Buzzword, hot topic, mission, social movement.
These were just a few ways Liz Davidson described financial wellness Friday morning to attendees at the annual GRP Advisor Alliance summit in Coronado, Calif.
A veteran in the arena, Davidson, founder and CEO of Financial Finesse—a company she started in 1999 before financial wellness “was a thing”—exuded elation as she emphasized how important this employee benefit has become within the 401k industry and beyond.
Session moderator David Kulchar, managing director of Cleveland-based Oswald Financial, backed her point.
“The rush is on,” Kulchar said, reiterating the breadth of interest. “Ninety percent of larger companies intend to increase their focus on financial wellness. That means that they’re getting results.”
As such, an increasing number of midsize and smaller companies will want in on the trend in coming years.
A panel of advisors and experts joined Davidson and Kulchar on stage, illustrating with real-world example after example the ways in which financial wellness has improved the lives of clients with whom they’ve crossed paths.
One told the story of a woman drowning in student loans whose monthly payment was reduced by $600 after being guided through the process of refinancing. Another client was spending loads on prescriptions, without realizing they could drastically lessen this burden by utilizing their company’s FSA offering.
It’s becoming increasingly clear the programs are working, and employers and sponsors have taken notice. In turn, there’s more competition in the market, so advisors must differentiate their offering and incorporate best practices in order to win clients.
The panel offered the following advice:
Differentiators
- Frame the program as a life-changing employee benefit that has been embraced by large companies, which have seen tremendous change as a result. Anecdotes are powerful.
- Position as cost neutral or financially beneficial by calculating the impact of absenteeism, delayed retirement, wage garnishment, productivity and so on.
- Ensure program provider is free of biases or conflicts of interest. Employers don’t want to pay for a program that will then solicit their employees to purchase financial products or services as “solutions.”
Best practices
- Incite behavioral change through bite-sized, actionable steps. Purely educational programs (e.g., retirement education, financial education) have been proven to fail.
- Encourage participation by offering personalized programming where progress is trackable.
- Offer access (via telephone or one-on-one) to a financial planner or other professional. People today are inclined to transact online but desire live coaching from another human when it comes to making highly personal decisions.
“Funds, fiduciary and fees…we’ve all been doing that forever,” Kulchar explained. “In order to survive in this industry, we’re going to have to figure out different ways to expand our businesses, go in a different direction, keep up with the times and keep up with the needs that are out there. In doing that, financial wellness is one of those things that can be leveraged.”
And there’s certainly no shortage of Americans who would love to be the next success story.
Davidson defined achieving financial wellness as getting to a state where financial stress is under control, a solid financial foundation exists, emergency savings are in place, goals have been set and one is on-track to achieve them, in addition to being fully protected from an insurance and estate planning perspective.
“How many working Americans meet these criteria?” she asked the audience, who shouted back numbers in the teens and 20s.
The correct answer? A staggering 4 percent.
But according to Davidson, because of the traction financial wellness has gained the past two decades, today’s industry professionals will someday be telling their children and grandchildren, “We pioneered this. We created this. You have access to this because of what we did.”
“It’s incredible to be here, literally and metaphorically,” she said.
Jessa Claeys is a writer, editor and graphic designer.
