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Monday, October 1, 2018

Defining financial wellness

What is Financial Wellness?

What is financial wellness and what does a great financial wellness program include?

  • Financial health is a state of being
  • Financial education is important but accomplishes little without action
  • It is a long-term commitment
  • You need to be able to measure results

Financial wellness is still gaining popularity as something that employers are looking at as an employee benefit and 401(k) advisors are looking at as a new revenue stream. That is a net gain for 401(k) participants as the focus shifts from just saving for retirement to helping them with multiple levels of their personal finances. However, even with this increased interest, it feels at times that financial wellness is poorly defined and a bit of a buzzword.

This graph from Google Trends shows that there is increased interest in financial wellness, but it is not the hockey-stick like growth that I had expected.

financial wellness trend

I think a lot of us in the industry agree that, even with the commoditization of advisory services, an increased focus on education is not a fad. With consumer debt still high, questions regarding Social Security, and health care costs continuing to spiral upward, forward-thinking employers are looking to help their employees build solid financial foundations at home so that they can remain productive at work.

We’re going to explore three aspects of financial wellness in this post:

  1. Defining financial wellness
  2. Teaching financial wellness
  3. Measuring financial wellness

With this I’m hoping to set out a framework on which you can build a financial wellness component to your existing service model.

Defining financial wellness

A mistake that I have seen too many advisors make is trying to sell financial wellness without defining what it is. The definition you arrive at shapes your education materials, the methods by which you deliver service, your participant interactions, and what metrics you use to measure success.

It is easy to define what financial wellness is not and that includes living paycheck to paycheck, low credit scores, payday loans, high-interest consumer debt, etc. It is more difficult to define what it is.

Questions to consider:

  • Is financial wellness objective or subjective?
  • Is financial wellness measurable?
  • If financial wellness is measurable is it graded on a curve?

In my opinion you can look at someone’s personal finances and have a good idea about their level of financial wellness. Objectively you might look at their net worth, retirement readiness, debt-to-income ratio, and their emergency savings to arrive at your assessment. There may be components that are more subjective based on a person’s individual financial situation and goals e.g. people have varying financial goals and certain things change at different levels of income and wealth.

Overall I believe it is both objective and measurable in that you can assign a value to each of those components and derive a score of a person’s individual financial wellness.

Whether financial wellness can, or should, be measured on a curve is another question. For someone making $30,000 a year having next month’s living expenses already in the bank account is a big accomplishment. For someone making ten times as much it should be a given. This would indicate we would assign a higher value to savings/income ratio for a lower-income individual. Alternatively if that person making $30,000 a year is single with no children then life insurance and a will is of less critical importance than it is to the individual making $300,000 who has a family to care for and property to pass down.

That all suggest that, while it can be objectively measured, context should be used when measuring financial wellness.

That still does not provide the definition we are looking for, so I’m going to provide what Wallet1000 defines financial wellness as:

Financial wellness is being prepared for all major life events up to, and including, retirement.

This definition allows us to cover both post positive goals (getting married, buying a home, having children, sending them to college) and the negative challenges that one might encounter (losing a job, major emergencies, health issues, market downturns). The word prepared also implies that planning is the key method by which to start the financial wellness process.

Teaching financial wellness

Once you have defined what the end goal is for your participants you can start designing the methods by which you are going to help them achieve it. This might involve education in the form of handouts or lunch and learns, individual meetings, and/or using software. You might use one, or multiple, of those approaches and the approach might differ depending on the client. For example software tends to work better for office workers than it does for people in manufacturing who don’t have downtime during their day to use a computer or their phones.

Look at your audience

We firmly believe that financial wellness is important for people at all levels of an organization. People making hundreds of thousands of dollars a year can still have cash flow problems that budgeting would help solve. Often the act of scheduling a financial wellness meeting is something that gets an individual to take the time to sit down and examine their financial picture and that is the first step towards taking the actions required to improve it.

However, what education you provide and the method by which you provide it should differ depending on who your audience is. People have differing comfort with technology and are at different points in their lives with different challenges in front of them. A 25-year-old might be very comfortable using financial wellness software but does not need the generic handouts about catch-up contributions. Somebody closer to retirement might appreciate more hand-holding as the day approaches that they have to live off of a fixed income.

Ideally you are providing the education and help a person needs at the time that it is most applicable and in the method in which it will be most effective.

