Financial Education in the Workplace

A financial education in the workplace survey completed in Canada in December 2011 showed that 87% of employees want financial education.  This does not surprise me.  I’ve been consistently proclaiming the ills of our society, many and most of which come from money worries.  What does surprise me is that 72% of companies believe financial education of their employees will benefit them (the employer).  Productivity and morale has obviously become so disaffected that employers have felt the trend and noticed the bottom line.

Companies top concerns regarding employees and their benefits are: absenteeism, presenteeism (at work but minds are elsewhere on financial issues), workplace violence, engagement, productivity, drug and alcohol abuse, benefit costs, turnover, mental wellness, physical wellness, organisational commitment, market place competitiveness.

What also doesn’t surprise me is that employees state the preferred times to participate in financial education, in order of choice;

1. During work hours
2. During lunch break
3. At home on my own time
4. Right after work
5. On the weekend.

People with high debt stress were displaying the following symptoms compared to those without high debt stress:

Severe anxiety                                    29%     to         4%

Migraines                                             44%     to         15%

Severe depression                              23%     to         4%

Heart attacks                                       6%       to         3%

Ulcers – digestive issues                    27%     to         8%

Muscle issues, back pain                   51%     to         31%

61% of all employees surveyed cited money as their number one stressor, and 52% indicated distress over financial matters contributed to irritability, anger, fatigue and sleepiness.

Employees experiencing financial stress spend 13% of their workday dealing with money – their own, not the boss’s.

This will become big business in NZ.  It is already beginning to show with any number of organisations proffering ‘financial coaching’, from banks to mortgage brokers, home buyer packages and insurance agents.  The market is unlimited and when demand appears ‘supply’ will follow.  The point of difference however that I perceive is the need for advice as opposed to the need for product and most distribution channels sell product – not advice.  Product sales generate cash flow through commissions and thus the client is not required to fork out a fee to the adviser.  The issue is – another product in their already burgeoning array of financial vehicles – will seldom solve the problem –

            Getting into the first home (a mortgage)

            Eliminating their mortgage faster (revolving credit)

            Accessing credit (credit card)

            Protecting their debt and mortgage (insurance)

            Retail (hire purchase)

            Business development (bank overdraft)

            Education (student loan)

            Investment property (2^nd property) (leverage)

            Spending capacity (eftpos)

The real problem is most often financial control – and you can’t sell someone a product for that – the best budgets and software packages don’t work because the problem is human behaviour, not human lack of information or human lack of a product.  Just as is the case with investing, temperament is more important that IQ when it comes to money matters.

That’s why both employees and employers ‘get’ workplace financial education.  Education is not just information and it is certainly not product focused.

The Canadian experience is now over two years old and companies agree that employee financial education is a valuable benefit to the:

            Employees                  88%

            Employee’s families    87%

            Company                    72%

            Economy                     72%

But they want education from a third-party educator to be:

            Unbiased                     88%

            Experienced                87%

            Accredited                   82%

These statistics are proof enough.  The time has come for NZ corporates and small business owners to step up and offer employee benefits in financial education – the Reasons:

            Employee and company performance

            Moral obligation (the majority of their staff are suffering)

            To improve morale

            Demand from employees

            Increased participation in pensions and benefits (KiwiSaver, Group Life)

            Improved bottom line.

But the answer lies in the quality of character and competence from the educator – guess who fits that criteria.

In my humble and biased opinion of course.

The information provided in this blog is not intended to be a substitute for professional advice. You may seek appropriate personalised financial advice from a qualified professional to suit your individual circumstances.