Research shows that Australians are under enormous financial strain – but what role, if any, do employers play in alleviating that strain?
Death and taxes may be the only two certainties in life, but it seems for the majority of Australians there’s a third contender: financial stress. Financial Fitness of Working Australians, a survey of 1,617 employees conducted by Map My Plan, shows that 48% of working Australians are worried about their financial situation. Headline statistics include:
“There’s a wide range of issues people are concerned about but for a lot of people they’re really worried about basic things like having emergency savings – how long will they last if they’re sick or they lose their job,” says Gavin Glozier, co-founder of Your Wealth Hub, who adds that the average amount of emergency savings for most people is just $3,000 (for others it’s as little as $1,000).
Other employees have concerns based on stage of life: some are concerned about retirement planning; others are looking to save to buy a home or have a family. Others are coping with large debts (see end of article).
Where do employers fit in?
While there are clear productivity issues associated with financial stress, Map My Plan research indicates only 13% of employers are offering any type of financial wellbeing services. Nineteen per cent offer advice on retirement planning – mainly by inviting representatives of superannuation funds to provide seminars. However, 56% of employees are interested in employer sponsored financial wellbeing programs.
“There is a significant gap in what is being provided by employers and what employees are seeking,” says Paul Feeney, ‘chief mapper’ at Map My Plan. “Our meetings with many companies revealed that they place a high priority on the independence of the content and advice that their employees would receive in a financial wellbeing program.”
There are limits and restrictions on the type of advice employers can offer, especially when it comes to superannuation (see HRD’s superannuation feature in this issue) – and Glozier recommends employers always advise employees to seek the assistance of qualified financial advisors as early as possible. He concedes it’s a fine line between providing support and services and giving advice. “First and foremost the line is drawn as soon as you give an opinion around what someone should do with their finances. It’s being able to be that person who can guide employees to get help with whichever party is applicable,” he says.
While it’s now commonplace for employers to offer financial counselling via EAPs, a range of dedicated financial wellness options are also available.
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Option 1: Your Wealth Hub
Your Wealth Hub offers a holistic financial wellness program with in-house engagement and a digital support program. For Glozier the key is continuous learning – and Your Wealth Hub offers an online knowledge centre which is packed with articles, videos, checklists that people can work through and read. In addition, the YWH website allows people to work at their own pace by using various online tools. “One of the reasons people don’t seek support is because they don’t know where to turn so that’s why we’ve concentrated on the knowledge centre and these tools,” says Glozier.
The firm also offers face-to-face education sessions, which will be based on whatever is timely at various points in the year: financial goal setting at start of year, tax time tips, or information on the federal budget. Sessions might include getting on top of credit card debt, attacking mortgage debt, investment updates, or information on foreign currency.
Partnerships with a wide range of suppliers, including Flight Centre, The Good Guys, Bupa and AGL mean that Your Wealth Hub can also offer a member rewards program. “We’re educating but also rewarding at the same time with discounts,” says Glozier.
Your Wealth Hub also has a dedicated business arm, Strictly Super, which specialises in corporate superannuation.
Glozier acknowledges that building a holistic program for employees can be daunting, so Your Wealth Hub offers not just a customised communications plan and reporting on program success, but a face-to-face induction program to alert employees to what’s on offer.
“We understand building something like this for an employer can be tough, so we have our tailored program ready to go. Our communications plan means the employer just needs to get behind it and live and breathe it to get maximum support,” he says.
#pb#
Option 2: Map My Plan
The goal of any financial wellbeing program should be to improve the financial fitness of employees and reduce their financial stress – and the best way to decrease financial stress is to have a plan. Hence, Map My Plan helps employees build a personalised financial plan.
“We are different to most advisers in that we do not sell any financial products – we just focus on advice. We guarantee to never sell financial products to our clients – essentially eliminating a significant conflict inherent in the industry,” says Feeney.
Map My Plan is an automated and self-directed service that enables anyone to create a personalised financial roadmap without the need to engage an adviser. An initial three-minute online survey helps employees get their personal financial fitness score and from there an automated financial planning tool helps them create their ‘roadmap’.
“We customise the general Map My Pan service to deliver a unique tool that provides financial education in the form of a personalised holistic financial plan in the context of their goals and current situation,” Feeney says. “The process of building a personalised plan engages an individual to understand their situation and the implication of today’s decision on their goals.”
