Helping employees become more confident about engaging in financial matters—improving their financial courage—is more critical than employers providing benefits that focus solely on financial education, a survey from Mercer suggests.
The Inside Employees’ Minds financial wellness survey found that, irrespective of objective financial knowledge (employees’ actual level of financial knowledge), perceived financial literacy (employees’ subjective assessment of their financial knowledge) was a significant factor driving whether or not workers engage with financial planning resources. It also had a significant effect on overall sense of financial well-being.
Those employees with a more favorable self-rating of their financial knowledge were more likely to engage with a financial adviser and seek guidance in improving their financial well-being. Confidence, therefore, likely has more bearing than actual financial acumen on a worker’s ability to improve his or her financial situation, Mercer concludes.
Employees who aren’t confident tend to default to employer provisions, which work on the average but may not be right for all individuals. Employees who lack confidence may be paralyzed by inertia and may fail to take even simple actions that could help. And individuals with low financial courage are likely to avoid financial discussions, particularly group discussions (since they’re not in their comfort zone), to avert potential embarrassment. NEXT: Taking small steps to improve financial courage