly becoming the case. A recent article by Which.co.uk pointed to an increasing trend for financial advisers to set a minimum level of investment or a minimum charge for advice, before they would engage.

This might seem harsh, but the reality is that financial advice is not free because the adviser has costs to cover and needs to earn a living on top of that just like everyone else.

The reason that financial advisers are increasingly setting minimum investment levels or charges is being driven, at least in part, by regulation. It used to be the case that anyone could ‘advise’. However, some years ago a minimum level of qualification was introduced, and rightly so. Since this time, the requirement for ongoing professional development and the standards for documenting advice has increased. While this ultimately comes with very good intentions on the part of the regulator, it does mean that an adviser today has to spend more time ensuring that these standards are met. This pushes up the cost of providing advice and limits who can afford to access help.

What might a typical session with a financial advisor involve?

Each adviser will approach this differently. However, I will typically start by trying to understand how someone is hoping that I can help. It is also important that some time is spent establishing common ground.

I am always conscious that while I have been providing financial advice for many years, it is often the first time the person I am sitting with has sought help. As such, I will typically explain what is involved in a first meeting and any follow-up discussions we might have before we get too deep into the conversation.

Much of the remainder of a first discussion will then centre around a detailed review of financial circumstances and needs and understanding any specific questions a person may have.

At the end of the first discussion, I will offer an appraisal of what a good next step would look like. This might be anything from some simple guidance offered over email, free of charge, to the preparation of a full financial plan.

If an individual is in debt, will the financial adviser share that information with the employer or others?

No, they should not share any personal information with the employer.

There could be some situations where this information needs to be shared with others, but only after seeking consent. An example might be needing to disclose such information as a part of a life insurance application, or an application for a credit facility to help consolidate debts.

Are there any disadvantages to seeking financial advice?

Yes, there is a disadvantage – the cost.

Personalised financial advice is generally not free. The cost will vary depending on the complexity of what you need help with, but according to a recent article by Which.co.uk the average financial adviser will charge 2.40% of the value of your investments for initial advice, and 0.80% of the value of your investments per year if you need ongoing help.

As such, if you have the knowledge and time to do it yourself, then that is generally going to be the cheaper option and something I will always make clear to a potential client. Personalised financial advice should be sought where you don’t have the knowledge or the time to do it yourself, and where the advice stands to add value above and beyond the cost you will incur.

Financial Advice for Staff Well-being

Sam’s responses can help you decide whether engaging with a financial adviser could be part of your employee well-being strategy. As mentioned in my article, an alternative is to signpost employees who disclose financial difficulties to debt advice organisations. These include StepChange and Money Helper.