How financially fit are your firm's employees?

'About a third of employees are distracted by financial issues while at  work, with almost half spending three hours a week or more on handling personal financial issues while on the clock.

Darren Smith CPA explains how encouraging staff to get on top of their financial health early can benefit your public practice.

Darren Smith CPA knows that if he tried to sell financial products direct to companies’ employees, he would be swiftly shown the door. Nobody wants to be sold to, and Smith is well aware of the issues these days around advisers’ selling techniques.

Yet if he told those very same companies that he could offer their employees a “financial wellness program”, with credible benefits to company productivity and no product sales involved, the bosses might just listen.

Smith, the managing director of Brisbane-based financial advisory firm Financial Advice Matters (FAM), markets his financial wellbeing program in much the same way a physiotherapist, yoga teacher, nurse or nutritionist might sell the health benefits of their programs for employees.

A person under financial stress can be not only a difficult and unproductive employee, but also a toxic one. Smith hears it anecdotally all the time – stressed employees can poison the working lives of their colleagues. He has clients in the mining sector and, in that context, an employee under financial strain can pose a serious health and safety issue.

Smith points to a 2016 AMP wellness report, which states that nearly seven hours per employee every working week are being spent on matters related to financial stress. Staff take four days sick leave per year to deal with financial problems. About a quarter of employed Australians are financially stressed, the study says, costing their employers an estimated A$47 billion a year in lost revenue.

A more recent 2017 PwC employee wellness survey found the correlation between an employee’s financial wellbeing and a company’s bottom line. About a third of employees are distracted by financial issues while at work, with almost half spending three hours a week or more on handling personal financial issues at work.

“Of course, statistics are statistics, and you can’t pin this down exactly,” Smith says. “But there is plenty of credibility in this. A stressed colleague affects others, and they certainly affect a company’s profitability.”

Smith’s answer is to offer companies a 12-month, 12-module program for their employees, with each module amounting to a two-hour commitment. Often companies will take the first three modules – goal-setting, budgeting and debt management – in one go. However, Smith advises against this.

“If you do it quickly, you’ll get less in the way of behavioural change from employees,” he says. “You need to take them through the whole course. I call it nudge theory,” he laughs.

The starting point is a quick financial health check, which gauges how engaged employees are with their finances. “Are you struggling on a weekly basis to balance your budget and why? A lot of people have little sense of where their money is going, so we’re only offering some basic skills and tools to start conversations and get people to the next level,” Smith says.

Debt reduction – especially debt related to mortgages – has been the area that has engaged most who take part. In this module, participants are offered keywords to use when renegotiating a deal with the banks. This might be about reiterating their loyalty or letting it be known they have been talking to a mortgage broker about alternatives.

“We’re not asking people to refinance, but they may be missing out on an opportunity to save several thousand dollars a year. The bank can only say no,” Smith says.

Estate planning is perhaps the most neglected module, and has become increasingly important in this age of blended families. The company found that about 70 per cent of participants have done little or nothing relating to their wills.

In all things, conversations always lead to stories, which form the real benefit of the workshops. “There might be some people who are embarrassed, who keep quiet in a public forum. Others sometimes take encouragement from it and share things they normally wouldn’t,” Smith says.

The idea took root three years ago when one of his clients, a psychologist, introduced Smith to the idea that all kinds of wellness were important.

“We found it a perfect fit with our own ideas,” he says. The program is now a significant part of FAM’s earnings and continues to grow rapidly year on year – Smith hopes to see it accounting for about 20 per cent of total revenue in years to come. FAM is a boutique adviser, with 28 employees spread over five offices around Queensland. There are 13 accredited advisers, of whom six are actively involved in the education program.

“It’s an area a lot of advice businesses aren’t doing well – if they’re focusing on that business at all,” he notes.

Smith says most workshops on personal finance tend to be Employee Assistance Programs (EAP), but these are always reactive. “People go to EAPs when they’re already in trouble financially. Our job is to get them thinking before the problems occur,” he says.

One big area of misapprehension is that financial health is all about superannuation – a fixation on the pot at the end of it all. Superannuation firms will come and lecture companies, but super is by no means the whole story, he says.

“You can’t leave the whole thing to what’s going to happen after you turn 65,” he says. The obvious health analogy is that by then it might be too late to bring in the doctor. Best to solve current issues now, not just focus on the end game.

Financial health is wealth

Darren Smith CPA, representing FAM, donating A$10,000 to Turn to Me following a mental health awareness fundraiser in April 2019.

As part of the company’s ongoing theme of health related to wealth, FAM has been a recent supporter of the Queensland Rugby League’s Turn to Me campaign, which deals with awareness of mental health.

“We have been lucky enough to work with some of the original founders of Turn to Me, including some of the great Queensland players such as Petero Civoniceva and Isaak Ah Mau,” Smith says.

Both players have witnessed a number of their teammates take their own lives, and felt they had to do something to help. Both were behind Turn to Me, which encourages people to talk to each other when they are under mental stress and may need some help.

FAM organised a 500km bike ride in April with a number of other business sponsors, and helped raise A$20,000 towards mental health activities, with A$10,000 being donated to Turn to Me.

Read next: Come together: staff engagement strategies for smaller accounting firms


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