Financial Wellbeing Index 2019 - UK Employees Need More Support From Their Employers

Posted by John Adam on September 10
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“Although many businesses have made great strides to look after the mental wellbeing of their employees over the last decade, not as many employers have supported their financial wellbeing”.

“Poor financial wellbeing doesn’t only affect individual employees, it also impacts business performance; it leads to a lack of productivity, from staff being distracted by money worries to sickness absence, as the stress takes a physical or mental toll”

  • Close Brothers Financial Wellbeing Index 2019

 

The Close Brothers Financial Wellbeing Index 2019 begins its foreword with the quote “Financial wellbeing has become the ‘buzzword’ of our time; increasingly the ‘must have’ employee benefit to complete a holistic wellbeing strategy”.

The term ‘buzzword’ often contains the slightly negative inference of being an abstract ‘management speak’ concept trotted out in PowerPoint presentation headings. Think ‘synergies’, ‘disruptor’ or ‘digital transformation’. ‘Financial wellbeing’ might qualify as a buzzword insofar as it has relatively recently entered the business lexicon and consciousness of employers, management and employees and is increasingly referred to and discussed. And that is how the paper presenting the findings of the 2019 Financial Wellbeing Index applies the tag.

But financial wellbeing is certainly not an abstract concept for employees. At least beyond the term itself. Because crucially, ‘financial wellbeing’ is a term that focuses on employees and their life and personal situation - not their job or their employer’s wellbeing as most other buzzwords inevitably do. And employers are increasingly understanding that’s the way buzzwords should be. Because with or without buzzwords, most employees do, under mutually beneficial circumstances, care about doing their jobs well and the success of their employer. And when they are happy and relaxed in their lives outside of work, they are able to bring more focus and energy to the workplace. And when that ‘synergy’ is right, the rest tends to naturally follow.

That employees content in their private and professional lives has a positive impact on their productivity and the employer’s bottom line is not news hot off the press. It’s why employers have shown the level of willingness and commitment they have to invest time, effort and money in mental wellbeing through creating the right conditions at work and offering support facilities around mental and emotional health.

Which brings us back to our opening quote:

“Although many businesses have made great strides to look after the mental wellbeing of their employees over the last decade, not as many employers have supported their financial wellbeing”.

The findings of the 2019 Financial Wellbeing index highlight that employee financial health is an issue for them and something that, on average, leaves significant room for improvement. The index’s methodology was to survey 1,003 employers with 200 or more employees, and 5,003 employees from companies with 200 or more employees. Employee financial wellbeing scores were assigned as a mark out of 100 across 8 categories:

  • Money worries
  • Budgeting and planning
  • Debt
  • Protection (how well individuals are able to absorb unexpected financial shocks)
  • Savings and investments
  • Retirement
  • Properties and mortgages
  • Tax

The overall average financial wellbeing score returned by the index came in at 53.6 out of a 100 - demonstrating plenty of room for improvement. The categories where scores indicate particular areas of concern are:

Budgeting and planning (48.8/100)

Protection (42.5/100)

Tax (48.5.100)

Another notable reality highlighted by the index is that there is a clear and significant disconnect between the actual financial wellbeing of employees and the employer perception. It’s not that employers are oblivious to the fact their employees may have money worries - 88% think they do. But many underestimate their extent. Employers forecast the Financial Wellbeing Index the employees would return at 70.6. That’s a lot better than the actual overall average index return of 53.6.

The good news is that employers are more aware than ever before that looking after the mental and emotional health of those who work for them leads to improved business performance. The more progressive employers have a desire to look after employee mental wellbeing for its own – their - sake. And it’s also largely understood that financial wellbeing plays as significant a role in mental and emotional health and stress levels, if not more, than other influences that employers already address. But if any further, commercial, incentive were needed, that is also now clear:

“Poor financial wellbeing doesn’t only affect individual employees, it also impacts business performance; it leads to a lack of productivity, from staff being distracted by money worries to sickness absence, as the stress takes a physical or mental toll”

Distilled into hard numbers, the fallout from poor levels of financial wellbeing is that 48% of employers recognise that fewer employees than they would like are taking retirement and that rate is increasing people costs. 45% also say that a lower rate of retirement than that they consider optimal is also negatively impacting succession planning.

The index report also identifies 6 major challenges associated with poor financial wellbeing:

  1. Reduced productivity (22%)
  2. Loss of talent (22%)
  3. Reduced employee engagement (19%)
  4. Higher absenteeism (19%)
  5. Demand for increases in remuneration (19%)
  6. Reduced rate of retirement (13%)

Employers Want To Help Improve The Financial Wellbeing Of Employees And Can

The conclusion of the 2019 Financial Wellbeing Index is that there is an obvious need for improvement across the 8 areas of financial wellbeing with particular emphasis on ‘protection’, ‘budgeting & planning’ and ‘tax’. UK employers have been ‘crying out’ for an objective measure of financial wellbeing that puts a pin in the key areas where employees need help. And now they have that. With the biggest issues having been identified, employers can take concrete steps to address them. Doing so will help alleviate what is now obviously one of the biggest sources employee stress – universally accepted as impacting performance at work.

Written by John Adam

John has almost 10 years of experience as a writer and editor on consumer finance and investment topics. An entrepreneur, he has one successful exit behind him and currently writes and consults freelance while enthusiastically pursuing hobbies he's not very good at such as football, squash and raising a small child.

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