But... Are we getting closer to the answer?
To date the majority of financial education programmes in South Africa focus on a single aspect of financial planning. Boards of trustees oversee member education programmes that help people interpret their benefit statements, financial institutions go to great lengths to help people determine what kind of annuity would best suit their needs in retirement or what sort of tax-free savings investment would be most effective in helping them fund their child’s education; employers have gone to great lengths to introduce debt counselling or programmes that help employees cope with financial crisis; and the government and NGO sector has focused on providing access to budgeting and planning tools.
Financial well-being is a concept that takes us one step further. It’s what the BMW programme was striving for when it developed its programme. It demonstrated that we needed is to move beyond a snapshot approach to financial education to something more akin to a movable feast, a journey, a change management continuum. “We need a framework that allows individuals to toggle back and forth between shortterm goals or immediate needs and longer-term needs2.” Or, in the words of one financial planning group, individuals need help striking a balance between living responsibly today and planning wisely for tomorrow. “In this sense, financial well-being programmes are as much about learning to do it right as learning the right thing to do3”.
SHIFTING FROM FINANCIAL WELLNESS TO FINANCIAL WELL-BEING
Now we need to take the goal one step further. It may seem more like a conceptual shift, but it’s a critical shift nonetheless. The challenge that these programmes have been up against is how to keep individuals engaged on the journey. When we embark on a change management programme – and we’ve identified that that is what is required here – we know we are in for a long journey. But it’s one that individuals are more likely to stick with if we can find ways to address the blockages that exist in each individual’s unique circumstance.
What the ‘journey’ is all about is less about accumulating a body of knowledge and more about learning how to let go of potentially dysfunctional behaviours. It’s about building up a more effective way to get money and finances to address your specific hopes, fears and dreams.
Who should be involved?
To hijack another change-management initiative’s byline, achieving this goal “will take a village”. We will need to tackle this at multiple levels and those levels need to incorporate as broad a social context as possible.
Policymakers will have to do their bit to clear up the problematic lending industry. Both public and private institutions will have to change the ‘messaging’ about money in various socio-economic settings. Financial services institutions need to control their inclination to capitalise on our tendencies to depend on behavioural short-cuts around financial decision-making. And somewhere, somehow, we need to cultivate the right type of professionals to help us provide that service continuum that takes an individual out of financial crisis, into financial stability and then on to financial well-being.
But after considerable debate and reflection, it’s becoming clear that the real engine room for change must, by necessity, be the workplace.
At some level this might seem counterintuitive. We are told by HR departments that employees consider their financial circumstances a deeply private matter. For many individuals, financial crisis and debt can be a cause for embarrassment and shame.
But let’s pose the problem differently. How would you respond to this statement?
“I see my employer as a natural source of assistance with respect to:
- my physical well-being
- my mental and social well-being
- my financial well-being.”
Be honest now. Which answer most naturally resonated with you?
The reality is that for most individuals, their employment represents the heart of their engagement with money. Under normal circumstances, your salary is your first port of call for financing life’s requirements. Like it or not, an employer will always play some role in how their employees engage with money.
As Sally Hass, the former Director for Human Resources for the American paper company, Weyerhaeuser, argued in a Consumer Financial Protection Bureau paper on Financial Wellness at Work: “Employers are already in the financial education business. They provide benefits and educate employees about complicated financial and investment products… but they rarely give much thought to the question of how they can be more effective with what they are already spending to educate employees4.”
Employers are typically the first outreach point when employees get into financial difficulty. What could be a more natural request than asking for an advance on your pay cheque?
Additionally, members believe their employee benefits fiduciaries act in their best interest. If these representatives take a view on the appropriate default investment strategy that best serves member requirements, members believe they are more likely to be right than anyone else.
But it’s more than just an endorsement by employers that should drive our thinking. Improving an employee’s financial capability works in the self-interests of both the employer and the employee. A study by Hira and Loibl concluded that financial wellness is correlated with employee satisfaction with the employer and with company pride5 – more so, perhaps, than other wellness initiatives set by the employer. From that perspective the potential for return on investment for the employer is more easily justified. Employers will accept that they need to invest in employee wellness programmes that focus on mental and physical wellness – while only tacitly acknowledging how interlinked these two states are with financial well-being.