Liz Davidson wants to introduce you to AIMEE, her newest team member making an impact on financial wellness.
“AIMEE stands for Artificial Intelligence Motivating Employees Everywhere,” the financial wellness pioneer and CEO of Financial Finesse explained. “She’ll assess your specific situation and, based on that, suggest resources and next steps tailored specifically to you.”
We’ve asked (hounded) Davidson for some time about cutting-edge advancements in financial wellness and what she had planned. A proverbial perfect storm of technology, employer awareness, consumer debt, and a global pandemic meant she was finally ready to answer.
After stints in investment management and investment banking, where she realized her work was impacting the top 1% of Americans and leaving behind the 99% who needed it most, she founded the El Segundo, Calif.-based Financial Finesse all the way back in 1999(!).
Her enthusiasm and positive attitude are infectious, and she made a strong case for why financial wellness is needed—especially now.
“It’s a bright spot in this crazy world,” she said. “We’re understanding, as a society, the inequality that exists with COVID and the issues surrounding Black Lives Matter. We have a social responsibility to address it, especially given the company’s mission to provide access to unbiased financial wellness for all people, regardless of income. It’s traditionally been incredibly hard to reach people en masse and in a really deep way, especially those that don’t have much in terms of investable assets.”
Not anymore, and the capability for what she coined the “mass personalization” of financial wellness—driven by artificial intelligence, predictive analytics and similar—is here.
To drive the point, she hit us with a stark, yet unsurprising, stat, “Financial stress is the No.1 source of stress-related illness, and it’s a feeder stressor for marriage, workplace productivity and so many others that negatively impact different areas of our lives.”
She’s backed by similar research. For example, PwC’s Employee Financial Wellness Survey found:
- 59% of respondents cited financial matters as a life stressor, more than any others combined.
- 35% reported that financial issues have been a distraction at work.
- 49% of those spend three or more hours at work each week dealing with finances.
Which is the reason for AIMEE.
“She allows our CFP professional coaches to see the financial goals of each employee and understand their journey thus far, so we’re able to understand the steps employees take to engage,” Davidson explained.
“Based on that, we’re able to better understand what motivates them—what they’re paying attention to and how they learn best. We then tailor messages around not only their life events, but how they absorb information. It’s very granular in the way emails, text messages and chatting are designed for the individual.”
What’s cool, she added, is that it fully integrates AI and human-based coaching, a combination of (wo)man and machine that complements, rather than competes with, the financial advisor.
True to machine learning, the system gets smarter about understanding individual goals and making recommendations for next steps. However, it has no way of knowing that a participant might just have found out that their spouse wants a divorce, or that their child was just diagnosed with a learning disability, requiring special needs education not originally planned.
“Those emotional, stressful life events are why it will always be important to have qualified and empathetic financial coaches,” Davidson noted. “They can override the AI. so that you’re not getting tone-deaf action-steps, like telling you to reduce debt when your life feels like it’s falling apart. It’s that combination of human and technology that makes for the best outcome.”
AIMEE, What You Wanna Do?
AIMEE marks a major turning point in the capabilities and delivery of financial wellness, one rarely seen in the two decades since the firm’s founding, and naturally stems from technological advancement.
“This kind of engagement hasn’t been possible until relatively recently,” Davidson claimed. “Traditionally, you would present to groups, meet with employees and conduct work over the phone. You might’ve had a website designed to provide financial guidance through articles and tools, but there wasn’t this ability for a participant to really get personalized, ongoing coaching at scale and built around their financial needs.”
Calling it the democratization of financial wellness, the beginning stages are now broadly available to workers of all ages and income levels.
“We’re at a stage where you have access to these tools that are incredibly personalized and oriented towards helping you make better financial decisions, change your behavior, and develop the right financial habits.”
In other words, she’s figured out how to get a truly comprehensive look at the participant’s situation, all in one place and in a cost (and time) effective manner.
“There was a focus years ago on asset allocation driving return. That’s true, but if you don’t have assets to allocate, it won’t do much. We know that saving, more than anything, drives wealth. We’re hitting a tipping point where employees are expecting this kind of help, and employers feel it’s their responsibility to provide it.”
We wondered about the term “financial wellness” and if it’s finally getting through to the general public, or if the industry is largely talking about it amongst themselves. Being so far ahead of the curve for so long, she was eager to answer.
“The pure-play financial service industry is countercyclical in a lot of ways,” she explained. “When we started out, dot-com era companies were spending money on concert tickets and massages. They had the money for that, but they’d go public and call us in a panic because the investment bank said they had to actually educate their employees about their benefit options. So, it was event-driven.”
Thankfully, there’s much greater awareness in leadership ranks today of just how financially strapped people are and the impact it can have on health, wealth and employee productivity, Davidson claimed.
