Financial Wellness: The Next Level Of Planning And Benefits

In the wake of the COVID-19 crisis, Americans face unprecedented financial, social and physical challenges. The notion of financial wellness — at its very core, freedom from immediate financial stress and the ability to prepare for future financial needs — is changing (and being challenged) in ways it never has before. The retirement industry is also evolving with new ways advisors support their clients in both retail and institutional markets.

LL Global instituted an industry task force to define and explore the many aspects of financial wellness for all our stakeholders — from individual consumers and clients to employers and their workers to the advisors and service providers who seek to fulfill the needs of all.

The core definition for financial wellness, developed by the task force, is “being confident in your financial situation, able to withstand unexpected expenses, and enjoying a financially secure future.” The group adopted this holistic view to include an emotional component, objective security/preparedness and support for future goals.

Financial wellness, so defined, is also fundamental to the role advisors play in helping their clients with financial planning as well as the role benefits advisors and financial wellness programs have in helping workers with their own current and future financial needs and goals.

According to the Secure Retirement Institute study “Advisor Views on Financial Wellness,” financial wellness differs from traditional financial planning efforts by:

» Also relating to health and medical comfort (and absence of problems).

» Having an educational component.

» Addressing emotion.

» Including investments, retirement and more.

» Taking a holistic approach to finances.

In many ways, these are themes that can be most efficiently addressed (and in scale) via workplace-enabled programs; according to other SRI research, nine in 10 advisors to defined contribution plans include some degree of financial wellness support in their offerings.

On the retail side, recent LIMRA research suggests there is a small but growing number of financial professionals who are familiar with financial wellness programs and that awareness is highest among group benefits brokers who work with larger employers.

This tracks with the inclusion of formal wellness programs in the workplace itself. In 2018, 21% of employers with 10–19 employees currently offered a wellness program, compared with 50% of those with 1,000 or more employees. Another 23% of small employers planned to add a program within a year or so, leaving more than half with no plans or thoughts of including financial wellness in their benefits offerings.

Not all wellness programs are alike, and I would venture to say that not all wellness programs are specifically defined as such. Taking a holistic approach that includes both education and products that help individuals address a host of financial needs — beyond retirement saving and health insurance — is perhaps the most basic common denominator. This creates great opportunity for advisors to assess needs and craft programs with both retail and institutional clients.

The elements of financial wellness, leveraging both workplace benefits and individual financial needs, are well suited for advisors to deliver retirement planning, retirement education, estate planning, insurance planning, budgeting, rainy-day saving, debt management, etc. Getting on the financial wellness bandwagon offers advisors an opportunity to deepen relationships and add new dimensions to the value they bring to clients.

Deb Dupont is assistant vice president, institutional retirement research, Secure Retirement Institute. She may be contacted at [email protected].