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Workers who are struggling financially benefit most from financial education and coaching, even without a global pandemic. A new report from Financial Finesse advises employers to focus their financial support on their most financially stressed employees during the COVID-19 crisis, as the financial education provider sees a shift toward lower financial health levels in the workforce.
|Suffering, struggling, stabilizing, sustaining, secure
Financial Finesse divides workers into five levels of financial stability and gives each a financial wellness score range, determined by how they responded to the following:
- whether they have a handle on their cash flow
- have an emergency fund to handle unexpected expenses
- how comfortable they are with their debt level
In addition to the lowest levels of suffering and struggling, the categories range from stabilizing, to sustaining to secure. Those categorized as suffering have a financial wellness score of 0-2, those who are struggling have a score of 3-4, and so on up the scale.
According to the report, most workers fall in the "stabilizing" category at 36%.
The report looked at using three methods of financial education and coaching: online, group and individual. It concluded that the "best practice" was a combination of all three. This method worked best among those employees defined by Financial Finesse as "suffering" or "struggling."
Segmenting workers into these groups helps employers determine where to focus their resources. For example, the report found that among those who have participated in the best practices method for five years improved their financial wellness score among suffering (+2.96 points) or struggling (+2.22 points) workers the most. Those workers who said that their financial stress level is "high or overwhelming" increased their average score by 2.7 points.
|What can employers do?
The report finds that employers can benefit from providing financial education and coaching services to employees as it reduces the financial stress and mental well-being of employees. Employers can see a cost savings as employees move toward financial stability in terms of productivity and an improvement in employee mental and physical health.
Employers should make employees aware that these services are available and encourage them to participate, especially during the very stressful (economic and mental) times of COVID-19.
Other recommendations in the report:
- Offer bank at work programs.
- Offer credit and debit counseling.
- Make employees aware of any employee assistance programs or funds the company offers and make the application process easier. Many financially-stressed employees will be reluctant to, or are unsure of how, to seek assistance so making the process easier may overcome those obstacles.
- Provide a COVID-19 resource portal with information on benefits and programs. Include benefits providers as well; many already have COVID-19-related resource pages available that highlight the benefits available to employees that might be of particular help during the crisis.
- Offer specialized messaging and assistance to employees in different populations. For example, the needs of those nearing retirement are different than those with young families or who are taking care of elderly family members.
- Protect employee investments. Financial Finesse expects investment scams to increase during the pandemic. The report cited a study that showed that 80% of employees in the U.S. trust their employers to "do what is right," so make sure any information or guidance on investments is from reliable sources with no conflicts of interest.
Steve Salkin is the Managing editor of ALM's Law Journal Newsletters.
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