Employee Financial Well-being – what is it and why should you care?

We know from current information that employees are struggling with stress, both at work and in their personal lives.  Based on results from Canada’s employee assistance providers, on average, one in ten employees will feel the need at some point in the year to reach out for assistance.  And increasingly the reason for them to reach out for assistance is around financial stress – how to plan for retirement, pay down credit card debt or student loans, create a budget, etc.

So why should an employer care?  Based on a recent study by PricewaterhouseCoopers, it is estimated that 50% of employees are distracted by their personal finances at work and spend on average about 3 hours per week dealing with their finances.  Regardless of how you may see this issue, that amounts to a significant loss in workplace productivity.

Based on some recent work at ZLC Financial, here are some areas that organizations can consider exploring further with employees:

  • Building Wealth – In general, employees may need guidance to learn to live within their means, including building adequate savings and living without the need for high interest debt.  Obviously, employees need to save for their eventual retirement but they may fail to recognize the need to also save for emergencies.  And once they have established some savings, employees need to know how to protect those savings from financial loss and erosion due to inflation.  They need to understand that the best way to save is to save early, save often and save using the registered financial vehicles available to them.
  • Managing Risk – Employees need to understand about life-changing events that can significantly affect their finances.  After they recognize these risks, they need to learn about strategies to manage those risks – avoid them, retain them, share them or transfer them.  For example, most employees already share risk with home and auto insurance, but far too few understand how to use insurance to manage personal risks.  They also need to better understand how those risks change over time based on major life events – marriage, divorce, mortgage, children, long term care, estate planning, death, etc.
  • Executing a Plan – While this may initially seem very challenging for employees, they need to gain some confidence that they can start to build a plan and then execute it.  That may or may not include the need to involve professionals like lawyers, accountants, insurance advisors and/or financial planners, but, as their needs change over their life, they may need some form of professional assistance.  A financial plan will help serve as a blueprint to follow during their lives but they also need to recognize, understand and deal with issues related to death – in particular, far too few Canadians actually have a Will.  Employees need help with basic ideas, concepts and strategies to help them get going.  In particular, they may already have access to resources that they are not aware of, like the company’s Employee Assistance Plan provider.

Proactive employers recognize the risks related to their employees financial wellbeing and therefore the related risks to their businesses and want to help their employees by way of increased education and communication.  If employers start to help their employees with financial wellbeing, those employees can then start to take care of themselves.

Each organization’s needs are unique and warrant a customized solution.  We would be pleased to discuss your specific situation with you to identify the best strategy with respect to your employee benefits program.  Should you have any questions on the above, please don’t hesitate to contact me or a member of our  team.

At ZLC Financial we are not the world’s biggest benefits advisor but we are large enough to have the best people, resources and clients in Western Canada.  Our goal is to work with you to find a better way for your employee benefits plan.  We provide this value to you by leveraging one of the most skilled benefits teams in the city – almost 250 years of experience within our team of 12 employee benefits specialists.  We have been working with businesses ranging from 4 to over 10,000 employees for the past 30 years.

By Dan Eisner and Joanna Zlotnik

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