WSSA Financial Wellness Index : Australians are not well

From
Terry Rhodes

Terry Rhodes

The Workplace Super Specialists Australia (WSSA) Financial Wellness Index has found almost two in five Australian workers are in dire need of improving their financial wellbeing, with only one in three considered truly financially well.

According to CoreData who conducted the research on behalf of the WSSA, just over one in three or 39% of employees were categorized as either ‘financially unwell’ (12%) or as having ‘room for improvement’ (27%), indicating that much of their financial situation is in desperate need for improvement.

Under a third (29%) of employees were rated as ‘on the way to wellness’, while 26% were rated as having ‘financial wellness’ and 6% as ‘super stars’.

“This data should be regarded as a real cry for help from everyday Australians living the day-to-day reality of their financial wellness,: says Terry Rhodes, President, WSSA. “It is a situation that is both stressful and costly for employees and employers.”

The research demonstrates a typical pathway to financial wellness among Australians with sequential ‘building blocks’ to success. This suggests an initial focus on achievable shorter term financial objectives, building confidence towards looking at long-term financial goals.

These categories were devised by CoreData based on employee responses to objective and subjective questions that related to their personal day to day circumstances and long term financial preparation.

Alarmingly, lack of financial wellness is driving absenteeism and presentism in the Australian workplace, estimated to cost at least $33 billion annually to businesses[1].

The most common behavioural impact of poor financial wellness in the workplace as described by employers is stressed employees (61%). This is followed by unengaged/distracted employees (43%), low morale (30%), unhealthy employees (23%) and absenteeism (16%).

The research also found there was a clear difference between male and female employees, with almost one in two males being ‘financially wel’l or ‘superstars’, compared to less than a quarter of females. On the flip side, almost one in two females are ‘financially unwel’ or have ‘room for improvement’, compared to less than a quarter of males.

A key driver of financial wellness was financial literacy, as more than half of the ‘financially unwell’ have poor or very poor financial literacy, where as 93% of ‘superstars’ have strong or very strong financial literacy.

“This research highlights the strong link between financial literacy and financial wellness, and we know that financial advisers can make a huge difference to financial literacy,” says Rhodes.

Australian employers are highly supporting of improving financial literacy with more than 60% of the surveyed employers regarding helping employees develop their financial literacy as extremely or very valuable. An overwhelming 90% of employers considered one-one-one sessions with advisers as the most valuable way to communicate with employees.

“There is a huge opportunity for employers and financial advisers to have a positive impact on the financial wellbeing of their employees through engagement programs that build knowledge, help them to achieve their goals, are relevant and affordable,” says Rhodes.

Other findings:

  • Only 6% of the ‘financially unwell’ pay off their credit card regularly, 21% indicated they spend more than they earn
  • Two in three ‘room for Improvement’ employees save money regularly, yet few were confident they had adequate insurance (12%)
  • Almost one in two who were ‘on their way to wellness’ indicated they had set specific financial goals, and two in three have average financial literacy
  • Almost three in four ‘financially well’ employees always pay off their credit card and over half have a retirement savings plan
  • ‘Superstars’ scored the top score in most sections, with 90% having adequate insurance arrangements, and 60% documenting their estate plan
  • Financial literacy is the key to moving employees along the journey to financial wellness. Interventions need to consider the milestones each employee has reached in this journey. For those who require the most help, setting achievable shorter-term goals and building confidence towards longer-term ambitions is key to garnering behavioural change and ultimately improving employee financial wellness outcomes.

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[1] (BUPA, 2015) (PriceWaterhouseCoopers, 2010)

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