The Financial Health Exchange recently partook in a webinar with colleagues from the Center for Financial Services Innovation (CSFI) in the US, on the subject of financial health at work – a big subject both here and in the US.
The session started with a presentation by Tanya Ladha, a senior manager at the CSFI, describing the hidden problem of financial ill-health among US workers.
She made the point that financial ill-health is sometimes very difficult to identify and doesn’t only occur to the most obvious demographics. Ladha points out that more than a third of those who are defined as “coping” (not necessarily in total financial distress, but struggling on occasions) earn over $60,000 per year (approximately £41,000). On the flipside more than a third of those classified healthy make less than $60,000.
In her research she has found that 50 per cent of Americans couldn’t raise $2,000 in 30 days and at least 25 per cent of employees in the US are financial stressed.
She found that those who are defined as financially stressed can often spend as much as twenty hours every week distracted by personal finance issues – which, when you consider what this does to an employer’s bottom line is something quite significant.
During her research she found that 40 per cent of employee turnover is due to stress, much of which is related to financial distress, and that some 97 per cent of employees admit to managing their personal finances at work.
After her presentation she gave the floor to Emanuel Rivero, the Director of Emerging Products and Services at Clearpoint, an organisation that has been providing consumers with budget, credit, debt, and housing advice for 50 years.
In his experience there is a clear gap in the market for financial services for those on low and middle incomes in employment, with the bulk of financial services geared more towards the higher income end.
Clearpoint felt they could offer a service in this space, primarily with My Financial Blueprint which provides advice for clients on a long term basis with “financial architects” who can guide them through their financial journey, from investments to reducing their personal debts.
In the early days of My Financial Blueprint they found that the service was not one that clients necessarily wanted to pay for themselves, presumably because they had to prioritise their spending elsewhere. So representatives of Clearpoint had an idea: take it to employers worried about the financial health of their employees.
This seemed to work very well, particularly because of the (in their words) “buzz” around financial wellbeing in the workplace at the moment.
They have found that employers want to dip their toes in the water, to test out financial health programmes before they commit long term – so Clearpoint designed an offering for companies who were not yet sure; a taster course.
Additionally they found that employers are unsure about what’s available to them. Many understand the need to offer some kind of assistance, whether through signposting to other services or playing a more interventionist part themselves, but essentially this world is still riddled with uncertainty.
Clearpoint, by branding themselves as an additional element to an employee rewards package, feel they’ve found the correct balance. Their pricing is also arranged in a way more familiar to employers for a benefits package.
However what’s still needed, as far as we at the Financial Health Exchange are concerned, is more information on how these programmes can produce tailored services for both older and younger workers. These types of employee will have varying needs which should be catered to.
Emanuel’s presentation concluded by adding a word of caution. Employees often get very excited about the assistance they’re receiving, then sit and think “hang on, these guys are in cahoots with my employer, how much information should I give them”. By aggregating data, Clearpoint feels it has the best of both worlds.
Data is not presented as Mrs X has this type of credit score or these types of debts etc. Employers, in their experience, don’t want information that’s this granular. Instead they would want to see how many people are using the assistance services and whether they are less stressed afterwards as a consequence.
The topic of employee financial health is a hot one in the UK, but there are similar problems here as in the US: how much should employers actually do and what assistance is necessary? Learning from experiences abroad is always very useful for good practice.