'Advisers - prepare for the rise of the employer bank'

Why? Because the financial system is stacked against 50 per cent of the working world.

Shift, frontline and volatile-income workers have been priced out by traditional finance. Either they are charged more than the other 50 per cent, or they are not given access at all.

This is true across a broad range of financial products, ranging from credit and insurance, right through to energy and mobile phone tariffs.

While this inequity was already being highlighted by campaigning groups like Fair By Design, the cost of living crisis has compounded the financial struggles of working adults around the UK.

Employers [are] stepping in to replace traditional finance, by closing the gap in access to fair products.

With stories of depleted food banks struggling to meet demand, and one in 10 households missing essential bills, financial support has taken the top spot on the boardroom agenda, and employers are stepping in.

Across the country, businesses have been upping investment in workplace finance - offering new types of ‘financial wellbeing’ benefits to staff.

This is more than just cycle to work schemes, train ticket season loans and staff discounts: this is employers stepping in to replace traditional finance, by closing the gap in access to fair products - fairer, cheaper, financial products and services, tailored to the needs of their people.

Workplace initiatives

They are effectively becoming ‘banks’. By 2023, a large proportion of UK employers had moved to offer support with one-off tactical initiatives - like hardship funds, employee loans and flexible pay.

But as industry indexes like the State of Financial Wellbeing and REBA’s Financial Wellbeing Report highlight, employers are now going a step further - stitching together strategic, comprehensive financial benefits programmes with third-party platforms like Wagestream.

Advisers should acquaint themselves with these schemes, because they aren’t going anywhere.

In 2021, 51 per cent of employers reported having a financial wellbeing strategy in place. By 2022, this had risen to 93 per cent.

There are direct advantages for advisers.

As enter this new calendar year, the cost-of-living crisis might be hitting the headlines less, but employers are now acutely aware of the importance of holistic financial support.

One in six have no savings while 3mn people are using loan sharks. One in five are meeting that shark through work. One in three have difficulty accessing credit through a mainstream lender.

All of these things can make a person financially vulnerable, and with financial stress costing a person up to 13 IQ points, the links between financial wellbeing, mental health and a happy, engaged workforce could not be more clear.

Is wellbeing worth it?

For clients questioning whether financial wellbeing programmes are worth the investment, there is plenty of evidence which advisers can lean on to prove that yes, this is not only the right but also the smart thing to do.

There is a clear business case for levelling the financial playing field for employees, with improving productivity for more than a quarter of a workforce, reducing churn and boosting recruitment all compelling business benefits.

Advisers should acquaint themselves with these schemes, because they aren’t going anywhere.

There are direct advantages for advisers, too.

While employer delivered financial advice was once limited to pensions, now, the coaching element of these schemes can help identify those in need of financial advice across a broad range of topics. This could go some way in helping to close the advice gap.

The bank of UK employers is growing. It represents a major new financial services distribution channel, and it represents a step-change in the societal role employers play.

Asda, Next, Burger King, Greene King, Bupa and the NHS are among the pioneering employers at the helm of this change, with thousands.

Erik Porter is chief risk officer for Wagestream