January brings new beginnings. From resolutions and crowded gyms, to diets, and promises to do or be <insert thing here>, January is also, and we think most importantly, Financial Wellness Month.
Wellness has taken the #trend charts by storm and, while fitbits, juice cleanses, and yoga classes are indeed part of the wellness equation, a core piece of that puzzle is, you guessed it, personal financial health.
You guessed it
Consider this: financial stress is directly correlated to health. So, when a person is worried about his or her finances, that stress affects that person’s health, physically and mentally. Life is unpredictable and can be complicated, but having the financial resources to handle things when life’s inevitable curveballs get thrown is vital to keeping oneself ‘fit’ in every sense of the word.
So, What is Financial Wellness Anyway?
Financial wellness is defined as an intricate balance of the mental, spiritual and physical aspects of money. Financial wellness is having an understanding of a person’s financial situation and taking care of it in such a way that he or she is prepared for financial changes. As everyone knows but rarely does much about, this vital component of wellness is often neglected — leaving people worried about what might happen and the financial consequences. When the unexpected becomes the reality though — things start to unravel — and it is that unpreparedness that has led us to the financial crisis we face today. Financial Wellness Technology (finwelltech) is defined as the software required to power a fully integrated, comprehensive, configurable financial wellness program. It is software that is utilized to guide people toward the state of financial well-being. Finally, Financial Wellness Programs are comprehensive programs designed specifically to assist employee populations. Financial wellness programs should incorporate financial wellness technology in a tailored, holistic, and connected way to get a true view of employee personal financial health. These programs often incorporate human advisors, other existing technology, training programs, and resources, content, and more.
With this context in mind, as we kick off 2018, we thought we’d take a moment to outline our predictions for the financial wellness space over the next 12 months:
1. Employers will demand financial wellness programs... that work
More than half of American employees are stressed about their finances, according to the 2017 PwC Employee Financial Wellness Survey, and really, it’s far more than that. More than ¾ of those stressed employees say their stress has increased over the past year. Close to 90% of employers already have financial wellness programs of some sort in place, with many more hopping aboard. They have tried educational programs, lunch n’ learns, app offerings (think: Learnvest, Mint, Acorns, etc), and more, but behavior change from these early solutions just hasn’t happened.
In 2018, employers will demand better tech. They don’t want bandaids or old school solutions that take up time and pair well-ish with lecture-backed bagels. They want comprehensive solutions that work with their systems and allow their employees to make tangible, measurable, actionable steps toward living financially healthier lives and toward financial well-being.
2. Financial wellness benefits will become more holistic
To build on prediction #1, employers will demand financial wellness programs that work, financial wellness programs will become more comprehensive and connected in 2018. For example, if you’re familiar with the history of the 401k, it was never intended to be an end-all-be-all for financial freedom in retirement. As it stands, it’s nearly impossible to measure progress, or even get a clear picture, with the siloed nature of all the money tools, tricks, and portals out there. Disconnected apps, 401k programs, student loan debt, mortgage payments, the list goes on — all of these create a completely incomplete picture of any person’s true financial situation. How then, without seeing the complete picture, can anyone expect anyone to get better?
Financial wellness technology (FinWellTech) with native scalability, configurability, and its ability to integrate with existing ‘things’ (think: other software, programs, tools, etc) is the answer to this fragmented mess. Companies like our friends at Yodlee are making massive strides in this arena, piping outside asset information in, and powering a more transparent and true financial picture.
In 2018, tech will take over and make it possible to see a holistic view of personal financial health. Employers - get excited.
3. People will get hooked on finwelltech
Employees overwhelmingly say they will participate in financial education programs. They’re open to new things. Forward thinkers and proactive planners may even already use tools like Mint and Acorns for budgeting and micro savings. But, the siloed nature of tools like these, coupled with people’s Amazon-level expectations, leaves a lot of room for improvement.
People want a modern, simple user experience that gives them not only a comprehensive view of their financial situation, but also a guided, personalized path to reach their goals and stay accountable. This year, they’ll get it.
With more and more employers looking to their trusted retirement plan consultants (think: those who manage company 401ks) for help in this arena, employees will be a few clicks away from a life changing tool they’ll be hooked on.
4. Retirement Plan Consultants will swap 401k first for financial wellness first
Most 401(k) and 403(b) advisers like to ‘stay in their lane,’ according to Investment News, and ‘[stay] clear of other company benefits’. This year, though, retirement plan consultants break free and repaint their lanes with a muralistic picture of what should be, rather than accepting the black and white lines of the past.
Financial wellness, however it has been defined or understood in the past, is the overarching umbrella that encompasses everything relating to personal financial health. 401ks, mortgages, debt, savings, life goals, etc. ALL fall under this umbrella, and every person’s strategy for meeting their goals has to be different because every person is different. Look for retirement plan consultants offering configurable, financial wellness solutions to their large employers clients this year. With the ability to maintain processes, keep purchased systems and tools in place, along with seamless integration into day to day life, financial wellness technology has the power to make this holistic vision a reality and technologically optimize the financial health of employees everywhere.
In 2018, retirement plan consultants shift their thinking thinking in this way. They will continue to broker 401ks as PART of their financial wellness offering, rather as a bolted on box check that offers little long term value or participant behavior change. Plan consultants have a fiduciary responsibility to guide their customers and their participants down the path that best helps all parties reach their goals. This year, the dominos start to fall, and they look different than they used to.
5. Innovation will continue to come from start-ups, not so much from the large financial firms
Financial wellness innovation has generally started with smaller start-ups disrupting the space and often ‘unbundling’ different financial services from the way they’ve been traditionally offered by the big firms (think: Acorns or Stash for micro-saving and investing as opposed to traditional bank-based savings accounts and retail brokerage firms). Then the large financial firms, who by their nature are less nimble, either partner with or acquire the start-up to keep pace. Think of Northwestern Mutual Life Insurance buying up B2C personal finance company LearnVest, for example. Start-ups will continue to bring innovation to financial wellness, helping retirement plan consultants use technology to scale their business, retain current clients, and attract new ones.
This year, there’s a lot on the horizon for financial wellness, financial wellness technology, and everything related to this complex space. Employers are finally realizing the important role financial wellness plays in employee wellbeing, but that’s just part of it. Our ability to successfully address the current financial epidemic is integral to the future financial health of our people, our companies, our country, and the world.