Why finance professionals must tackle problem from a place of care
FP Canada’s 2023 Financial Stress Index shows that money concerns are still climbing for Canadians and one advisor beleives advisors should be more proactive in reaching out to those who need help.
“The loss of sleep due to financial stress is on the rise. Nearly half – 48% – of Canadians have lost sleep due to financial worries in 2023 as compared to only 43% in 2022,” Nabila Mirza, a qualified associate financial planner and wealth specialist with Connect First Credit Union in Olds, Alberta, told Wealth Professional as the report was released.
“We’re seeing the impact that financial stress is having on the overall wellness of individuals. I believe that financial wellness goes hand-in-hand with your psychological wellness, and it’s quite interesting to see how one area can affect the other areas so drastically.”
Leger, a Canadian-owned market and analytics company, conducted the survey for FP Canada in the spring. It surveyed 2,004 Canadians nation-wide online. It showed that, for the sixth year, money remained the top source of stress for 40% of those Canadians, which was more than the number of those concerned about personal health (23%), relationships (17%), and work (16%).
One-third – 36% – of those Canadians said they’re experiencing mental health challenges, such as anxiety or depression, due to financial stress.
As they struggle to afford groceries, gas, and other goods and services, the survey showed almost half – 48% – of the Canadians surveyed had less disposable income in 2023 than a year ago. Only 39% reported feeling that stress in 2022.
Money Woes Squeeze Lives
Mirza said the survey showed that concerns about finances are not only impacting Canadians’ sleep, but also making an increasingly negative impact on other areas of their lives. It was impacting 16% of their marriages and relationships in 2023 compared to 15% in 2022. It was causing a loss of productivity for 16% of them in 2023 compared to 15% in 2022. It was also leading to substance abuse for 6% of those surveyed in 2023 versus 4% in 2022.
Mirza attributed the steady climb of negative results, even post-pandemic, to all the factors that are still impacting Canadians’ finances, including rampant inflation and increased gas and grocery prices.
The index showed Canadians are also struggling to save money. More than one-third – 35% – were concerned about saving enough for retirement while 32% were concerned about saving enough for a major purchase. Half of those aged 18 to 34 were concerned about saving for major purchases.
The index noted that many Canadians have taken steps to reduce their financial stress: 44% were tracking expenses, 36% were paying down debt, and 34% were saving more. But, it also showed that the 59% of Canadians who worked with a professional financial planner felt significantly more hopeful about their financial futures than the 46% who don’t. Those with professional help are less susceptible to money-related stress, sleep loss, and financial regrets.
Financial Advice Helps
Even for those who said money was their primary stressor, more than half – 55% – who worked with a financial planner said that financial stress didn’t negatively impact their lives and only 38% said they lost sleep over money worries, compared to 42% and 49% of Canadians without a planner.
Still, only slightly more than one-third – 36% – of the Canadians surveyed worked with some type of financial professional and only 5% had a financial planner. Mirza said they may not feel they have enough resources to get one, but they may also feel short of time or knowledge to take that step. She recommended advisors take more initiative to reach out to those who need help to rectify that.
“As an industry, we want to come from a place of care,” she said. “We like to spread the message that working with a certified financial planner or a qualified financial associate financial planner is in Canadians’ best interest. We need to let them know they’re not alone. We’re here to help and figure out what roadmap we can draw to get them from point A to point B. We’re here to reduce their financial stress.”
While it’s always challenging to figure out how to reach those they’re not always serving, Mirza suggested that advisors can ask to speak to the families of their clients, particularly if they’re retiring or older clients who have named younger family members as their executors or beneficiaries.
Advisors can also use more social media to spread financial literacy and make their presence known to more Canadians who could become clients to reduce their financial stress. Advisors can also find opportunities to make presentations, such as she has done in schools, where she has talked about saving for education, or for rehabilitation services where she’s talked about disability plans.
“Just step outside of your comfort zone and go to the sources where you can connect the resource to the demographic,” said Mirza.
“As financial institutions and financial planners, we need to put it out there that we have qualified individuals for every client level. We need to let them know that where we can help the most is when they are in a wealth accumulation stage, where we can actually make a difference.”
