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Introduction to Financial Wellness

Helping employees around the world get the most from what they have now, while saving enough for the future

Financial Wellness at work

Employers are increasingly focused on employees’ Financial Wellness. Employees, saddled with debt and the task of saving for both health care and retirement, are looking to their employers for support. Employees who are confident in their finances are likely to be more motivated and engaged at work. Financially stressed employees are less likely to be physically or mentally present at work, with clear implications for productivity.

Employees want to understand their whole financial picture, from borrowing to saving, budgeting and beyond. Fidelity’s Financial Wellness focuses on the four key areas of expenses, debt, savings and protection, in order to make it easier for people to look after their money. This means helping employees getting the most from what they have now, while saving enough for the future.

Defining Financial Wellness

Fidelity believes that Financial Wellness is holistic and multifaceted: objectively, it is an individual’s total financial situation; subjectively, it is how the person feels about their financial situation.

Fidelity believes that there are four common domains of Financial Wellness, wherever your employees are located across the globe:

Budgeting

Spending within one’s means is the foundation upon which financial wellness is built. Maintaining a budget and a positive cash flow are necessary (though not sufficient) precursors to managing debt, saving for the future, investing and protecting against risk.

Savings

To achieve financial wellness beyond the here-and-now, individuals must take control of their debt and save and invest for the future. This includes long-term savings and investing (saving for retirement, for example) but also saving for short-term goals such as home repairs or holidays.

Debt

High levels of debt, and monthly debt repayment obligations, relative to income can present a considerable barrier to savings. All else equal, higher interest borrowing is of greatest concern. Prudent use of credit may be a good way to build a positive credit profile and thereby improve access to credit and potentially lower future borrowing rates.

Protection

Financial wellness requires not only managing, accumulating, and investing money appropriately but also insuring against potential losses, be that a temporary or permanent financial loss or a loss of financial control. Without adequate emergency savings and/or financial protection against catastrophic health events, disability or property loss, one’s financial situation can very quickly move from comfortable to distressed.

 

For the employee - tools & guidance

At the heart of Fidelity’s Financial Wellness offering is an interactive personal money check-up tool that takes employees through a series of questions, both personal and financial.

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Money Check Up Tool

Fidelity’s bespoke money checkup tool builds a personalised picture of your employees’ financial health. It then offers tailored content, tools and tips to help them improve their overall financial well-being.

The guidance and suggested action plan is different for each user group – from Millennials having to make first-time decisions to people managing day-to-day expenses to those who are financially established.

In addition, employees will benefit from guides and tailored content.

For the employer - Robust metrics

Lack of Financial Wellness in employee populations is a large-scale challenge globally - and therefore requires large-scale solutions. Developing and testing the effectiveness of solutions requires an empirically-sound and operational approach. Fidelity believes a Financial Wellness metric should have the following characteristics to achieve maximum impact:

 

  • Global consistency: Metrics should be consistent globally, so that insights for employers are available across the workforce, wherever employees are located. This enables analysis of both global and local trends, and supports tailored programmes.
  • Quantitative and precise: Improvement at scale requires a methodology that establishes baseline levels and tracks the degree and nature of changes over time, with high precision.
  • Comprehensive, yet specific: Understanding individuals’ overall level of wellness (or distress) is key to identifying those in need of assistance; understanding the specific domains in which they are struggling is key to providing the right type of assistance. Comprehensive assessments of Wellness are also critical because interventions might improve some areas of wellness but not others.
  • Clear and actionable: Metrics should be understandable and yield constructive insights for employers about which areas of their employees’ financial lives require more focus.

The opportunity for employers

Fidelity is in the midst of quickly changing financial times. Workers face a multitude of competing financial demands and are unsure of how to prioritise them or of which steps to take to improve their situation.

To decrease the impact of financial stress in the workplace, Fidelity encourages all employers to consider the benefits of deeply understanding the financial state of their employees and supplying the solutions they need to build financial confidence.

As the needs of employees evolve, so must the benefits offered by employers -- in order to drive attraction, retention, engagement, and productivity.