Employed Canadians have a lot on their plates, from managing their daily to-do list, pleasing various stakeholders, and navigating the corporate ladder, it isn’t easy to find time to focus on personal wellness. To help ensure that employees are happier and more productive, managers at progressive companies are implementing wellness solutions that lessen various types of employee stress. This focus on overall employee health is why workplace financial wellness programs are growing in popularity.
What is financial wellness?
Financial wellness, according to the Conference Board of Canada, is an overarching term to describe the often complex interplay of both objective and subjective understandings of a person’s financial state. The objective elements of an individual’s financial health include the ability to pay day-to-day bills, accumulate savings, and plan for long-term goals such as buying a home or retiring. This element of financial wellness requires having the knowledge and skill-sets, or financial literacy, to tackle these items. The more subjective elements of financial health include the feelings and attitudes towards an individual’s financial situation. Poor financial wellness can lead to stress, ultimately having an impact on physical and mental health, as well as performance at work.
Financial wellness in Canada
Canadians have fairly high levels of financial literacy on par with countries such as Denmark, Norway, and Sweden, with approximately 65% or more adults who would be considered financially literate. However, there is room for improvement as the Canadian Financial Capability Survey found that only 40% of Canadians feel they have a good or very good level of financial knowledge.
Similarly, there is room for improvement in terms of the financial wellness of Canadians. When you look at the numbers, it's easy to see why Canadian companies are starting to offer financial wellness programs:
- 42% of Canadians rank money as their greatest stress.
- Employees with poor financial health took 36% more sick days than those with good financial health.
- The government of Canada estimates that distraction due to financial stress costs companies an average of $1,000 per employee every year.
Employees who are concerned about their financial health at home will likely bring this concern with them to work. While an initial instinct might be to provide salary increases to alleviate financial worries, without the proper education and tools, financial stress may persist.
What's in it for employers?
Return on investment
According to a Techcrunch article, employer-provided financial services are poised to grow significantly. Companies are generally happy to cover financial planning costs as they are "...confident that the productivity and engagement gains will yield positive returns relatively quickly."
While it's impossible to completely alleviate all financial stresses, companies should consider what a less distracted and happier workforce means for the bottom line. If financial stress costs companies an estimated $1,000 a year per employee, a financial planning solution with an annual cost of less than $500 per employee has at least a 2x return on investment.
Attract and retain talent
Many companies already offer attractive benefit plans that cover certain medical expenses, fitness reimbursements, and even life, disability, and critical illness insurance. By offering financial planning services, companies have another employee offering to help attract and retain talent. In fact, 84% of Canadians would be interested in financial education programming offered through their work, according to a survey by the Canadian Payroll Association.
With the decline of company sponsored defined benefit plans, many Canadians don't have a source of guaranteed income in retirement. Business managers that assist employees with financial planning demonstrate that they care about employee well-being and long-term success, even after they leave.
Why financial wellness at work?
Employers that contract independent wellness providers, can often provide a more convenient, relevant, and trusted financial planning solution than employees would be able to find on their own.
According to a publication by the Ontario Securities Commission, the hardest part of financial planning is starting the process. To help address this hurdle, the report suggests that "employers could integrate retirement planning into their onboarding process for new employees". This process could be further streamlined, as much of the time-consuming information gathering process can be automated by connecting to employee payroll and benefit data.
Individuals have unique personal finance questions, and they want to know what financial products and services work best for them. By engaging an independent company to offer advice, employers can ensure that the advice being provided is in an employee’s best interest.
Components of a financial wellness program
Employers should look for financial wellness programs that:
- Engage employees by providing information on the importance of financial planning.
- Offer an easy to use online financial planning solution that is convenient to the employee and doesn’t take up a lot of their time.
- Provides the employer with metrics on employee utilization and satisfaction.
- Has optional educational components that offer either in-person or online workshops.
- Allow the employee to virtually connect with a human financial planner if they have more complicated concerns.
- Don’t push unnecessary financial products on employees. The financial wellness provider should be focused on educating employees and helping them find the best solutions for their individual needs.
- Never share individual employee financial information with the employer or other parties.
A growing trend
By making objective financial planning easy for their staff, employers will stand out and better attract and retain a talented, productive workforce.
Employees will feel happier and cared for, knowing that their employer wants them to have a secure financial future.
In fact, the Government of Canada has an entire website that highlights the importance of financial wellness in the workplace.
With so many positive outcomes, it's easy to see why there is a growing movement towards offering financial wellness programs to employees.
At Frame Financial, we are excited to be a part of this movement and to work with companies to implement innovative and unbiased financial planning programs: