The three components of financial wellness

Financial wellness is the crux of your business. As a financial advisor, your goal is to help your clients achieve that elusive, often ill-defined but undoubtedly happy state.

What is financial wellness? LIMRA has a definition that accommodates the different goals and needs of consumers and workers — the ideal financial situation is not the same for everyone. The LIMRA Financial Wellness Index defines financial wellness as having three main components:

» An emotional element of being confident in your situation and having knowledge about how to get where you need to go.

» An objective/current component of being able to meet daily obligations, withstand unexpected expense and hopefully enjoy the extras that can come with financial security.

» A future-looking aspect of being able to plan and act in order to build a financially secure future including but not limited to retirement. 

For financial advisors, whether focusing on retail or workplace (or both), this definition offers a framework for helping your clients. And your clients agree. About two-thirds of consumers agree with the statement “Professional financial advice is necessary for good financial wellness,” while only about 16% disagree. According to LIMRA’s Financial Wellness Survey, full-time workers (especially those who are self-employed), older consumers and those with incomes of more than $100,000 are the most likely to feel strongly about the necessity of professional advice.

If your business model encompasses workplace solutions — financial, insurance, education or other — there’s a natural and elegant fit between financial wellness efforts and the workplace. After all, we could consider that financial security (wellness) for most consumers begins with a paycheck. And the workplace is a natural delivery location for wellness products (payroll-deduction insurance and financial services) and education. According to the research, two-thirds of workers say that “employers should offer services to help address/reduce employees’ financial stress.”  

But those most likely to strongly agree represent a different demographic than those who feel strongly that advisors are necessary for wellness. Younger and middle-income workers are somewhat more likely to turn to employers to provide these services, and are also for those workers whom scalable, more technology-enabled solutions may be more appropriate than more time- and labor-intensive personal consulting.

Furthering the case for workplace wellness efforts is the fact that many (nearly 7 in 10) employees consider workplace benefits integral to their financial wellness. While our research shows that fewer than half of consumers consider that they have adequate disability or long-term care insurance, only a little more than half (57%) of consumers are confident in their household’s financial situation.   

Yet fewer than half of workers report that they are offered financial wellness programs or support at work.

There is a role for both financial advisors and the workplace in helping clients build and maintain financial wellness. Figure out where you add value, and leverage what may be available in your clients’ workplaces in ways that complement your own offerings. 

Support your business owner and business decision-maker clients in their efforts to facilitate employee financial wellness — or bring wellness to the table as a part of your own value proposition to these clients. By encompassing products, education, services and more, financial wellness efforts in the workplace can become an important part of your own services for your business clients. 

Deb Dupont is assistant vice president, institutional research, LIMRA. She may be contacted at [email protected].