What Is Financial Wellness & Why Should Business Leaders Care?
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Financial Advisor, Portfolio Manager, Managing Director RGF Integrated Wealth Management
bh in Brief
Clay Gillespie is a Financial Advisor, Portfolio Manager and Managing Director of RGF Integrated Wealth Management, a Vancouver-based financial planning and advisory firm founded in 1973. Gillespie has been quoted by numerous publications including, the Globe & Mail, Toronto Star, Vancouver Sun, The Province, National Post, Money Sense and many others.
Gillespie is also the author of Create the Retirement You Really Want, available from Chapters.Indigo.ca and Amazon.ca.
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Helping employees cope with financial stress makes good business sense. In the 2017 PwC Employee Wellness Survey an incredible 53% of employees reported being stressed about their personal finances. The report suggests 48% of employees are distracted at work thinking about their finances, 16% miss work dealing with their finances, 35% say that financial stress has affected their health, and 50% of the employees spend at least three hours a week dealing with their own personal finances.1
What are the stressors?
Retirement
Different generations have different financial stresses at different times in their lives. Many defined-benefit pension plans have now been replaced by defined-contribution plans. Under the old defined-benefit pension plans, employees did not have to manage their pensions and were entitled to a monthly income based on salary level and years of service. In contrast, members of defined-contribution plans must manage investment choices and deal with personal investment behaviors as stock markets around the world go up and down over the years. Under a defined-benefit plan it was much easier to estimate pension totals. With a defined-contribution plan, an employee has a pot of money to invest and must decide how to make it last for the rest of their expected lives. It is a very stressful endeavour.
Student debt
Many millennials are struggling with student debt while at the same time trying to launch their careers and family lives. Under these circumstances it is easy to see why millennials jump from job to job for a slightly higher salary.
Day-to-day living
Employees of all ages also face the day-to-day stresses of balancing lifestyle expenses with salaries. Needing a new car, replacing the roof, helping children fund their education – the list of financial stressors is almost endless.
What steps can you take?
Benefit plan
As a responsible employer, the first step is to ensure that you have a competitive benefit plan that helps employees save for retirement, deal with unexpected issues such as death or disability, and defer the cost of healthcare-related issues.
Education
The second step is education. Education comes in many different forms. You can host the traditional “lunch & learn” sessions on various topics, such as estate planning, retirement planning, and debt education planning. You can add personalized one-on-one consultations, so that employees can ask questions about their specific situations. A newer trend is to offer technological solutions that enable employees to do some of the educating and decision making on their own time, where they feel comfortable. All forms of education must be supported from the CEO down – not just the individual in human resources.
Privacy
A third step is to respect the privacy concerns of your employees. Many employees are uncomfortable talking about their financial affairs at work and they do not want their employers to know details of their personal affairs. It is important that any program that is set up is not about collecting data on employees but is solely designed to help employees make better financial decisions.
Why should you care?
As a business leader, your goal is to empower your employees and help them make decisions that reduce stress and increase their financial wellness. You need to care because employees who are comfortable in their personal financial life will focus on their work and not jump to other employers for just a few dollars more. They are likely to be better long-term employees, able to make significant contributions to the well-being of your business. bh
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From Create the retirement you really want by Clay Gillespie
Mike and Rachael have questions for their financial advisor…
“How much income will our pensions bring in?”
“Between thirty and forty thousand dollars each year.”
Mike and Rachael looked at each other. “I think we would need $50,000 on top of that, but we need to think it through a bit more.”
“Fair enough. Let’s say you decide on $50,000 a year. In that case, I’d make sure that, at the time of your retirement, your fixed income instruments would be set up to generate $50,000 a year.”
“Why would you do that?”
“That way, as we discussed earlier … “
Follow Mike and Rachael as they learn to manage their money and plan for their retirement, in Gillespie’s book, available from Chapters.Indigo.ca and Amazon.ca.
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