Financial wellbeing: Inside the movement to make clients happy, not just wealthy

Inside the movement to make clients happy, not just wealthy

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Nov 14, 2019
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The word ‘wellbeing’ crops up increasingly in modern society as we look to improve our quality of life. We are encouraged to be more aware of both our mental and physical wellbeing and of the steps we can take to create and enhance the conditions in which we can prosper. Now a third strand is also shooting up the agenda – that of financial wellbeing.

General wellbeing is a matter not just for individuals; employers are also giving it more thought and attention. Organisations around the country have cottoned on to the need for a holistic approach to wellbeing to create a happier, healthier workforce.

Many believe a greater focus on looking after employees’ health and financial wellbeing is not only the act of a responsible employer but also a sound business investment. If fewer people need to take time off work because of ill health, productivity is likely to increase, and a workforce that feels supported in areas outside the office can serve its business well.

Some companies have upped efforts to give employees access to resources to help them make good choices about health, lifestyle and finances. Others have seen an opportunity to showcase their products or services to get in on the wellbeing action. The definition of ‘financial wellbeing’ tends to differ depending on who you ask, but it is a hot topic in the world of financial services and is being talked about more frequently. Advisers are keen to play their part too.

As September was drawing to a close, news emerged about plans to form an institute of financial wellbeing. Since then more than 330 advisers and firms have expressed an interest in being involved.

The group behind the proposal describes financial wellbeing as the “study and application of how money can make us happy”. The initiative is aimed at anyone in the financial advice and planning community who wishes to “help their clients to become happier, not just wealthier”.

Advisers should get into this to improve their own financial wellbeing. They will have happier clients and also be happier themselves

Plans are in motion to set up the infrastructure, such as a regional network, but the initial idea to call it an institution has been put on hold because this would need ministerial approval, the group says.

In the meantime, it will be called the Initiative for Financial Wellbeing. It hopes to conduct research with universities and other organisations such as the What Works Centre for Wellbeing. The independent collaborative centre says it puts “high-quality evidence on wellbeing into the hands of decision-makers in government, communities, businesses and other organisations”. Its goal is to “improve and save lives through better policy and practice for wellbeing”.

Meanwhile, the new member-led Initiative for Financial Wellbeing says the interest shown for such a movement has been “overwhelming”. As a starting point it will:

  • Research the principles of money and happiness
  • Develop ways in which advisers can use this research in their business
  • Collaborate with other organisations both within and outside the financial services community
  • Organise events to spread knowledge and bring people together.

Ovation Finance chairman Chris Budd, who has committed to the initiative and was instrumental in getting the idea off the ground, says it feels like this could be “something significant”.

Starting point

Budd is so passionate about financial wellbeing he put pen to paper to write The Financial Wellbeing Book, which was published in 2016.

This practical guide helps people plan their daily and long-term finances by understanding their objectives and motivations. It aims to offer “respite from the anxiety and stress caused by money problems”.

To keep the conversation going, Budd is also the person behind the regular financial wellbeing podcasts that accompany the book.

He tells Money Marketing: “I have a strong view that financial wellbeing at its headline level is all about how we use money to make ourselves happier. It is not – as some companies are using it – an excuse to sell some products. It is a broad subject and it is not really about money at all.

“Because, unsurprisingly, money itself does not make us happier; it’s how we use it, and that’s what the study of financial wellbeing is all about.”

Budd outlines the five aspects of financial wellbeing:

  • A clear path to identifiable objectives
  • Control of daily finances
  • Having financial options in life
  • Preparing for financial shocks
  • Clarity and security for those we leave behind.

So, why should financial advisers be interested in financial wellbeing? Budd thinks it creates an opportunity to try to persuade advisers to “stop talking to clients about their money” and start talking about what makes them happy.

He says: “My belief is that when clients come to see a financial planner what they are saying is: ‘I have this load of money and I don’t really understand it; I don’t really know what it does; it scares me, in fact. I don’t want to be responsible for it any more. Please could you take it away from me and just deal with it.’

“And what we do as financial planners, what we are trained to do is to go away, do lots of analysis, investigate investment portfolios, risk profiles and pension rules, and then we drag that poor client back into the meeting room and tell them all about their money.

“The one thing they came to get rid of, we made them sit down and listen to [us talk about].”

Budd suggests, if you stop talking about money itself and discuss instead what makes people happy, you can then put the two together to determine how their money can

increase their wellbeing.

“But it has got to start off with what makes them happy,” he stresses. Budd argues if advisers get on board with the concept the advantage to them will be twofold. “First, you don’t get just loyal customers; you get ambassadors. You get clients who will go around boasting to people.

“Just imagine a client of a financial adviser looking forward to the annual review meeting. Imagine it...,” he muses.

