Financial wellbeing: more than just pounds and pence

Financial wellbeing: more than just pounds and pence

While employee wellbeing initiatives are booming in the accountancy sector, the one area which has been forgotten about is financial wellbeing support

Most in accountancy would be hard pressed to have missed a considerable change seen in the sector over the last decade: the explosion in employer wellbeing initiatives. From employee fitness schemes to mindfulness and counselling provision, the sheer range of initiatives offered by many of the leading accountancy firms shows that firms recognise they have a duty of care to support their employees’ mental and physical wellbeing.

But many we advise in the accountancy sector highlight one area of wellbeing support which is conspicuous by its absence: financial.

It may sound strange to highlight support for financial wellbeing as a gap in a sector where many end up doing well financially. But our latest research with accountants and other High Net Worth individuals finds that financial wellbeing does matter. That’s because the factors that constitute financial wellbeing go beyond just pounds and pence.

More emotional factors are most important drivers of financial wellbeing

We wanted to understand which factors High Net Worth individuals see as most important to having a sense of financial wellbeing, and how able they feel to achieve those factors. We found that while this group recognises they have greater wellbeing than most, many still don’t feel a strong sense of financial wellbeing.

More emotional factors involved in financial wellbeing are generally considered most important. These include ‘feeling happy with finances’ (ranked 4.62 out of 5 on average by those in accountancy, where 1 is ‘not important’ and 5 is ‘very important’), or ‘having clarity and confidence over future financial plans’ (4.6/5).

These rank ahead of more direct measures of wealth, such as ‘reaching a desired level of investable assets’ (4.04/5), or ‘reaching a point of not needing to work purely for the money’ (4.18/5).

Factors most important to financial wellbeing are the hardest to attain

Tellingly, High Net Worth accountants feel they lack the ability to achieve financial wellbeing most in the areas they consider most important. These gaps between factors seen as most important and their ability to attain them are particularly pronounced among those aged 36-49, who tend to be still in work and at the height of their careers, compared to those approaching or in retirement.

Source: Saunderson House

Wider economic, social or political changes such as a dramatic increase in income tax, a sharp economic shock, or tectonic political shifts are factors beyond our control. Therefore, achieving true financial wellbeing for busy accountants can be difficult.  But it is not impossible. There are two important steps individuals in this position can take.

Use financial plans to drive wellbeing

Firstly, recognise the importance of time in setting financial plans. Almost all accountancy partners we speak with recognise that making the time to deal with personal finances is important. But many also have to manage significant time pressures – both at work and in their personal lives. So having the time to properly plan finances becomes the ‘stone in the shoe’: a niggling bugbear but never the top priority. This lack of time creates other obstacles to financial wellbeing.

Our recommendation? Invest the time to create a proper set of financial goals. In doing so, build wellbeing goals into your plans. Creating a cash flow forecast and reviewing income and expenditure needs regularly are critical to establishing a firm financial grounding in the face of bigger uncertainty. After all, it is much easier to be buffeted by storms if you don’t have a sense of which direction you’re supposed to be going.

Seek support to boost financial wellbeing

Secondly, find ways to reduce the personal burden of managing finances. High Net Worth accountancy professionals told us that having a clear set of financial objectives, and receiving guidance on when they achieve financial independence, would greatly enhance their sense of financial wellbeing. But they also said they’d value regular discussions around financial wellbeing both with an adviser and with their family.

Many people turn to family first when discussing other forms of wellbeing. Why should finances be any different? Similarly, financial advice can provide clarity, and comfort that you are heading in the right direction. Reducing the demands on you to tackle this alone will give you back time to focus on improving wellbeing in other walks of life.

In conclusion…

Not only can financial advice provide guidance and clarity, it can also help indirectly on the most important factor of all: achieving wellbeing in other areas (such as physical or mental health). This is particularly relevant for those busy with careers, who can’t dedicate all their time to proper financial planning. After all, if financial wellbeing goes beyond pounds and pence, many could do worse than to delegate those worries elsewhere – and focus on the elements that truly matter.

 

Gareth Parsons, Financial Planning Director at Saunderson House

 

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