Building a bridge through COVID-19: Bolstering financial wellness

For a large number of the circa 1.4 million individuals who have accessed their superannuation under COVID-19 hardship, it has been about surviving or creating a bit of breathing space to get through this period.

For clients, managing their finances well takes time, effort and focus but the reward is worthwhile. This holds true regardless of the environment they are in. We all live life at such a frantic pace that for many finding the time and discipline to take control of finances gets prioritised out. Unfortunately, it takes a significant crisis such as COVID-19 where we are forced to slow down that we gain a renewed appreciation of its importance.

This event has compounded the concerns and pain points that many were already experiencing, particularly where a member of the household has had their employment impacted.

Financial Advice Matters internal research conducted in the 12 months leading up to the COVID-19 crisis with over 600 participants highlighted that less than one-third of those surveyed were very confident in managing their finances.

The common pain points shared by participants over that period have been:

- Living pay cheque to pay cheque;
- Sticking to a budget;
- Paying off loans/interest;
- Approaching/planning for retirement;
- Paying too much tax; and
- Dealing with the unexpected.

Many families and households have been impacted by COVID-19 and the flow on impacts. The uncertainty around employment security and income has led to a significant increase in the level of financial stress. It is important during these difficult times to focus on what you can control. It is also important to review what is important to you and encourage conversations within your household as other family members may be coping differently.

The urgency of required action and stress levels is very different for those who have had employment put on hold/ceased versus those that have the ability to continue to work in a different capacity.

The range of questions and uncertainties is high in number and quite broad. Certainly, increased anxiety about how to manage through the coronavirus transition, particularly so where job security or income has been impacted. The flow on questions are then around what options exist to manage the family household finances and what actions can be taken to stop reduce or defer spending. For some it is about where can I save, and for others it is about where can I invest. For those that can potentially access stimulus packages there are many questions.

For those approaching retirement or looking at their flightpath, there is a range of questions to be answered and in some cases a new flight plan set.

Never has there been a greater need within workforces and the community to provide support and guidance in this area. Family households are under significant pressure to make ends meet and this will impact the employee’s ability, now and in the future, to be employed and be productive and present.

The volume of information that people are now receiving from multiple sources on a broad range of issues daily is overwhelming and likely to be impacting their mental resilience and wellbeing.

A key role for advisers and businesses such as ours is to help build a bridge for people and be very mindful of the emotional roller coaster and in some cases emotional sledgehammer that individuals are experiencing. Time to really show our hearts and hold a hand as we help people navigate the uncertainties and frustrations that exist and simplifying where we can.

For business owners and leaders looking to transition their teams back to the workplace over the coming months providing tangible additional support in the area of financial wellness will be greatly valued by team members. Through the financial wellness programs, we run with a broad range of business and organisations we get an insight into the great support that many organisations provide in the area of employee wellbeing and mental health. Progressive organisations are now upping the ante with enhanced financial wellness support. For larger organisations with diverse workforces we have seen increased interest around the flexibility and economies that digitally supported programs can provide.

At a time when there is lots of detailed information, it is about adapting and focusing discussions with teams around areas where individuals can take micro actions and take some control back.

Helping individuals and businesses get through to the other side, adapting and strengthening financial wellness is an area that many advice businesses are well placed to support. In many cases it is about lifting awareness, letting people know they are not alone in this journey and they have got access to support and where appropriate they should also utilise the support networks around them such as family, which can be both emotional and financial.

Darren Smith, managing director, Financial Advice Matters