Should brokers focus more on financial wellbeing?

“That ‘hiking cycle’ has been very rapid by historical standards and a sizeable portion of the population has never experienced so many rate increases over a short period of time, nor have they experienced a significant decline in property values and the increased cost-of-living pressures we are currently seeing,” said Melbourne-based Sciarrone. “Due to these challenges, it is important that we raise awareness in the community about the important role that financial advice can play during an uncertain economic climate.”

Is financial wellbeing the missing piece of the puzzle?

Sciarrone suggested that financial wellbeing is the missing piece of the wellbeing puzzle and recommended insurance brokers consider this, especially with their clients who are currently under financial pressure.

“It’s important that we consider our client’s holistic goals and objectives,” she said. “It’s also important to ensure that your clients understand the connection between financial wellbeing and positive physical and mental health.”

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AIA Australia’s CEO Damien Mu (pictured below) said how we feel about our financial situation is a key predictor of overall wellbeing.

“When people talk about ‘wellbeing’ we often think about physical or mental wellbeing,” he said. “More recently, there’s been a growing focus on the role that financial wellbeing plays in our overall wellbeing.”

***please put picture of Damien Mu here***

Mu said insurance companies can do more to highlight the “bidirectional relationship” between physical, mental and financial wellbeing and provide holistic support to their customers.

Part of this, he suggested, is championing the wellbeing of both employees and customers. For example, he said, AIA does this through wellbeing and coaching programs that reward positive health behaviours and help manage chronic health conditions.

“We continue to champion this in the insurance sector and see it as key to improving all aspects of wellbeing – physical, mental and financial,” said Mu.

How feelings impact our wellbeing

The AIA report explored the whole concept of wellbeing.

“In particular,” said the report introduction. “We will explore the often-overlooked role that feelings, thoughts and perceptions relating to financial matters have on our wellbeing.”

The introduction referred to a Gallup study analysing data across 150 countries to differentiate “a thriving life from one spent suffering”. The study found that financial wellbeing was one of five overarching contributors to a thriving life together with career wellbeing, social wellbeing, physical wellbeing and community wellbeing.

The AIA report also cited Australian household data that shows both current and previous experiences of financial hardship lead to a greater risk of mental health problems.

“A separate study,” said AIA, “Has found that financial hardship, through an inability to meet mortgage or rent payments and job security concerns, is one of the largest drivers of psychological distress.”

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The report also said that subjective financial wellbeing (SFWB) research is now a focus of interest with both academics and practitioners.

“HILDA [Household, Income and Labour Dynamics in Australia] Survey, conducted by the Department of Social Services (DSS), data also shows that people experiencing financial challenges are twice as likely to be experiencing mental health challenges as those who are not experiencing financial challenges,” said the report.

The AIA report concluded that better understanding of how evidence-based financial behaviours

can be woven into financial advice can be “a powerful mechanism for deeper engagement” and allow for more “targeted” and “personal conversations” that can “resonate at every stage of life.”

Sciarrone and Mu suggested this applies to anyone involved in financial advice, including insurance brokers.

“Research is now presenting an enormous opportunity to amplify the impact that financial advice can have on the wellbeing journey, through integrating subjective financial wellbeing and objective financial wellbeing in its approach,” concluded the report.

AIA Australia describes itself as a leading life insurance specialist with 50 years’ experience. In 2014, the company launched AIA Vitality, a science-based health and wellbeing program, to the Australian market. Three years later, the firm and its partners launched AIA Health Insurance.