“The other thing you get is a much more fun way to do your job. If you are sitting down with clients talking about the things they have done in the past year that you helped them to do, which made them happy and have given them wellbeing and fulfilment in life, that is a lot more fun than sitting down and talking about how one of their funds outperformed a benchmark.”

Hence Budd, feeling a “bit bored” on a rainy afternoon in January, put out a tweet that asked: “If I put on a financial wellbeing conference, would anybody come?”

He tells Money Marketing: “Thirty-eight people said yes, so I thought ‘Oh bollocks, now I’ve got to do it.’”

In fact, the resulting conference had 70 participants. Budd says it was a “fabulous day”, but at the end he was left wondering where to go from there.

He composed an email and sent it to the conference attendees pointing out: “It’s all very well our sitting in a room talking about this stuff – but so what?”

Budd signed off the email with: “If you want to do something more, let me know.”
Affirmative responses came flooding in. After whittling them down to 25 or so people who would take an active role, Budd sent out a press release from the group detailing the prospect of the launch.

“My bluff was well and truly called,” Budd jokes. “Lots of people were doing their own thing and we wanted one place where everybody could come along and share their ideas.”

With increasing pressure being put on adviser fees, Budd believes that “simply taking 1 per cent from a portfolio and not doing much for it isn’t going to last much longer”.
If advisers concentrate on helping people to be happier, he argues, it is a great way to add value to clients.

EXPERT VIEW Alistair McQueen

Alistair McQueen

Give people a greater sense of confidence and control over their money


Life is difficult.” Those three words open Dr M Scott Peck’s best-selling self-help book, The Road Less Travelled.

For many this can be a sobering truth. But, thankfully, the expertise of others can help us navigate when the road gets bumpy, as it will. And this is where the financial advice community comes in. But more help is needed.

Money worries are recognised as a common cause of stress in modern Britain. This is unsurprising when levels of personal debt are booming, real wages are only now getting back to where they were before the financial crisis, and our increasing life expectancy is building an ever-steeper route to retirement.

Aviva’s own research finds two-thirds of us fear that life is riskier than it used to be, and elsewhere it is reported that consumer confidence is about to exit the year lower than it began, for the fifth year in a row. For many, as we look towards 2020, a growing sense of uncertainty is the only certainty on the horizon.

With angst in the air it is easy to understand why our industry is seeing an increasing focus on ‘financial wellbeing’ – for individuals and in the workplace. Financial wellbeing is not about guaranteeing untold riches; that would be financial wonderland. Instead, it is about giving people a greater sense of confidence and control over their money, through good times and bad.

Confidence and control are what the advice community brings – day in, day out. And it brings them brilliantly. The FCA reported in June 2018 that 6 per cent of adults had benefited from this confidence and control in the preceding 12 months. Great. But what about the 94 per cent who did not? There is a growing advice gap in the UK, and worry, not wellbeing, is filling the void.

The financial wellbeing of UK Plc depends upon the financial wellbeing of the millions who lie beyond the immediate confidence and control of our brilliant advice community. For that reason, we all need wider forms of financial help to succeed. We need the Money and Pensions Service to succeed; we need the Financial Advice Market Review to succeed; and we need innovations such as robo-advice to succeed.

We recognise that a demographic under particular strain is those in mid-life, between the ages of 45 and 60. This ‘sandwich generation’ is found to be the most anxious and least happy in the UK. That is why we are giving our own people access to a mid-life MOT, to help them navigate their wealth, their work and their health from this critical point in their lives. When it comes to feeding our nation’s financial wellbeing, we see this population at the front of the queue.

Some criticise these other forms of help beyond the walls of advice. Such criticism is short-sighted and self-harming. The advice community and the fortunate 6 per cent do not live on an island. We are not immune from the wellbeing of the 94 per cent. There is room for all, there is demand for all.

And, for the financial wellbeing of everyone, there is a need for all.

Alistair McQueen is head of savings and retirement at Aviva


‘Know thyself’

The Financial Wellbeing Book and podcasts commonly use the phrase ‘Know thyself’ on the basis that, if people want to use their money to make themselves happy, first they need to know what it is that will make them happy.

Referencing the book entitled Top Five Regrets of the Dying, written by a palliative care nurse who recorded patients’ most common regrets, Budd says: “Funnily enough, none of them said ‘I wish I had made more money.’”

He adds: “Financial wellbeing is all about ‘knowing thyself’. “Work out what you want from life and spend your money on that.”

But would some advisers challenge the idea because part of their purpose is to help people make sure they are supported financially for the rest of their life? If we spend all our money on what we enjoy doing, are we likely to run out or encounter problems later?

“Finding out what you want from life and spending your money on that doesn’t mean you have to spend it all on frivolous things now,” Budd retorts.

“Security of the future is one of the major things to make people happy, so savings and pensions are therefore a big part of that.”