“Executives understand that they’re in a privileged position. What they might want, or need, is not the same as most of their employees. There are ways to rectify this in a manner that reaches as many employees as possible, but at arm’s length so that there’s no mistrust over data going back into their HR file.”
Tech and Trust
That lack of trust has impeded greater 401(k) participation and savings for some time, something GRP Advisor Alliance Founder and longtime Financial Finesse advocate Bill Chetney says retirement plan advisors have long struggled to rectify, but without the scale needed to change employees’ financial behavior en masse, which is exactly what Financial Finesse has done for years, and what AIMEE is intended to accelerate.
We wonder if AI, AIMEE and similar innovation will require the same education and understanding (and therefore time), or whether adoption by plan sponsors and participants will be more immediate.
“I would expect wide adoption immediately, because the system is a natural evolution of what we’ve already created, but refined in a way that it’s much more tailored to an individual’s specific situation—that feeling of knowing what you need before you even know you need it. It’s part of a natural progression to better understand and guide users accordingly,” Davidson responded. “The backend is also incredibly flexible and we’re finding that most employers really do know, based on their existing wellness programs, what their employees respond to.”
And they can go as deep as their comfort level allows, which is key. Many large organizations still shy away from predictive analytics and similar technology due to security concerns.
“We can base it on habits and behaviors and not collect outside data, if that’s what the employer wants. Or we can feed in data from the 401(k) plan and everything else to fully integrate all their other services. The smarter we get about that, the better we can leverage the entire employer ecosystem.”
Health and Wealth
We also wondered if the comprehensive, holistic approach she’d previously mentioned extended to wealth and health, or if it solely focuses on finances.
“Good question; they’re absolutely interrelated,” Davidson answered. “There is a lot of decision-making around healthcare from a financial perspective. The inverse is also true, which is fascinating, but it ties into financial stress and the ripple effect.”
She referred to Financial Finesse studies that examined healthcare claims among those that are financially stressed but have coaching resources.
“What we found from this research was a 23% difference in stress-related healthcare claims from regular users vs. nonusers, with regular users actually experiencing a decline in healthcare claims year over year at a time when healthcare costs were increasing pretty significantly.”
Davidson cites a study by the American Physiological Association showing that ulcers, migraines, and diabetes—as well as heart attacks, which are much more prevalent among the financially stressed—means higher healthcare costs. “If you don’t address it holistically, it’s a big problem.”
COVID Concerns
Current events tie in as well, and the fallout from the COVID crisis seems to have validated the firm’s digital direction.
“I would say it both influenced and validated it,” Davidson responded. “I started the company with the knowledge that many Americans have serious financial challenges and a lack of financial knowledge. We had to get them to a place where they were even a candidate for financial advice, which is now exacerbated.”
Noting the high levels of “consumerism” in recent decades, it took a dangerous pandemic to influence people to save through shutdowns and social-distancing safety measures.
“It’s the first time you could save for an emergency as it was happening, provided you were employed, and stimulus checks were sufficient.”
Overall, she claimed, the fact that individuals are now getting to a place where they’re more financially stable is a huge deal.
“There are so many people suffering in silence. We talk a lot in the industry about making wealthy people wealthier, which is understandable by virtue of how the industry is designed and how advisors make money, but it deepens the inequality that already exists. Getting access and help to as many people under financial stress as possible and influencing them, behaviorally, to use these kinds of services will seriously help bridge that gap.”
As we said, her enthusiasm is infectious, and we got excited as the interview progressed, concluding with a flurry of questions she took in stride—was applying artificial intelligence to financial wellness something she hit upon herself? Are there other companies doing it? Is it a game-changer in general, and well as for Financial Finesse specifically?
“Yes, yes and yes,” she answered calmly. “You’re seeing more big tech firms already leveraging it. We certainly know social media leverages it. You have a conversation and suddenly ads pop up related to what it was you were discussing. Obviously, there’s a lot of controversy around privacy there, but they have shown the ability to personalize with AI.”
Many fintech firm are doing a good job targeting people based on everything from their account balances to the cadence of their transactions, she added, but financial wellness is more behavioral.
“Behavioral finance is valid and should be overlaid on top of everything you do with financial wellness, but it’s a crude instrument, meaning it’s human-nature based vs. individualized. The question we need to answer is how do you motivate me versus the neighbor down the street? There’s a lot of differences between people, and but that’s the layer we’re getting to.”
Ultimately, the good news is that financially stressed people are using financial wellness services disproportional to their population size, something Davidson noted when concluding on a positive note.
“It means we’re getting to the people that need it. It’s not the only solution, but it’s a really important lever. It’s changing financial lives. Now imagine doing it for tens, even hundreds, of millions of people and more.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
