This is the first in a series of blogs from SS&C about Financial Wellness and how to provide supportive, targeted tools that meet an individual's evolving needs over their financial life.
Financial wellness is a popular term these days. There are plenty of articles or perspectives about what it means and it’s the subject of many conference sessions. But defining the term is the easy part.
The challenge comes when trying to help people become—and stay—financially “well.” It requires anything but a one-size-fits-all approach. Differing demographics, partnership and family situations, personalities, capabilities, income, assets, employment pictures, and physical capabilities all shape an individual’s financial health… both in the present as well as in the future.
Why Financial Wellness Matters
Being “well” financially is more than having a high bank account balance or a sufficient investment fund. It’s about the effect of financial stability on an individual’s physical and mental well-being. The repercussions of being financially unwell come from not having enough money to get by as well as not being able to save. For example, paying down student debt might impede the ability to set aside money for retirement. That leads to stress.
And stress can have significant physical repercussions. A recent report from the American Psychological Association revealed that stress is a leading national health concern, with over 74% of adults experiencing negative effects from stress. Without treatment, it can lead to the avoidance of social situations, neglecting responsibilities, and eventually, chronic medical conditions such as heart disease or diabetes.
Worries about finances can also influence well-being and productivity at work. A study by SHRM found that 80% of employers agreed that employee financial stress was lowering productivity. At a cost of more than half a trillion dollars annually, the impact is real for both the employer and the employee.
Financial health and mental/physical health are interdependent in so many ways. And the ripple effects of being unwell can clearly be serious and lasting.
How to Get There
Achieving wellness goes far beyond having individuals save more. It’s about helping people as they progress through the changing stages of their lifetime financial journey. And, as each journey varies, the way forward must involve dynamic approaches that are personal, supportive, educational, and most importantly—achievable.
Think of it this way: while a podiatrist and a cardiologist are both doctors, you wouldn’t go to your foot doctor to treat your heart disease, would you? It’s the same with trying to help people become financially well. You need to address their specific ailment.
SS&C’s retirement team has spent decades working with groups across the retirement support ecosystem—with plan providers, plan sponsors, plan advisers, asset managers and wealth advisers—to understand and measure retirement plan success. As one of the largest recordkeepers in the world, we have analyzed data to understand how people react and respond to challenges and opportunities throughout their financial lifetimes.
Experience and technology have allowed us to continually refine our capabilities and focus on delivering personalization at scale. We view financial wellness through the lens of financial inclusion—supporting each person with materials and guidance that recognize them as individuals whose unique situations and needs evolve.
We’ve also identified personality types—planners, spenders, learners, worriers—and how these types or combinations of these types make financial decisions. Our tools utilize proven methods of engagement (including gamification and quizzes) that help reinforce an individual’s successes, thereby encouraging continued focus on their financial wellness.
In our following blogs, we’ll discuss in more detail how to use technology, data and analytics to shape targeted, outcome-oriented methods that drive success. Leading practices include a “call to action” engine that drives savers to their next best step and in-depth reporting that helps plan providers, wealth managers, and employers understand their client/employee challenges and ways they can more effectively support better outcomes. Continuing to refine and improve the approach to financial wellness is a journey we are all on together.
Watch our "Financial Wellness" webinar to learn more.
Written by Alicia Hartjen
Head of Product Development, Financial Education & Communication Solutions