Look at your own resources

While you are participant focused you are also constrained by your own resources. Individually meeting with each of your client’s employees might not be feasible based on the fees they are paying or the size of your team. If that is the case then you might need to create materials, or leverage software such as Wallet1000, that can scale regardless of the size of your organization or your participant base.

When selling your services you might tout a content library where you have created handouts, ebooks, or videos by which you educate participants. If your resources allow you might be able to charge higher fees for group or one-on-one meetings that put you directly in front of a company’s employees.

In Person

While all methods of education can yield results we have found that in-person education–particularly one-on-one meetings–always plays a role in the best outcomes. The two main reasons I have found:

  1. When you have a meeting on the calendar with someone you are more likely to do what is required to prepare for it. The meeting acts as an artificial time constraint which inspires action. (Think of limited time sales that inspire you to buy.)
  2. When you meet with someone in person you act as an accountability partner (particularly if you schedule a follow-up meeting right away). When someone helps you personally, and when you know you’re going to see them again, you try to take full advantage of the help.

Additionally, a lot of people come into one-on-one meetings not looking for a full review of the finances but have a topic in mind that they want to focus on. They might be saving for a house, trying to refinance debt, or have a newborn on the way. In these situations you can do a deep dive on that topic and save the rest for a later meeting.

It is important that the participant leave the meeting feeling like they learned or accomplished something. This creates momentum for them to take the actions prescribed during the meeting.


budget on ipad Obviously at Wallet1000 we believe software is in important component in financial wellness education. The biggest reason is that few, if any, advisors have the time to do in-depth financial planning for each of their participants. Software puts a bit of the onus on the participant to budget and build the first draft of the plan which saves you immeasurable time as the advisor.

Software also allows you to scale your delivery of education content, automate your accountability follow-up, and track where each participant stands at any given point of time. Not to mention delivering the valuable metrics that you can use in plan reviews and proposals.


Content tends to be less personal than what you can deliver with meetings, phone calls, emails, or software. Some technology allows you to insert a participant’s data into the content (think of a very powerful mail merge) which definitely inspires people to read the content rather than filing it directly into the recycling bin.

What content is great at is scale. You create something once and can reuse it infinitely. It is also something that can be self-serve which the participant can access whenever the need arises.

People can readily identify great content that is worth taking the time to read and what is mediocre. Spend the time making your content great.


Webinars are similar to group meetings in that they tend to focus on a specific topic and that they are done on a one-to-many basis. The downside of webinars is that they are more easily dismissed if something else comes up. I believe that is outweighed by the ability for users to anonymously ask questions which they cannot do during group meetings. (I often get few questions during group meetings and none which might reveal a person’s individual financial situation.)

Another great thing about webinars is that they can be recorded and added to your content library!


It is important to always remember that personal finance is personal. One-size fits all does not inspire action. A personal touch (and personalization in general) elevates all aspects of financial wellness–your content is more likely to be read, people are more likely to sign up for meetings or webinars, and they are more likely to use software that is useful for their particular financial situation.

I believe a hybrid approach works best where a participant can self-serve at their convenience by using software or consuming education content that you provide while also having the opportunity to reach out for more hand-holding.

Regardless of which approach you use it is important that the participant has a plan (either that you provide or they create) for moving from their current state to a state of financial wellness and that the plan is broken down into smaller, actionable steps that encourage action.

Measuring financial wellness

Before launching financial wellness services it is important to identify what you want to measure and why. You’re going to be measuring both an individual’s financial wellness and the effectiveness of your program. As the saying goes, “what gets measured gets improved”.

For an individual you do not necessarily need to assign a numeric value (Wallet1000 does). You can effectively use a matrix or even a checklist which covers all the components that you have deemed to be part of financial wellness.

In order to gather data you can use software or include an initial questionnaire which establishes a participant’s baseline and then use a follow-up survey to assess progress.

For your program you need to identify a way to measure the overall effectiveness of your education as well as the individual methods and content that you use. Simple examples would be identifying how many people upped their 401(k) contributions within thirty days of a handout on the company match or tracking whether a participant comes to a meeting with less credit debt than they did the last time you met with them when you created a debt payment plan with them.

Delivering financial wellness

This basic framework is a good starting point for delivering a financial wellness program to your clients that achieves the client’s goals as well as making a difference in their employees’ lives. It will require sustained effort rather than a one-and-done approach to help those participants make progress towards their goals, but I truly believe that it is one of the most rewarding endeavours to undertake as a financial advisor.

Will Johnson

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