Financial Educationin the workplace

Aberdeen 8 Queen’s Terrace, Aberdeen, AB10 1XL Tel: 01224 652 100 ◆ Fax: 01224 652 101

Buckingham Investment House, 22-26 Celtic Court, Ballmoor, Buckingham, MK18 1RQ Tel: 01280 823 030 ◆ Fax: 01280 822 665

Glasgow 2nd Floor, 229 St Vincent Street, Glasgow, G2 5QY Tel: 0141 375 7120 ◆ Fax: 0141 243 2346

Leicester MW House, 1 Penman Way, Grove Park, Enderby, Leicester, LE19 1SY Tel: 0116 240 8700 ◆ Fax: 0116 240 8701

London Third Floor, 22 Park Street, Mayfair, London, W1K 2JB Tel: 020 7269 4729 ◆ Fax: 020 7269 4701

Newmarket Cheveley House, Fordham Road, Newmarket, Suffolk, CB8 7XN Tel: 01638 564 230 ◆ Fax: 0845 458 1224

Preston Lanson House, Winckley Gardens, Mount Street, Preston, PR1 8RY Tel: 01772 555 073 ◆ Fax: 01772 203 688

www.mattioliwoods.com

Aberdeen

Glasgow

Preston

Leicester

London

Newmarket

Buckingham

Authorised and regulated by the Financial Conduct Authority

July 2016

WEALTH MANAGEMENT & EMPLOYEE BENEFITS

www

About Mattioli Woods plc Why is financial education in the workplace so important?

Mattioli Woods is a leading provider of employee benefits and wealth management services.

We deliver benefit solutions to help our clients maximise employee engagement, thereby increasing productivity and profitability and leading to improved employee attraction, retention and motivation.

A 21st-century financial services business built with expertise, integrity and delivered with passion.

As a nation we are living longer and the need to make our savings last is more important than everWith such a wide diversity of financial products and services available many employees simply do not understand, or are unable to find out, what their options are and how best to manage their financial goals. With increasing financial freedom and financial choice comes the need for more financial information and financial education, so employees can make the right decisions.

The government is keen to see a change in the way in which we manage our money and the way in which we financially provide for ourselves throughout our lifetimes (therefore reducing the burden on the state). Recent budget changes have had a dramatic effect on the way in which we promote employee benefits such as pensions. As a result, employees are now faced with complex and technical products and services whose true value they sometimes struggle to understand.

We employ over 500 staff

Taking care of over

£6 Billion of our clients’ assets

Why is financial education in the workplace so important?

Our financial education services help to:• Reduce absenteeism

• Increase staff retention

• Increase productivity

• Increase employee value and appreciation of their employee benefits

Currently, employers can pay up to £150 per employee per year towards the cost of pension advice before this is treated as a benefit-in-kind, however the treasury have accepted the Financial Advice Market Review (FAMR) recommendation that this should be increased to £500 from April 2017.

The new exemption will ensure that the first £500 of such advice, per employee per tax year, will be exempt from income tax and Class 1A NICs where funded by the employer. Employers should be able to claim corporation tax relief on the cost of providing staff with financial advice, if this can be shown as a benefit to the company. The normal value of a benefit is the cost to the employer, less any contribution made by the employee. This cost includes VAT, even if the employer can reclaim the input VAT. Further recommendations from the FAMR mean that employers will be better protected and supported when providing employees with access to financial advice without worrying about liability.*

A recent survey by the insurer AXA found that 70% of people admit to spending time thinking about their finances instead of working, and 5% of employees have taken time off work during the past year because of money worries.

* Guidance on the increase is still to be provided by HMRC.

of people admit to spending time thinking about their finances instead of working

70%

18%of employees often

lose sleep worrying about their finances*

said financial worries often interfere with

their work*

of employees worry about

their finances*

of human resources and benefits professionals

said that financial education

improves business performance**

20% 46% 74%

* Barclays Corporate and Employer Solutions (C&ES) - Financial wellbeing: the last taboo in the workplace? ** Nudge Global. Financial education the definitive guide 2015 †The workforce view in Europe 2015/16 Report – ADP †† Research by the Open University Business School †††Portus Consulting 2016 employee survey

”Providing education for your employees demonstrates you care about their futures”Alan Fergusson Director of Employee Benefits

Studies show greater insight into the UK workforce and their

current motivating and de-motivating factors:

