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September 10, 2010 at 08:00 PM
Over three-quarters of employees report some level of financial stress, according to a second-quarter research report from Financial Finesse, a financial education firm. Fully one-third of employees report feeling high or "overwhelming" stress.
There's an upside to all that stress, though. Employees are more proactive about financial planning and are focusing on long-term plans. In fact, 48% of all calls to the company's financial help line were regarding long-term planning issues, up from 37% last year. Calls about retirement increased from 14% to 20%.
As part of the shift to a long-term outlook, calls about debt management or budgeting and saving fell from 38% to 32%, a trend that started at the end of last year, according to the report.
Liz Davidson, founder and CEO of Financial Finesse, spoke with Investment Advisor on Friday, September 10, to talk about why employees are shifting their financial priorities.
What can you tell me about the results from your second-quarter research?
I study a lot of behavioral finance and psychology and there's a theory that stress leads to panic and people become paralyzed which leads to tunnel vision in their financial planning. But when employees aren't stressed enough they take foolish risks and overextend themselves. Employees are pretty stressed, but it's focusing them and causing them to prioritize.
Retirement is a top priority for employees. Is that a trend that will continue or just a condition of the current economic environment?
It's a surprising trend upwards, despite the persistent recession. Last quarter debt was the top priority. In a crisis you hunker down and focus on short-term worries. The shift in the ratio of long-term planning calls to short-term planning shows employees are more proactive. They have time to address the most pressing issues since we've been
in [the recession] for a while, and employees see they need to save more, and plan more. Emphasis on planning, investing and growing money in a tough economy is a sign of resilience.
Employees know they can't control the markets, and they can't control changes their employers make to their benefits, but they can control their saving habits.
