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What is the true cost of financial education?

Today’s forward-thinking employer has employee wellbeing as a key driver for the business.

There’s recognition that not everyone is taught how to be good with money and it’s becoming increasingly common for businesses to invite professionals in to educate their employees on financial matters. However, it can be difficult to know how to select education providers and we often see cost being the determining factor. What you may not fully appreciate are the differences between two distinct business models of workplace financial education providers.

The upselling model

There are many providers who use education purely as a means to sell other products or services - be that insurances, loans, financial advice or wealth management. These providers, however subtle their bias might be, will pass some or all of the cost for delivering education onto the employees they’re trying to sell to. You might be charged a low cost, but will never know how much is being passed on to your employees.

The financial literacy model

Conversely, there are several providers who simply help employees make better financial decisions. These providers are paid a transparent fee for doing so and to this end, are more likely to provide fairer and more balanced guidance. 

Ask yourself, as an employee, which model would you prefer?

Determining the value of financial education

Costs and value are understandably going to be some of your main priorities. To determine the true fee and compare apples with apples, ask for two prices when comparing education providers:

  1. How much is their standard price?
  2. How much would their fee be if you asked them to refrain from recommending any products or services to your employees?

If you’re comfortable using a provider that aims to sell, you may want to do due diligence on their other services rather than just the education. If it is a company selling financial advice and wealth management services, kick the tyres on those services as well. By introducing this provider, you should be comfortable that they’re going to do best by your employees. Only once you’ve determined the true cost of a provider’s financial education, can you understand the real value it offers your employees.

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Lee Coles
Lee has been in the financial services industry for over 25 years in a variety of advice and communication roles. He currently heads up the Workplace Education function at Jelf, part of Mercer Marsh Benefits. Lee has a strong pedigree in group pensions and employee communication, having worked previously for AXA and HSBC. He also has a wealth of knowledge regarding all aspects of financial and retirement planning but has a particular interest in employee behaviour and financial decision making.