Financial wellness: What UK employers can learn from the US

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July 07, 2023

28 mins read

Financial wellness has been a hot topic in recent years, but what does it actually mean? And how can employers be sure the support they provide to employees really makes a difference? The key lies in understanding people’s individual needs, says Blake Allison, founder and CEO at financial wellbeing consultancy LifeCents.


Sangita Chawla: Hello, I'm Sangita Chawla, Chief Marketing Officer at Standard Life. Today I'm excited to have as our guest speaker Blake Allison. Blake is the founder and CEO of LifeCents, a US based health and wellness consultancy that empowers people to improve their financial health and wellbeing. Today, Blake and I are going to discuss what the UK can learn from the US about financial wellbeing.

Hi Blake, and welcome to Thinking Forward. Nice to have you here.

Blake Allison: Thank you. Good to see you.

Sangita Chawla: So with financial wellbeing in the UK, there are a couple of problems that we have

pretty well understood that people suffer from money worries and the impact it has on their physical health, emotional health. Yet 80% of people don't like talking about money.

A recent survey from the ONS showed that those people that fell behind on their energy bills were also suffering from more money worries. And in many cases they showed moderate to severe signs of depression. Now, at Standard Life, we care about our customers and also about society more broadly and we see this coming through from our own data.

So we have many more customers phoning us, asking us for help about how to access their money, and citing money worries as a form of vulnerability. It's in fact one of the top vulnerabilities that we track. So I can see that this is a topic that we need to spend more time on. So it's great to have you here with us today.

And my first question really is, what does financial wellbeing mean to you and what can we learn?

Blake Allison: Well, thank you again for having me here. It's a pleasure. Everything you're describing are the things that are on the radar for us as well. But I think you're starting with a question that is the equivalent of what is the meaning of life?

It's a big, important question. And I think over the years, financial wellness and financial health, their definitions have evolved.

I think when I first started the business back in 2005, there was a focus on financial literacy, and then we saw a move to financial stability and financial security, financial capability.

Now we have financial health and wellbeing, financial wellness, etc. So I think the concept or the terminology has evolved.

But at the core, what is it? And as we've talked about in other conversations, if you ask a hundred people what financial wellness is, you're going to get 100 different answers. And I think that's one of the challenges that we have as providers is there's not that unified definition. But I think on the consumer side, on the members side, it's also very challenging because a lot of people just don't know what financial health is or what that means to them.

But when we look at what financial health is, there are some frameworks out there that we even use with LifeCents that help guide the idea of helping someone improve their financial health and wellbeing. So we look at save, spend, borrow and plan as four pillars of good financial health. And what that means is someone who spends less than they earn, they pay their bills on time, they have adequate short-term savings, adequate long-term savings, a manageable level of debt, prime credit score, etc. So those often are used in the US as a measure of what good financial health is. Now, how do you execute against that? That's a whole other conversation. But I also think financial health from an individual perspective is, am I happy with the life that I'm living? And what I mean by that is, I think sometimes there's a risk that as providers we are defining what good financial health is from our eyes versus what it means to the individual. So I may not be someone who needs to take a big vacation every year. I might be happy going camping. And it's kind of a strange example, but we have to make sure that we're not pushing people to achieve levels of what we call financial health that are not consistent with their goals and their values.

Sangita Chawla: So your business has been going for about 18 years, I think you said, which is incredible and testament to the great work you've done. You must have seen, I hope, a tremendous amount of change in those 18 years. What have been the highs for you?

Blake Allison: So I think where we have really done well over the years, we've been very fortunate to work with many different types of clients, whether it's employers directly or through employee benefit consultants, retirement Plan advisors. But we also have worked with a lot of community organisations, non-profits, government agencies, and so we've been able to attack the issue from multiple channels and also have different lenses through which we see this problem.

I think what we have really learned is understanding that we first have to understand who we're helping and what problems we're trying to solve because we're working with very diverse populations, with very diverse needs.

And I think from a financial wellness perspective, if financial wellness providers are not asking the questions of the individual, of who you are, what are your goals, what are your interests, and what are your needs, and responding to that in kind. I think that's where a lot of financial wellness programmes are not set up for success, where they're failing to ask the questions to understand what the diverse needs are of diverse populations.

And so I think we've really kind of zeroed in on that. And so when we look at some of the initiatives, whether we're working with, let's say, veterans or seniors or returning citizens, people coming out of the penitentiary system, the LGBTQ community, that's a mix of those groups are actually the same profiles of people that you have working in companies.

So if you're not looking at those needs, then you're missing a huge mark with addressing the needs of those populations.

Sangita Chawla: Sounds like an awful lot of research almost has to go upfront before you can even start to roll out a financial wellness programme then, from what you're saying.