Feeney adds that, in his view, just hosting seminars or passing on information to employees is not sufficient. The information and knowledge needs to have context to the individual. It needs to help them address questions or issues they have about their current situation.
“Financial literacy programs are great, but most of them are missing a key ingredient – context. It doesn’t make sense to provide information about getting income from super for someone in their 30s. Generic seminars are useful but only when the information is personalised does it become truly valuable,” he says.
Map My Plan is a living plan that continually changes as someone’s situation changes. “It puts them back in control of their financial planning,” Feeney says.
Specific employee benefits can be incorporated into the employer’s unique ‘version’ of Map My Plan – for example, where a company provides insurance for its employees, information and even an internal HR contact for more info can be incorporated into the online tool.
Employers never see any individual data but Map My Plan does provide macro-level information on the financial fitness of their workforce and what pressures their workforce is facing.
Employers pay Map My Plan an annual fee per employee of less than $1 per week. “There are no products; this is the only fee we receive. There may be a minimum annual fee depending upon the level of customization,” says Feeney.
#pb#
The next hot employee benefit?
Glozier believes offering financial literacy and wellness initiatives will be the next “hot benefit” offered by employers. “If we start unraveling the fact that so many businesses have wasted productivity per year, and that by spending a little they’re able to achieve an awful lot by engaging and retaining staff through these programs, I think demand is set to grow.”
Financial stresses by generation
Gavin Glozier of Your Wealth Hub outlines what’s top of mind for each generation:
- Personal finance is a major cause of stress for one in three working Australians
- Personal finances keep 23% of working Australians up at night
- Only people on an annual salary of $150,000+ report a slightly lower level of financial stress
- 39% spend 2+ hours per week (with 26% spending 3+ hours per week)
- Gen Y spend on average of 4+ hours per working week worrying about money
“There’s a wide range of issues people are concerned about but for a lot of people they’re really worried about basic things like having emergency savings – how long will they last if they’re sick or they lose their job,” says Gavin Glozier, co-founder of Your Wealth Hub, who adds that the average amount of emergency savings for most people is just $3,000 (for others it’s as little as $1,000).
Other employees have concerns based on stage of life: some are concerned about retirement planning; others are looking to save to buy a home or have a family. Others are coping with large debts (see end of article).
Where do employers fit in?
While there are clear productivity issues associated with financial stress, Map My Plan research indicates only 13% of employers are offering any type of financial wellbeing services. Nineteen per cent offer advice on retirement planning – mainly by inviting representatives of superannuation funds to provide seminars. However, 56% of employees are interested in employer sponsored financial wellbeing programs.
“There is a significant gap in what is being provided by employers and what employees are seeking,” says Paul Feeney, ‘chief mapper’ at Map My Plan. “Our meetings with many companies revealed that they place a high priority on the independence of the content and advice that their employees would receive in a financial wellbeing program.”
There are limits and restrictions on the type of advice employers can offer, especially when it comes to superannuation (see HRD’s superannuation feature in this issue) – and Glozier recommends employers always advise employees to seek the assistance of qualified financial advisors as early as possible. He concedes it’s a fine line between providing support and services and giving advice. “First and foremost the line is drawn as soon as you give an opinion around what someone should do with their finances. It’s being able to be that person who can guide employees to get help with whichever party is applicable,” he says.
While it’s now commonplace for employers to offer financial counselling via EAPs, a range of dedicated financial wellness options are also available.
#pb#
Option 1: Your Wealth Hub
Your Wealth Hub offers a holistic financial wellness program with in-house engagement and a digital support program. For Glozier the key is continuous learning – and Your Wealth Hub offers an online knowledge centre which is packed with articles, videos, checklists that people can work through and read. In addition, the YWH website allows people to work at their own pace by using various online tools. “One of the reasons people don’t seek support is because they don’t know where to turn so that’s why we’ve concentrated on the knowledge centre and these tools,” says Glozier.
The firm also offers face-to-face education sessions, which will be based on whatever is timely at various points in the year: financial goal setting at start of year, tax time tips, or information on the federal budget. Sessions might include getting on top of credit card debt, attacking mortgage debt, investment updates, or information on foreign currency.
