The Connection Between Covid-19 And Financial Wellness

A new study titled A Tale of Two Crises: Financial Constraint and Beliefs about the Spread of COVID-19 examines the connection between perception of financial constraint and behavior/beliefs around COVID-19. While the link between socioeconomic status and infectious disease is well-documented, the psychological impacts of financial constraint on perceptions of disease spread and subsequent actions is not well understood. Professors from Vanderbilt University, University of Chicago, and Stanford University set out to study this relationship.

This sort of study is important because what a person believes about the severity of the spread of the disease and likelihood of being infected will influence their behavior and thus the overall trajectory of the virus. The authors proposed that the COVID-related job losses and pay cuts actually have a greater relationship with risk perceptions and predictions of disease spread over local infection numbers. The media has also led many to conclude that political affiliation is significantly tied to beliefs about the virus. They sought to test that in comparison to the feeling of financial fragility.

Trueblood, et al found that "financial constraint predicts people’s beliefs about both their personal risk of infection and the national spread of the virus as well as their social distancing behavior." In addition, they found that the "strength of the effect of financial constraint equals or eclipses the influence of partisanship on beliefs and is much larger than that of local disease severity." According to the authors, the study's results suggest that the economic crisis created by COVID-19 affects people’s beliefs about the health crisis and their behaviors, and that variables related to this economic crisis can be used to predict both people’s beliefs about the health crisis, as well as related behaviors.

So why am I bringing this up?

Similar to other stressors outside of the workplace, such as mental health and family roles (Adler et al., 2006; Rothbard, 2001), financial scarcity is known to hinder workplace performance (Meuris & Leana, 2018). Other statistics support that someone who is not “financially fit” is more distracted and less productive, reports a negative impact on their health from financial stress, and expects to work past retirement age, but I don’t think any of us anticipated that status of financial wellness could indicate a person’s willingness to wear a mask or social distance, how they’d feel about going back to work, or how vulnerable they’d feel from other non-financial risks, such as Covid-19. 

It begs these questions, among others, for the future for employers: 

• How ELSE does feeling fragile about finances impact a person and their work-life? 
• What role does an employer have, if any, to assist with that for cultural, productivity, and retention purposes?
• How do you construct your benefits package to include meaningful options for financial wellness resources in line with your employees’ needs and your workplace culture?
• Is your retirement plan reaching everyone at any stage in their career and should you target specific groups for education on where they should be with financial wellness on that trajectory?

As the final takeaway, as an employer, you only have so many dollars to spend on benefits. When creating a package that is meaningful for your employees, I hope you’ll give some consideration to this subject and figure out where the right balance on financial wellness is for your group. If you need to talk through this, book a call with us.

Want more detail? Read the long version here.

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Courtenay Shipley, CRPS, AIF, CPFA has a diverse background in the retirement plan industry providing a unique foundation for her clients in the areas of fiduciary responsibility, investment analysis, and participant education. During her career she has provided institutional investment consulting to qualified retirement plans, developed business strategy for a boutique third party administrator and recordkeeper, conducted over 9,000 education meetings to groups and individual employees, and served the nonprofit market.

Courtenay is a graduate of Vanderbilt University, and is licensed as an investment advisor representative (Series 66). She holds the Accredited Investment Fiduciary? (AIF?) designation through the Center for Fiduciary Studies, the Chartered Retirement Plan Specialist (CRPS) designation from the American College of Financial Planning, the Certified Plan Fiduciary Advisor (CPFA) from National Association of Plan Advisors, and the Certified Health Savings Advisor (CHSA) designation. Since 2015 she has been featured in the Financial Times Top 401 Retirement Plan Advisors annual list, named a Top Women Advisor All-Star by the National Association of Plan Advisors (2015, 2017-2019), and named a 2018 NAPA Young Gun: Top 75 under 40. Click here for award descriptions and criteria.