Blake Allison: Where we start, and I just truly believe it's a prudent starting point, is providing a financial health assessment, which is asking people what's going on? What are your dreams? What are your goals? What are your worries? What keeps you up at night? Where are you trying to go?

And simply letting people talk about themselves and letting people tell their story. So really taking someone through a financial health assessment, not a ten-question assessment, because those are not comprehensive enough. But getting that baseline, providing that foundation is the starting point, not only for the provider but also for the individual, because I think that's the other thing that we have found that awareness is probably one of the most powerful motivators and ways to engage people. If I am someone who is trying to get my financial life together, take control of my finances, typically, I've just never known where to start. And if I finally have a place to start and I finally have awareness of what's going on, maybe even how I compare to other people like me, that is one of the best motivators to keep someone engaged in a financial wellness programme.

Sangita Chawla: You mentioned a few minutes ago about employers, so we're seeing an increasing number of employers talk to us about employee and financial wellbeing. So they're asking us about this, and they're saying it's really important, how can we help and support them more? Is that the experience that you're seeing in the US too?

Blake Allison: Indeed. I think there's common understanding that reaching consumers through their employer is a great way to engage them in a financial wellness programme because they also are making very big decisions about their money regarding the benefits they have, whether it's retirement, health insurance, other types of insurances.

So it does make sense to reach consumers through their employer. But also keeping in mind that that's not at the exclusion of looking at other pathways and other channels to reach the same people. So maybe they're involved in a community organization that can provide programming as well. So yes, we're definitely seeing employers as a primary channel for financial wellness.

Sangita Chawla:  You've mentioned communities a couple of times. I'm not sure that we've done enough here in the UK to explore that. And that may be an avenue that we have to. We're obviously years behind the US on financial wellbeing and all the different techniques that we're introducing even now. I wonder, actually, if it comes down also from a consumer sort of customer behaviour perspective. So we do see obviously customers calling us saying, you know, tell me more about my pension, tell me more about my options. And as I mentioned, people are raising concerns about money. But what we never hear anyone say and, in fact, I don't think I've ever used the expression myself, to be honest, is: I need financial wellbeing help. That phrase, I don't think it exists. Is that just the UK, or is that a US concern too?

Blake Allison: I think it's universal because I think people don't know. People don't know what they don't know. They don't know what to ask for. They don't know where to start. And I don't think anyone's going to say, “Oh, my financial health is not good.” Instead, they’ll say, “I can't pay my bills. I’m stressed about this. I have too much debt.”

So they identify the components of financial wellness, but they're not going to come on and say, “I need to be financially healthy.” And so I think that's something that's very important from a provider perspective, is the lens is not financial health for the consumer. The lens is I have problems, I need help,

Sangita Chawla: Help me in the moment that matters.

Blake Allison: Correct. And that's a great point too. So in moments, the teachable moments, so you're helping them, and the package of it is overall improving their financial wellbeing, but they're not going to come and say, I need a health check-up.

Sangita Chawla: Okay, so is there anything more we can do? Is there anything that's worked for you over the years or has that been a consistent theme?

Blake Allison: I think you made the statement that the US is further ahead. Okay, maybe in length of time that financial wellness has been a focus, but I think we have to look at how far have we advanced in helping consumers improve their financial wellbeing in the US.

And so there's been a lot of activity, yeah, but I don't know how much is productive. A lot of resources have been put into financial wellness programmes, resources, platforms, but has it really helped change the status of consumer financial health? I think more broadly, we're not seeing huge strides forward being made to help people reach their goals and everyone sail into a happy retirement.

Sangita Chawla: And you haven't seen any specific changes in cohorts that are particularly interested in it or that's changed over the years or feeling maybe that we need to do more to support younger, in fact, age groups post-COVID. A lot of them are suffering in different ways as well.

Blake Allison: I think what's happening is there is greater awareness that financial wellness needs to be provided, just like you mentioned with the employers in the UK, there's greater awareness and interest to provide financial, financial wellness. I think as there's more conversation about financial wellness, the need has always been there. But identifying that, oh maybe we approach youth different than we approach seniors different than we approach the LGBT community versus someone who is struggling to pay bills versus someone who's trying to catch up on retirement versus someone who's nearing a secure retirement.

There are just so many so there's so many different profiles of people that need help, that I think the risk is we try and chase individual ones versus stepping back and saying everyone has unique needs. We need a solution that helps us solve a broader population need versus trying to say, hey, we need to help this specific group in a specific way.

Sangita Chawla: And I think part of the issue is around the broader level of engagement in the topic of money retirement planning. I mean, it's something that people don't engage in particularly well. And you talked about awareness being a really important thing to help drive that engagement through. I think we're still struggling with that, you know, certainly here.