Partnerships with a wide range of suppliers, including Flight Centre, The Good Guys, Bupa and AGL mean that Your Wealth Hub can also offer a member rewards program. “We’re educating but also rewarding at the same time with discounts,” says Glozier.
Your Wealth Hub also has a dedicated business arm, Strictly Super, which specialises in corporate superannuation.
Glozier acknowledges that building a holistic program for employees can be daunting, so Your Wealth Hub offers not just a customised communications plan and reporting on program success, but a face-to-face induction program to alert employees to what’s on offer.
“We understand building something like this for an employer can be tough, so we have our tailored program ready to go. Our communications plan means the employer just needs to get behind it and live and breathe it to get maximum support,” he says.
#pb#
Option 2: Map My Plan
The goal of any financial wellbeing program should be to improve the financial fitness of employees and reduce their financial stress – and the best way to decrease financial stress is to have a plan. Hence, Map My Plan helps employees build a personalised financial plan.
“We are different to most advisers in that we do not sell any financial products – we just focus on advice. We guarantee to never sell financial products to our clients – essentially eliminating a significant conflict inherent in the industry,” says Feeney.
Map My Plan is an automated and self-directed service that enables anyone to create a personalised financial roadmap without the need to engage an adviser. An initial three-minute online survey helps employees get their personal financial fitness score and from there an automated financial planning tool helps them create their ‘roadmap’.
“We customise the general Map My Pan service to deliver a unique tool that provides financial education in the form of a personalised holistic financial plan in the context of their goals and current situation,” Feeney says. “The process of building a personalised plan engages an individual to understand their situation and the implication of today’s decision on their goals.”
Feeney adds that, in his view, just hosting seminars or passing on information to employees is not sufficient. The information and knowledge needs to have context to the individual. It needs to help them address questions or issues they have about their current situation.
“Financial literacy programs are great, but most of them are missing a key ingredient – context. It doesn’t make sense to provide information about getting income from super for someone in their 30s. Generic seminars are useful but only when the information is personalised does it become truly valuable,” he says.
Map My Plan is a living plan that continually changes as someone’s situation changes. “It puts them back in control of their financial planning,” Feeney says.
Specific employee benefits can be incorporated into the employer’s unique ‘version’ of Map My Plan – for example, where a company provides insurance for its employees, information and even an internal HR contact for more info can be incorporated into the online tool.
Employers never see any individual data but Map My Plan does provide macro-level information on the financial fitness of their workforce and what pressures their workforce is facing.
Employers pay Map My Plan an annual fee per employee of less than $1 per week. “There are no products; this is the only fee we receive. There may be a minimum annual fee depending upon the level of customization,” says Feeney.
#pb#
The next hot employee benefit?
Glozier believes offering financial literacy and wellness initiatives will be the next “hot benefit” offered by employers. “If we start unraveling the fact that so many businesses have wasted productivity per year, and that by spending a little they’re able to achieve an awful lot by engaging and retaining staff through these programs, I think demand is set to grow.”
Financial stresses by generation
Gavin Glozier of Your Wealth Hub outlines what’s top of mind for each generation:
- Gen Y – Their focus is all about lifestyle and ensuring they can balance everything life throws at them. There is a concern about getting into the housing market but they also want guidance on how to save and at the same time spend their hard-earned cash responsibly. Credit card debt can easily mount up after that overseas holiday and they need advice on paying that down without enduring a crippling lifestyle. They are looking up at what their parents have achieved or are achieving and are thinking ‘it’s all too hard’.
- Gen X are in the housing market, so it’s a conversation about investments – be it property or shares. Family planning comes into the equation with now how they can drop back to one wage with kids on the horizon. Spending can be a lot tighter so smart decisions are critical to making ends meet.
- Early Gen X’s and late baby Boomers are interesting. It’s either conversations about a blended family, preparation for retirement, or now the kids are out of the nest it may be revisiting some of the goals in life that had been on hold for some time. People are still taking on significant amounts of debt so there is a real conversation about how long people will be working for. The stability of the kids is important: they want to ensure the whole family is on the right path.
- 65 years olds and three years either side… it’s about making sure they have enough money in super to fund the lifestyle they want into retirement.