Nine ways Ayco helps employees take control of personal finances

Employers 08.02.2021 4 MIN READ

Few topics come with more emotional baggage than money. Whether an employee is excited about getting a raise or fears they’re not saving enough for retirement, money and emotions are forever intertwined.

But making financial decisions based on emotion is never a good idea. Emotional decisions may feel right at the time, but they can often work against your employees in the long run.

Fortunately, at Ayco we’ve identified nine steps to help employees take control of their personal finances – and emotions!

The 9 steps to peace of mind: the personal finance edition

Employees can take some of these steps right now on their own – but if they really want to reduce the influence of emotions and make more prosperous financial decisions, partnering with a seasoned financial professional through an Ayco financial planning benefit is essential.

1. Figure out what really matters.

Having a clear understanding of long-term priorities can help employees stay focused on immediate obligations and future goals when making decisions. The perspective allows them to look past changing circumstances and market fluctuations.

2. Avoid the most common mistakes we see employees make.

Every investment is essentially a tug of war between the fear of missing out and the fear of losing money. But fear is an emotion, and letting emotions cloud their judgement is the most common mistake we see employees make. Working with an advisor can help them step back, gain some perspective and avoid emotional decisions that adversely affect their wealth.

3. Look at money as “fuel.”

When an employee sees money as just a resource to allow them to do things, it can help make financial decisions less emotional. That shift can give them breathing room to realize money isn’t the end goal—how money helps them live the life they want is what really matters.

4. Control what they can control.

There are some things employees can control and some they can’t. Interest rates, for instance, are out of their hands, so there’s no point worrying about them. But they can control their costs, tax exposure and risk. A solid financial plan and a diversified, flexible investment portfolio can help employees manage the things they can control and avoid distractions from things they can’t.

5. Ignore what others invest in.

It’s easy for an employee to feel left out when they hear how much their brother-in-law or next door neighbor made on a particular stock. Smart investors ignore those stories because they know people only talk about their wins. No one ever mentions their losses.

6. Understand how their biases affect their decisions.

When it comes to money, employees tend to have three basic priorities: 1) protect themselves, 2) take care of people they love, 3) enjoy life. Working with a financial advisor can help your employees both identify which their bias leans toward and build a portfolio to balance all three. An advisor can also help adjust your employees’ portfolio as their life and goals change over time.

7. Make sure goals are aligned with their partners’.

Whether one or both partners manage personal finances, they should both agree on their priorities. Do they want to take more vacations now, or leave more for the kids later? Cooperation is especially important when working with an advisor. The “non-financial” spouse isn’t going to support a financial plan, after all, if he or she had no part in creating it.

8. Reassess priorities before the pandemic ends.

If there’s one bright spot to the pandemic, many employees have taken this opportunity to step back and evaluate what they want life to be like when it’s over. Some will be happy to get back to “normal” while others will take a hard look at goals or obligations that may no longer be relevant.

9. Prepare for more volatility.

While no one knows what lies ahead, being prepared for market volatility always makes good sense. If your employees are concerned about a market overcorrection, it’s a good time for them to discuss their plan with an advisor. We call it the “lifeboat drill.” How much water can their boat take on and stay afloat?

More emotional control means more financial control.

Once employees learn to keep their emotions in check, they can begin to make more thoughtful, long-term decisions. Protecting their money may make them feel better, but being overprotective can cause them to avoid risk altogether and hinder investment returns. Getting past their biases and emotions can help them act in their long-term interest more consistently – reducing financial stress and helping them stay more productive at work.

Working with a financial professional who knows each employee personally can make all the difference. Advisors can help your employees see their biases and move past them, providing the necessary perspective for your employees to be more financially objective, and eventually, more financially secure.

To find out more about how Ayco can support your employees, visit https://www.ayco.com/for-employers.html.