He adds: “Financial wellbeing is a broad subject. Advisers should get into it to improve their own financial wellbeing. They will have happier clients and also be happier themselves."


EXPERT VIEW

Jeanette Makings

Doing nothing is no longer an option

Poor financial health doesn’t affect just a person’s finances; it is one of the biggest causes of stress in general, impacting mental health and, potentially, physical health if left unchecked over the longer term.

Money worries affect people’s quality of life at home and also, importantly, their ability to perform at work, which in turn raises wider issues such as productivity, employee engagement and, ultimately, business results.

Our research, the Financial Wellbeing Index, found that more than three-quarters (77 per cent) of UK staff – equivalent to 25 million employees – said money worries impacted them at work, and that the average score for UK employees’ financial health stands at just 54 out of 100.

So, there is some work to be done and some significant benefits to be had in improving financial health.

The components needed to help people with this are increased financial awareness and confidence, access to financial guidance and advice, and individuals taking action by utilising the financial opportunities available to them via workplace benefits and across the wider investment market.

Building financial awareness and confidence can start in the home and in school, but it’s when people arrive in the workplace that there is the greatest opportunity. This is not only because of the range of rewards and employee benefits available, but also because so many organisations are now supporting employee financial wellbeing by arranging programmes of financial education and advice.

Businesses see the benefit of a focus on employee wellbeing, with financial wellbeing now recognised as a core pillar, both on its own and as a solution to improve mental wellbeing. Helping employees to understand and make the most of their workplace benefits not only boosts their financial wellbeing but aids business performance via reduced absence, increased productivity and higher talent retention and engagement.

Employers are also in a great position to select the most appropriate providers to support their people, and to ensure that education and advice programmes are tailored to the specific needs of their workforce, their benefits and their culture; in this scenario there is no one-size-fits-all solution.

As well as focusing on employee groups most at risk, a financial education programme should provide inclusive support for the whole workforce, enabling people to understand what’s important at that particular stage of their life, in relation to a specific topic such as managing debt or a financial goal such as planning for retirement.

Even with a bedrock of financial education in place, there will always be a need for advice, with some employees requiring individual help and others choosing to pay a professional to manage their financial plans rather than do it themselves. With the personal finance world now more complicated than ever, more organisations are offering financial advice services for their employees.

Doing nothing is no longer an option. Financial wellbeing is the final piece in the puzzle to complete a holistic wellbeing strategy for UK workplaces. The result is a more positive and healthy life for staff and a more engaged, productive workforce for businesses.

Jeanette Makings is head of financial education at Close Brothers


Money worries

Online financial adviser Open Money, which recently acquired employee benefits platform Jargonfree Benefits, suggests financial wellbeing is about people being in control of their finances so they can enjoy life without “constantly worrying” about money.

Open Money head of adviser services Hayley Millhouse tells Money Marketing: “Our research into the advice gap earlier this year found a lot of people weren’t on top of their day-to-day expenditure.

“In the previous 12 months, nearly half of those surveyed had run out of money before payday, a third had used short-term credit because they didn’t have enough money to pay for something, and a quarter had borrowed from friends or family to cover regular expenses.

“Owing money or living from pay packet to pay packet can be really stressful, but it is often relatively easy to take back control by setting realistic spending and budgeting goals.

“Financial advisers play an important role in improving their clients’ financial wellbeing, but often it is those who are already wealthy who benefit.

“The problem is, although we found that almost 20 million people felt they would benefit from financial advice, many of those most in need were unable or unwilling to pay for it. And most traditional financial advisers are not geared up to offer basic money management help because it’s not profitable for them.”

Millhouse adds: “Financial wellbeing should be within everyone’s reach, regardless of age, wealth or financial experience.

“This can be achieved only by providing information and automated tools alongside human advisers to guide people through the stages of their financial journey, taking the stress out of managing their finances and helping them make the most of their money.”

Finding a home for wellness

Earlier this month, consultancy Mercer launched a ‘digital wellness platform’ to enable employees to manage their finances in one place. Mercer Money provides a real-time view of current accounts, debt, savings, pensions, investments, mortgages and property values.

The company says its platform and app will boost pensions engagement and financial wellness. They will educate, remind and send personalised nudges to “empower” individuals to make better financial decisions for the short, medium and long term.
The platform will provide a way to bring together financial wellness programmes and pension engagement strategies, the firm says.

Mercer UK wealth leader Benoit Hudon says: “Many employees struggle to understand their pension and get a comprehensive view of their finances. They have to juggle multiple conflicting financial demands daily, resulting in increased stress and difficulty when making decisions.

“Mercer Money has been designed to support better financial decision making and help improve people’s lives today while giving them peace of mind that their future needs are met.”

He adds: “Employees with better control of their finances are often less stressed and more productive.”

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