What can an employer do to improve employees’ financial wellness? If you think the answer is to simply pay them more, you’d be wrong.
“It’s not about how much you earn, it’s your relationship with money,” explains Emmet Rennick of Financial Wellbeanz, a digital financial wellness platform.
Having a fat cat salary won’t keep you financially well if you spend more than you bring home. “It’s about having good financial disciplines. That means making sure I can pay my bills at the end of each month, that I can save for a rainy day and am financially resilient enough to cope with an unexpected bill, and that can I also save for the longer term,” he explains.
Those who question why employers need to get involved in employee financial wellbeing are likely those who, in a previous age, would have questioned why employers need to provide pension contributions, or health insurance plans, he adds.
“One thing often overlooked is the fact that the biggest stress in people’s lives is their finances. PWC surveys undertaken each year show it is the number one stressor. To put that in perspective, that’s above relationships, above careers,” says Rennick.
Mental health
Such stress has an impact on productivity, mental health, loyalty and on the employee’s willingness to “go above and beyond for their employer”, he says. “So apart from being the right thing to do, there is a business case for doing it as well.”
Unfortunately, instead of bringing in experts to help employees develop a more robust approach to their financial health, too often employers delegate the task to junior human resources personnel who incorporate financial wellness into overall wellness programmes or calls in someone from their bank.
The risk is either poor information from an unqualified person – a serious risk given that financial advice is highly regulated – or a talk from someone who sees it opportunity to push their own financial products.
Simply folding finance-related stress into general wellness programmes won’t work either.
“It’s not about more yoga mats. Yoga treats symptoms of stress, not the cause of it,” he points out.
“Financial wellness is about providing good advice, that is, doing it properly, getting a regulated advisor in, not someone to talk about energy bills and crypto-currencies. It has to be someone impartial, with a whole of market view.”
In October professional services firm Mercer’s announced a partnership that gives its clients the option to incorporate the Financial Wellbeanz platform within their existing benefits set up.
“Financial wellness is a growing area globally and in Ireland it will become bigger in the coming years,” says Rennick.
Spending patterns
“It’s about helping people to understand their spending patterns and putting structure on what is important in their lives, so that they are not only managing day to day but being financially resilient enough to cope with unexpected bills, and saving for the future.”
Given that the shift from defined benefit to defined contribution pension schemes pushes retirement risk entirely on to employees, the need for employees to have the tools to run their lives from a financial perspective has never been more important, he adds.
What employees want has changed as a result of the pandemic too. “They don’t care how nice your canteen is any more, they care about paying increased energy bills at home, about who is going to pay for the fit out of their new home office, about the fact that they can’t operate in a one bedroom apartment anymore. Soft rewards like foosball tables and canteens aren’t going to make a meaningful impact on their life.” Financial wellness will.
At a time when employers are struggling to manage recruitment and retention, helping employees cope better with their number one source of stress pays dividends all round. It also helps to bring one of the most common, but least talked about, sources of stress out into the open where it can best be tackled, he suggests.
“The taboo around mental health is being addressed. The taboo around financial distress is still not.”
