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TOP TIPS - Financial Wellness in the Workplace

Wealth and wellness are inextricably linked, but too often they are seen as separate entities and, in many cases, this can lead to individuals sacrificing their basic financial wellness needs in the workplace in the misguided belief that it will somehow lead to future reward.

The truth, however, is that caring about your holistic wellness, including your financial wellness in the workplace, should be an important part of your lifestyle.

The most recent Bank of America Workplace Benefits Report* describes a nation that still has some way to go when it comes to feeling confident about their long-term financial journeys. Of those surveyed by Bank of America, slightly more than half of employees rated their financial wellness as "good" or "excellent," with 29% rating their wellness as "average" and 16% rating their situation as "poor" or "fair."

Of course, employers must bear a large portion of the responsibility for this less than inspiring picture, but in truth America has long been the land of the individual, so any person who has reservations about their level of financial wellness in the workplace should take steps to effect change themselves. Sadly, if they don't, no one else will.

Below we consider some top tips for securing financial wellness in the workplace.

1. Know your personal financial situation

The first step to ensuring your financial wellness is to make a personal overview of your financial situation. Many of us have a rough idea of our finances and how they will affect us in the future but we rarely put the figures down on paper.

By knowing your income and expenditure, alongside a full inventory check of debts, mortgage balance, investments, savings, and pension pot, among other things, you can ensure that you have enough self-knowledge to begin the next stage of the process. There are many online tools that can help you on your journey. Some of these can be found here here.

2. Take independent financial advice from a professional

The next step is to instruct a suitable financial adviser to carry out a review of your circumstances, goals and capabilities. This can help identify your financial strengths and weaknesses and may also help you begin to formulate a plan which looks at the products and investments that may make a positive difference to you financial wellbeing.

For those with financial interests outside of the United States, you will need to consider assets debts, savings, pensions, property and retirement accounts from both inside the US and in your other jurisdictions of interest. Whatever the case, by taking advice you are making a positive step towards financial wellness and beginning the journey to self-reliance and ultimate empowerment.

3. Consider the alternatives to a 401(k) plan

Since 1978 the 401(k) has been the go-to employer-sponsored retirement plan. However, if you do not have access to one, you should speak to your financial adviser about the alternatives.

These include, the traditional IRA, the Roth IRA and a variety of qualified investment accounts. In fact, if you have a 401(k) but still have concerns about your workplace financial wellness, you can open up one of these alternative accounts in addition to your employer-sponsored plan.

An IRA's flexibility can be appealing; it allows the retirement saver to invest in stocks, mutual funds, and bonds, as well as property, private company stock, gold, farmland, cryptocurrency, franchises and more.

If your workplace does not have scope for you to change the way your pension savings are invested or if you don't have access to financial advice at work, then finding a suitable adviser is almost certainly a good idea.

Non resident aliens working in the US have a number of options when considering the management of international pensions such as IPPs, bespoke US SIPPs and tailored management of existing QROPS. And again, financial advice from experienced advisers, such as Blacktower (US) LLC is recommended.

4. Consider what you can do differently?

According to the Bank of America there are three primary engines of employee financial stress: worries about health care costs, worries about caring for children, a spouse or other family members, and worries about an insufficiently diverse and inclusive work environment

The first of these is a real concern for anyone working in the US; Medicare has its limitations so a Health Savings Account (HSA) may be the answer. As for caregiving, not all employers allow adequate flexibility or paid family medical leave opportunities and employees may feel tentative about raising the issue, even in times of extreme need. But it is essential that you raise any concerns you might have with your employer; there may be things that you can do differently such as flexible working hours.

As for the final concern, Bank of America says that only 51% of employers have meaningful diversity and inclusion programs in the workplace.* These may not immediately impact financial wellbeing, but, if not properly addressed, may result in a toxic workplace culture. This can quickly have an impact on financial wellness. Unfortunately, short of looking for alternative employment, there may be little you can do redress this problem on your own. However, if your employer does offer a plan you should make the most of it: according to Bank of America, only 49% of employees participate in employee diversity and inclusion plans when they are offered.

Blacktower – smoothing your path to financial wellness

Employer-sponsored retirement accounts can be an important part of your retirement planning, but they are not everything. At Blacktower in the US, we specialise in wealth management and retirement planning for cross-border individuals who are looking to make the most of their money over the long-term.

For more information about how we may be able to help you, contact Blacktower (US) LLC today.


Disclaimer: The provision of information in this communication is not based on your individual circumstances and does not constitute investment advice. Blacktower makes no recommendation as to the suitability of any of the products or transactions mentioned.


*https://benefitplans.baml.com/publish/content/application/pdf/GWMOL/2019WorkplaceBenefitsReport.pdf accessed 16-03-20

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