Seven out of 10 middle class workers experience some form of financial stress, states the 2017 Sanlam Benchmark Survey. The annual retirement funding study, which has now delved into the financial wellness of employees in the workplace, shows that financial stress has reached dangerous levels in South Africa and has become pervasive both at the workplace and in the home.
Viresh Maharaj, CEO of Sanlam employee benefits of client solutions, says, “The research shows that financial stress impairs the quality of our lives and diminishes our ability to be productive at work.” The sample consisted of 1 317 well-educated professionals, with 60% earning more than R300 000 per year.
“This is our middle class – the spine of our economy, our tax base and our hope for the future. And they are stressed. We believe that the findings point to a dire need for financial coaching and increased employer involvement in the financial wellness of employees.”
The survey found that:
· Nearly half of the respondents find themselves with a budget deficit a few times a year, where their income is less than their outgo;
· The primary source of stress for 55% of respondents comes from their short-term debt, while 41% worry that they won’t have enough set aside for unanticipated emergencies;
· 1 out of 9 say that they are just simply not coping with their financial stress;
· 1 out of 3 cope with their debt by reducing expenditure;
· 1 out of 5 have to borrow from friends and family to makes ends meet;
· 7 out of 10 believe that they will have to reduce their standard of living when they retire; and
· 3 out of 5 are not making provision for their medical aid premiums in retirement.
“The starting point to address many of the issues is to gain a better understanding,” says Trurman Zuma, CE of Sanlam personal finance of Savings, “But, while the level of understanding is at an all-time high due to the combined efforts of the media and providers – it is still too low. Our people need help. And, in this context, help means advisers who are able to work with the middle class to educate and help coach them towards consistently displaying the right behaviours and making better decisions. In fact, just over 80% of the respondents indicated that they do value financial advice. Good quality advice can have a material impact on financial stress, but access to and affordability of quality advice may act as barriers to many respondents as only 52% of respondents actually have advisers.”
Access to and affordability of quality advice are issues across the middle class and even more so for blue collar workers, but this can be addressed via the mechanism of the employer. Workplace-based financial wellness programmes provide the opportunity for employers to address the drivers of their employees’ financial stress at scale and in an inclusive manner.
Six out 10 respondents indicated that they would be interested in such programmes with another two out 10 being open to such initiatives. Respondents expressed an appetite for such programmes to include access to financial advisers, financial literacy training and budgeting tools. The stress is real. So are the potential solutions.