EMPLOYEE FINANCIAL WELLNESS

PRACTICAL WAYS COMPANIES CAN ASSIST EMPLOYEES TO START INVESTING IN CAPITAL MARKETS AS PART OF FINANCIAL WELLNESS PROGRAMS

As part of its long-term sustainability strategy, a company must consider the financial well-being of its employees in a broader way. This means instead of just focusing on its own bottom line, a company must also look at that of its employees, including post-employment financial wellness. In actual fact a company's bottom line will suffer as long as that of its employee suffers, because the two are not mutually exclusive. According to a PwC 2017 Employee Financial Wellness Survey 57% of employees are stressed about their finances. This means in a given workday you have more than half of the workforce of a company not performing. Certainly, this is too much to ignore.

Instead of increasing the salary, which tends to be a short-term and expensive solution, companies should consider innovative and practical ways to grow each dollar the employee is already earning. This is because increasing the salary of someone who does not know how to manage their finances only results in an increase in their spending and appetite for another increment. Robert T. Kiyosaki in his bestseller Rich Dad Poor Dad wrote, ‘’I noticed that my poor dad was poor not because of the amount of money he earned, which was significant, but because of his thoughts and actions’’.

This then supports the argument that companies must incorporate practical financial literacy training in their wellness programs since this is not taught at school. However instead of teaching budgeting and expenditure tracking, which most companies tend to dwell on, the 2018 Bank of America Merrill Lynch Workplace Benefits Report showed that employees prioritize long-term financial goals, such as ways to help them save and invest for the future. This is what companies should consider.

One profitable way that employees can be assisted to save and invest for the future is by encouraging them to buy, especially listed, shares (that is, investing in the Capital Markets). On average shares tend to appreciate in value, in the long-term, and where cash dividends are received and reinvested, they offer a good return on investment. However, there are many challenges which are faced by retail/individual investors (most employees will belong to this class) that a company can chip in to address and benefit its shareholders as a result. Examples of challenges that companies can assist to deal with include, lack of information on operations of the Capital Markets, lack of information on security performance and little investible funds, just to mention three.

Some of the practical ways that companies can assist employees to invest in Capital Markets include:

1.                  Share ownership schemes

These have been abused by some senior management, however they still remain one of the most convenient ways a company can introduce its employees to the Capital Markets. Caveats, though, will have to be inserted in the agreements to make sure that the shares are owned for the long-term, preferably until post-employment. This also means that companies will also have to consider listing on the stock exchanges, if not yet listed. Shares can also be offered, even at market value, instead of cash bonuses.

2.                  Rotating Savings and Credit Associations (ROSCAs) also known as ‘Rounds’ or Mukando

Companies can assist employees to establish these Mukandos and formally register them or to officially recognise them within the organisation. They can then be turned into investment funds with the company offering investment advice or meeting the cost of hiring a professional consultant. The funds can be also be run on Hedge Fund lines.

3.                  Training on how to use C-Trade Platform

The C-Trade Platform is one of the best things that has happened to our (Zimbabwe) Capital Markets, for the retail/individual investor, to date. Not only does it reduce the cost of trading and minimum entrant investment requirement, but it also provides real time market updates which assist retail/individual investors in monitoring their portfolios. Companies can actually assist with training employees on how to use this platform. For example, employees can be offered practical training on how to use the platform during wellness programs.

4.                  One-on-One portfolio management mentoring

This includes assisting employees with planning their portfolio, developing and implementing their strategy, monitor their portfolio and portfolio adjusting. Though this might be a lot to ask from companies at first, it will definitely be less demanding, resource wise, with time as employees become more proficient. In the long run, what companies will need to do, is to provide a support structure like peer-to-peer group discussions on Capital Markets so as to improve information sharing and couching.

The list is not exhaustive but it provides a starting point which puts companies on the path to greater long-term own success and that of employees.