And I think actually for here in the UK, I don't think auto enrolment helped us to be honest, because that's actually helped people sort of step away from actively engaging in the decision making. With auto enrolment, the idea that people are automatically being enrolled in the retirement plan, people assume that they are being enrolled at a level that is sufficient for them to reach their retirement goals. But they have probably never identified what they're exactly getting.

I'm now very pleased to welcome onto the couch a colleague of mine, Neil Hugh. Neil is Head of Workplace Proposition at Standard Life and has led the development of our financial wellbeing proposition. Hi Neil.

Neil Hugh: Hello Sangita. So financial wellbeing must be a topic very close to your heart, having worked on it for so many years. So why do you care? Why do we care?

Actually, listening to Blake earlier sometime really resonated with me. It was about wellbeing being like the meaning of life. This is sort of the question for us, in terms of thinking where does this fit in with what we do as a company. At the heart, we are a long-term savings and retirement company. So however we approach financial wellbeing needs to have that front of mind. Some recent research that we did showed some quite interesting relationships between the financial confidence that consumers had and ultimately how successful a retirement they were having. So for us, it's really important to actually go all the way back to the beginning. Financial wellbeing is about confidence. It's about control and security in terms of how you're pushing your finances. So it's really coming from that emotional side of things. So when we think about financial wellbeing, it's about how do we actually solve the whole of the consumer, get them confident with their saving, and then really actually think about how we apply that as they approach retirement to give them the best possible outcome.

Sangita Chawla: And is that a similar experience in philosophy in the US?

Blake Allison: It is. I fully agree. I think for so long businesses have looked at employees as numbers, versus people. But you've got to connect with somebody on an emotional level to really have them respect and respond to what you're putting in front of them.

Sangita Chawla: And do you think it's successful doing that at all age groups, or do you think there's a perfect time to start that conversation?

Neil Hugh: I think it's about the most important moments. It's very key financial events. For instance, we've engaged people at the outset of when they're beginning their pension saving journey by looking at what's important, so it might be about paying off student debt and getting on the housing ladder. So for me, any age group we can engage with, we need to make sure it's relevant to them.

Sangita Chawla: And I assume that's similar again in the US? Is it debt that triggered people's attention to this, or is it other things?

Blake Allison: I would extend what Neil said just a little bit by going back to some of our earlier conversation, about the assessment, of understanding where individuals are because you could have people that seem similarly situated, but I might have a ton of debt and you have none. And so you've got to really make sure you understand the individual's needs, not necessarily just the demographic or where you assume they are in life.

Sangita Chawla: And I guess another area to explore is how do we think about minority groups? Is that different?

Neil Hugh: I think minority groups often have a lot similar problems. What we generally see, using gender as an example, in terms of the gender pension gap, is not necessarily driven by things that are unique to women, but they're generally events or things that impact women more greatly.

So you need to personalise your approach and really think about that circumstance. So the sort of assessments we've talked about are really key.

Blake Allison: And I think we talked about communities supporting more as well. And I think where we've seen success is contextualising information. So, you know, let's say you're trying to help somebody create a budget.

A budget is a budget in terms of what you know, how you create it. But what goes into it might be a little bit different for different groups. And so helping to contextualize that message is, I think, where it will resonate with those groups.

Sangita Chawla: And one of the things I think we sort of talk about a lot within our company and touched upon it earlier, is sort of whose job is it actually to help people with financial wellbeing?

We're sitting here as a provider. We believe we need to be doing more. And you know, we talked earlier, is it the employer? Is it providers? Is it communities? Do you have any thoughts on that? Like on whose responsibility this is?

Blake Allison: There is no question that the employer is a great touchpoint for the consumer, related to a lot of big financial decisions, benefits, retirement, healthcare. But the question is, how far do you want to take this? You know, how far can you take it? And is the investment that you're willing to make going to be commensurate with the outcomes that you expect? And I think part of that is identifying what the outcomes are that you want and what is it going to take to get there.

But also, I think one of the challenges is a lot of times I'd like to say that we're trying to kill the mosquito with a sledgehammer in the sense that the problem of helping engage people and raising awareness and getting them to care about their finances is less complicated than I think the industry makes it. A lot of times I think that if you ask people about themselves and what's going on and you engage them that way, raise the awareness, then they're going to be engaged and inspired. They will then find and use the resources that they need, but they need a starting point. And, so, rather than assuming that we know where someone is starting from, you know, we give them the opportunity to share that with us and then respond. So that might be the distinction.

Neil Hugh: Ultimately it's the end consumer that is responsible. So it’s about empowering them. We have a lot of other interested parties. The employers are interested because a more engaged workforce is going to be more productive. As providers, we stand by the commitments we make people as they become our customers and actually in wider society as well.

