Monday, November 29, 2021

Empower Social Workers to Care for Themselves, Too

Their tendency to put everyone else first means they often fall behind in financial literacy and retirement readiness.

Social workers and mental health professionals are a lot like financial planners: We have a shared vision to impact the well-being of our family and friends, neighbors, clients, and the community. I focus my efforts on helping these individuals who work every day to help others — and whose passion calls them to put the needs of others before their own.

Some advisors target high-earning medical professionals, who also receive limited financial literacy training during graduate school, because their earnings potential makes them ideal candidates for an advisor’s book of business. In contrast, social workers are well known for being underpaid.

According to Zippia, the average annual salary of a licensed social worker in the U.S. is $55,840, compared with $176,157 for an attending physician. The way I see it, the stakes of making wrong decisions while earning a much smaller salary can be even more detrimental.

Imagine a recently-graduated master’s level social worker entering the workforce, with an average annual salary of $43,000 and student-loan debt in the six figures. In addition to limited income, the social worker is likely to have little understanding about repaying debt, managing cash flow and selecting the employee benefits and retirement plans being offered to them.

Many social workers forgo important benefits offered at work or put off contributing to a retirement account.  And those who do enroll in the benefits are usually unaware of their limitations and gaps.

A ‘Junk Drawer’ of Disorganization and Stress

As a result, I often encounter individuals with overly-conservative retirement accounts and multiple types of financial products acquired through many different financial professionals. In essence, they have an uncoordinated “junk drawer” of disorganization and stress. Many social workers and mental professionals also find themselves surrounded by financial industry jargon, unfamiliar products, lavish advertisements and siloed advice, without an ability to sort through confusing information.

I’m committed to helping social workers and mental health professionals effectively manage financial decisions and organize their finances so they can reduce stress. I’ve seen them lose sight of their finances while immersed in their long work hours, particularly during the pandemic.

I’ve also gained insight into the common financial issues mental health professionals face at various stages in their careers — whether they are social workers with a clinical lens doing direct work with individuals, specialized social workers, or macro-level social workers with a broader focus developing government policies. While there is an ongoing educational component for social workers, there is rarely any support for financial literacy. I’ve also found this the case for psychologists and other types of human services advocates working in the mental health field.

Unraveling Three Decades of Confusion

In one particular case, a veteran social worker in her fifties had accumulated a collection of financial products she’s had since starting her first job out of school nearly thirty years ago.  She recently transitioned into self-employment in private practice and began thinking about when she will retire.

During our conversation I learned she had two employer-sponsored retirement accounts still held at employers she had not worked at in years, in addition to an IRA set up several years ago by a captive producer no longer in the business. That captive provider had also provided her auto and home insurance. It had been years since she spoke to this individual or reviewed the account performance. She had also established annuities for her teenage children at the recommendation of a banker.

After educating her and describing the impacts of the retirement accounts held by her old employers, and the accounts she had set up for her children, she was astonished to learn about the rules, taxes, fees and penalties surrounding the access of those various funds. Not only was I able to help her organize her finances and focus on her retirement planning, I was also able to help her understand the pros, cons and implications of various financial decisions. I was ultimately able to provide coordinated recommendations that aligned with her vision and goals.

The Value of Holistic Support

This client’s situation reminds me of the value of providing personalized, holistic support to individuals. Too often, non-fiduciary financial advisors get caught up talking about products and pay less attention to financial strategies and behaviors.

For instance, when someone is faced with a medical concern, they receive a thorough evaluation from a medical professional, as well as education about possible solutions, treatments, and the potential side effects of prescription medications. Most individuals may be apprehensive to take medication from a doctor who does not complete a thorough examination and explanation of the presenting issue.

The approach to financial planning is similar. As I learn about my clients and evaluate their financial belongings and behaviors, I also provide education and intervention that will benefit them to understand the financial principles, their level of importance, and the implications of various financial decisions. Financial literacy prepares them to effectively manage cash flow and debt, and have a general understanding insurances, investments and loans, including mortgages.

My relationship with my clients goes beyond financial advice and includes a collaborated effort to ensure personal success and validate client strengths. For example, a social worker in her mid-thirties who I’ve been working with for the past few years recently called me to thank me after purchasing her first home, a pivotal financial milestone. I was able to serve as an advocate and guide her through developing a saving strategy for a down payment, while also helping her confidently save for retirement.

An Untapped Market

Currently, the Bureau of Labor Statistics reports there are over 715,000 social workers in the United States, of which 188,000 have a clinical license which requires a master’s degree.  As mentioned above, these degrees don’t come cheap. [HYPERLINK on 715,000 social workers: ]

The Wall Street Journal recently highlighted the University of Southern California which used a for-profit company to enroll thousands of students – many of them low-income minority students — in its $115,000 online master’s degree program in social work. Recent graduates of the program took on an average of $112,000 in student debt and earn less than $52,000 after two years of graduation.

While tuition may not be as extreme at other universities around the country, the average student loan debt for a bachelor’s plus master’s degree for a social worker is over $75,000 according to a 2019 Survey conducted by the Council on Social Work Education.

Social workers represent a large portion of trained professionals inadequately prepared to manage their finances. They have plenty of company: According to a 2018 study conducted by The Financial Industry Regulatory Authority (FINRA), over a multi-year period, 66% of Americans are financially illiterate.

High-Touch Outreach

To help my clients and prospects, I’ve developed a free guide that provides basic financial tips for budgeting, debt management, insurance and retirement savings that any social worker or mental health professional can use to learn about basic financial knowledge. It’s an opportunity for me to provide both financial education and guidance. I hold virtual consultations, to address specific financial questions and concerns, and I also offer financial education to mental health professional groups and students to empower them in managing personal finances. These discussions and workshops focus on financial terms and principles, rather than product or company specific information.

During the pandemic, I’ve expanded my outreach with social workers and mental health professionals through LinkedIn and other social media platforms. Through these connections. I’ve been featured on various podcasts, other digital forums, and online workshops where I discuss basic financial concepts.  I offer attendees the opportunity to meet and ask their questions with me in private sessions where I tell them about my practice and share ideas about improving their finances. Some decide to work with me, while others decide to just follow me on social media.  Either way, the work I do helps social workers and mental health professionals by giving them a better grasp on managing finances

How I Found My Niche

You may be wondering: Why social workers and mental health professionals? Well, here’s my back story.

When I began my career in 2009, at a large general insurance agency, I learned a lot but felt lost in a sea of advisors. A colleague and mentor taught me to recognize the importance of the “big picture” and to identify myself as a trusted resource and not a salesperson. I began to embrace these ideals and build relationships with my clients. I looked forward to learning about them and what they needed for financial stability.

I also briefly worked at a local bank where I met a social worker employed by an agency serving children in the community. Her drive to support families was palpable, and she often provided crisis intervention services. She worked long hours, and often provided weekend on-call coverage. As a result of feeling overwhelmed with the demands of her job, she often avoided making financial decisions altogether. I found that acknowledging avoidance was essential for opening the door to a real conversation. She has remained my client and has referred me to many of her colleagues and former classmates.

Finding a target market is a wise way to improve your business plan and grow a client roster. In my experience, doing that in a way that is genuine and creates a personalized connection, is critical. Find that deeper passion and work with a group of people who you care about what they’re doing, and want to make an impact on.

Alex Casella, a licensed financial professional since 2009, has a comprehensive outlook on personal finance and has developed an affinity with social workers and mental health professionals.  He works closely with them to help them prioritize their finances, and to navigate important personal finance decisions. He can be reached at alex@alexcasella.com.

 

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