Financial wellbeing has “huge impact” on lives of clients
With Auckland restrictions not easing for another week and the road ahead looking uncertain, an increasing number of customers will be worried about their financial resilience over the long term - something which will almost certainly have a knock on effect on physical and mental health.
Last year, University of New South Wales and Black Dog Institute research showed that rates of anxiety, depression and stress were rising during the peak of the pandemic in Australia, and research released to support Mental Health Awareness Week in 2019 showed that 69% of New Zealanders are concerned about money - a pre-pandemic figure which is almost certainly higher today.
When it comes to mental wellbeing and financial resilience, the Financial Services Council said that the two issues are often closely linked. It its own research into the wellbeing of New Zealanders over the past several years, the FSC has noted that financial confidence and security has directly impacted almost every aspect of the lives of its respondents, and it says that the insurance, adviser and financial services industry is in a prime position to help address some of these concerns.
FSC manager Clarissa Hirst said that although financial wellbeing is often left out of general ‘wellbeing’ conversations, it needs to become a central part of the discussion, particularly as research has repeatedly shown the significance of its impact.
“My role involves helping to grow the financial confidence and wellbeing of Kiwis, and I also work very closely with our research, including our Financial Resilience Index,” Hirst said.
“That’s a really interesting piece of research that we’ve been doing for a couple of years now, and it tracks Kiwi’s financial confidence, financial preparedness, job security and feelings of wellbeing. We’re able to see that the pandemic definitely had an impact on their wellbeing, and was also a link between their finances and their wellbeing.”
“Financial wellbeing is not something people often consider within this broader concept of wellbeing, but I think our research shows that it does have a huge impact,” she explained.
“I’m really passionate about trying to build confidence in people, and to build their knowledge and capability so that they have the knowledge and tools to really life a live that they’re comfortable with.”
The last Financial Resilience Index was published in May, and it showed a high number of respondents feeling that financial security affected their relationships, mental health, and also physical health - particularly among the younger generation.
However, Hirst noted that the lockdowns have also been widely used as a learning opportunity - something particularly evident in the rise of micro-investing platforms - and so advisers have a great opportunity to equip the public with a broader range of skills and knowledge.
“Our findings from those surveys have been really interesting in terms of how financial issues have been impacting Kiwis,” Hirst said.
“54% of Kiwis say that financial issues have impacted their mental heath, and over half say that they’ve impacted their relationships with family and friends. It’s also impacting physical health, and it really does makes you wonder why financial issues do have such an impact.”
“There is also a fairly clear trend that the younger you are, the more you worry about your money - 22.6% of people worry about money on a daily basis, but this jumps in the under-37 age group,” Hirst said.
“I think that’s quite an interesting finding, and perhaps indicates that the resilience level is a bit higher in that older generation.”
“However, the learning aspect was something really positive to come out of this time,” she added.
“We did find that there was an increase in learning, and if we want to improve wellbeing, we really need to start by helping people to understand these financial concepts. A lot of them can be filled with jargon, and people don’t really understand what they mean - so there is a role to be played by the sector in educating people, in lifting their knowledge, and equipping them with the tools to take action and improve their financial wellbeing.”