• 24% name employee benefits that focus on long-term financial welfare as the top

motivating factor.†

• 64% of UK employees have never received any personal financial education.††

• 44% of UK employees said major life events were the last time that new financial knowledge was gained.††

• 80% of employees would like help from their employer to understand their finances.††

• 58% of employees do not expect to have enough income when they retire.†††

• 1 in 5 employees plans to release cash from their pension funds while they are still working (compounding their income shortfall in retirement).†††

7.2LowerWellbeing

HigherWellbeing

7.4

7.6

7.8

8.0

8.2

16-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54

Age

Happiness

55-59 60-64 65-69 70-74 75-79 80-84 85-89 90+

2.4HigherWellbeing

LowerWellbeing

2.6

2.8

3.0

3.2

3.4

16-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54

Age

Anxiety

55-59 60-64 65-69 70-74 75-79 80-84 85-89 90+

Office for National Statistics UK population happiness

and anxiety levels

To understand the workplace and the motivating factors for employees and their employee benefit choices, it’s important to understand the UK population and how UK employees by age and by generation see their own personal circumstances. Below are tables released by the Office for National Statistics which look at happiness and anxiety levels in the UK population.

Baby Boomers Those employees at or near to the point of retirement will need to concentrate on a wide range of personal, family and social issues as well as understand life expectancy, how their income needs will change with age in retirement, the state pension, personal pensions for those continuing in paid work, tax, estate planning, power of attorney and will planning. Typically employees that are 56+.

Generation YThose employees in their early career will want to make sure they have mastered the basics of money management skills from budgeting and borrowing to saving and investing. They will need to learn about setting financial goals and objectives, and the difference between short-term and long-term goals, then how to tailor their product choices and employee benefit choices to match. They will also want to learn the basics about borrowing (including credit scoring), mortgages, pensions, tax, savings and investments. Typically employees that are 22–39.

Age is a factor

Generation X Those employees at the mid-career stages are likely to want

to take stock of their current financial position and look for ways in which they can improve their longer-term

financial planning. This will include looking ahead to retirement and what income they might need,

how they can improve their current savings and investment strategies, understanding how

best to enhance their tax-efficiency and, above all, how to make the right choices for the remainder

of their career. Typically employees that are 40–55.

Generation Z

These employees are probably in their first job following school, college and possibly university and will have limited experience

of managing money. They are expected to learn from their mistakes and collect information as they move along their

career path. These employees will need a basic introduction to budgeting, borrowing, saving and investing, pensions,

and thinking ahead to longer-term aspirations and financial objectives such as owning their own property.

Typically employees that are under 21.

Aberdeen 8 Queen’s Terrace, Aberdeen, AB10 1XL Tel: 01224 652 100 ◆ Fax: 01224 652 101

Buckingham Investment House, 22-26 Celtic Court, Ballmoor, Buckingham, MK18 1RQ Tel: 01280 823 030 ◆ Fax: 01280 822 665

Glasgow 2nd Floor, 229 St Vincent Street, Glasgow, G2 5QY Tel: 0141 375 7120 ◆ Fax: 0141 243 2346

Leicester MW House, 1 Penman Way, Grove Park, Enderby, Leicester, LE19 1SY Tel: 0116 240 8700 ◆ Fax: 0116 240 8701

London Third Floor, 22 Park Street, Mayfair, London, W1K 2JB Tel: 020 7269 4729 ◆ Fax: 020 7269 4701

Newmarket Cheveley House, Fordham Road, Newmarket, Suffolk, CB8 7XN Tel: 01638 564 230 ◆ Fax: 0845 458 1224

Preston Lanson House, Winckley Gardens, Mount Street, Preston, PR1 8RY Tel: 01772 555 073 ◆ Fax: 01772 203 688

www.mattioliwoods.com

Aberdeen

Glasgow

Preston

Leicester

London

Newmarket

Buckingham

Authorised and regulated by the Financial Conduct Authority

July 2016

WEALTH MANAGEMENT & EMPLOYEE BENEFITS

www

The contents of this brochure are for information purposes only and are based on our understanding of current HMRC legislation, rules and practices, which are subject to change at any time. Individual reliefs and allowances are dependent on personal circumstances. It is not intended to be an invitation to buy, or act upon the comments made, and all/any investment decisions should be taken with advice, given appropriate knowledge of the individual’s circumstances.