How financial literacy can save employers significant sums

Educational sessions can increase productivity of financially stressed employees, says CFP professional

How financial literacy can save employers significant sums

Employers can save hundreds of thousands of dollars per year if they help employees with their financial stress. Manulife’s survey, ‘Stress, finances, and well-being,’ says financial stress could cost employers up to $1,786 per employee per year in lost productivity.

With record high inflation and rising interest rates, workers are bringing more of their own stress to the workplace, says the report. As well, seven out of 10 workers say worrying about personal finances at work interferes with their productivity.

As much as people try to keep their personal and work lives separate, many find it hard to leave their financial concerns at the door. This added distraction is affecting job performance – making financial stress both a business concern and a real cost.

Worried about soaring costs of living

This year, Canadians are even more worried about the soaring costs of living than they were last year, says the FP Canada’s ‘2023 Financial Stress Index.’ However, the research also shows that working with a professional financial planner is helping people manage through and reducing the impact of financial stress.

Money remains the top source of stress (40%) – even more than personal health (23%), relationships (17%), and work (16%) – for the sixth year in a row. On top of that, financial-related stress has negatively impacted the mental health of Canadians, with one-in-three (36%) experiencing mental health challenges such as anxiety or depression related to financial stress.

As Canadians struggle to afford groceries, gas, and other goods and services, almost half (48%) say they end up with less disposable income.

Saving enough for retirement a growing concern

Further, Canadians are struggling to save money. Saving enough for retirement (35%) or a major purchase (32%) are two areas of growing concern.

“Employers have a vested interest in making sure their employees’ mental health is in good shape. That’s the best way of getting full productivity from them,” says Tina Tehranchian, a CFP professional and senior wealth advisor with Assante Capital Management Ltd. “If money is the biggest source of stress, then the best thing employers can do is to improve the level of financial literacy of their employees and encourage them to seek help from a financial planner.”

The Financial Stress Index also shows that Canadians who work with a professional financial planner feel significantly more hopeful about their financial future (59%) than those who don’t (46%), underscoring the value that financial planning can bring to Canadians in today’s challenging economy.

Financial planning goes beyond retirement planning

“Financial planning goes beyond retirement planning,” says Tehranchian. “Most people think financial planning is all about planning investments or their retirement, but it starts with budgeting and cash flow management. It includes tax planning and taking advantage of the different ways to reduce taxes and enhance savings. It also includes risk management.”

She says employers could offer educational sessions for their employees and perhaps offer some type of incentive to encourage them to participate. Many employers might already have a financial information component available within their wellness scheme or employee assistance program (EAP).

There are many resources available for employers and employees. All it might take is a call to their benefits provider or consultant and some encouragement so the resource is utilized.

For smaller employers, Tehranchian says they could liaise and form relationships with CFP (Certified Financial Planner) professionals in their area. “Many of these CFP professionals are open to the idea of doing lunch-and-learn sessions for employees of smaller firms. They would be a huge resource for improving financial literacy.”

Although the economy is starting to show some resilience so far this year, we’re not out of the woods yet. Experts says the economy will continue to create challenges for Canadians throughout 2023. This gives employers the opportunity to support employees, help reduce financial stress, and create a profitable outcome for everyone.

FP Canada, the publisher of the Financial Stress Index, has a directory of CFP professionals by region.