So what we've got is consumers that we need to empower, then a lot of other interested parties that can begin to put in front of them the right tools to help.

Sangita Chawla: And not just even from a solution perspective, but even from a guidance and advice perspective, we were hearing recently from our customer service teams a number of questions we get asked about from customers. For the sort of help that's needed, a lot of training is needed. And it's a case of us working out also how far do we go when we hand off to different people, like the Samaritans, as needed and other partners we can work with.

Neil Hugh: Yeah, absolutely. I think sometimes the best thing we can do is just try and get that person to the right place, rather than trying to step in ourselves.

Blake Allison: To me, that's the best model. As a business, there's only so much you can do helping to get people to the point that they can benefit from the services you provide. So if it's not in your wheelhouse, if you can have a partner to hand off to, that's the best approach.

Sangita Chawla: So Neil, you’ve done a lot of work recently on leading the development for us, so what's been your thinking in terms of what sort of media we need to use to help people engage? Is it video, is it print, or events? Is there a sort of a mix that you've got that works?

Neil Hugh: The key thing is just to recognise one size doesn't fit all. We've talked a lot about personalization. So it’s key to really allow people to have different options, to think what is the best media for me? How do we make sure those different options are there, and what are those different impacts to different cohorts of a consumer.

Sangita Chawla: Is that also how you approach this in the US?

Blake Allison: Indeed. I think there are a lot of resources out there. You mentioned, you know, handing someone off to a partner. I mean those partners are going to have resources and tools, articles and videos and, you know, calculators. Hand them off to those people, rather than trying to reinvent the wheel. So I just I think it's absolutely the right approach.

Sangita Chawla: A topic that I don't know the answer on, actually, because we're doing some thinking internally on this, but AI, ChatGPT: are people going to type in, give me a financial wellbeing plan at some point and then ChatGPT comes up with a recommended plan? These are the sorts of things that that could happen in the future, I guess?

Blake Allison: I think with that people have to know the questions to ask. They don’t have the foundation to do that, I think. And then also at this point and for, you know, as far as I know, I still would not trust the advice, the output, because a lot of times you are going to get a lot of bad information and bad statistics. And actually it doesn't even it won't even do calculations, per se.

Neil Hugh: I think that's one of the challenges, because trying to get that proper personalised service, keeping the right side of guidance and advice. The other challenge is how do you get someone to the right result but still remove the friction from the process. So that's why we're looking at a lot of data-led solutions and really thinking about how that can better support that. But, yeah, I agree, ChatGPT moment creating a financial wellbeing plan is probably not on our development roadmap.

Sangita Chawla: It's one to watch right for the future, for all of us. The amount that people rely on Google for information, for medical advice as well as all these things. People are going to different sources, aren't they, for information.

Blake Allison: But to that point, Google has been out for how long? And people have had access to the same information for how long? How has that helped people improve their financial wellbeing? It hasn't, because they don't have a starting point. They don't know what to look for. They don't know what their needs are. And so I think that's where that evaluation of going to a doctor and saying, hey, you need to eat better, you need to exercise, you have a starting point. You can go research better diet, you can go research and exercise routines. But just saying I'm I think I need to exercise. That's like saying I have chest pains. And is that heartburn or heart attack?

Sangita Chawla: So, just wrapping it up then, what advice or key takeaway would you give the UK, Blake, in your experience?

Blake Allison: Maybe in summary, and it came out of another conversation that we had, which is, you can't do everything and just understanding that there's a lot of conversation around the benefits of financial health and wellbeing programmes, but how much is realistic and how much do you need? And I think scaling things back and saying, you know, out of everything that we think it can do and all these connections to all these different areas of wellbeing, what do you want your wellbeing programme to do and what do you want those outcomes to be?

Because you can sit here and brainstorm, and rightfully so, come up with very broad, very big, very seemingly disruptive ideas on how to improve the finance. But it's like boiling the ocean. And I think just having a very clear strategy with very specific outcomes is the best place to start.

Sangita Chawla: And from your point of view, Neal, is what's on the roadmap for you next?

Neil Hugh: Data is important. We're also looking at how do we integrate more. So I guess how do we remove that friction and we make it easier for people to access. But beyond that, we just really want to be led by what we're seeing, so constantly listening to the customers, see what are their biggest priority areas and develop that way.

Sangita Chawla: So in summary, I guess what we're saying is financial wellbeing has got a role to play, but it's not going to solve everything.

Blake Allison: I would agree.

Neil Hugh: That’s fair.

Sangita Chawla: Brilliant, Great. Well, thank you both for joining me today. That brings us to the end of this episode. And I'd like to say a special thank you to Blake Allison for joining us in this fascinating discussion on what the UK can learn from the US. And also a big thanks to Neil who for his perspectives on what's happening in the UK. Thanks very much.

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