Are we asking too much of our financial wellbeing solutions? Can a single solution solve all the various problems of the diverse range of personalities that make up every workforce in the land? For Blake Allison, CEO and founder of US-based wellness platform LifeCents, it’s time for a reality check.
“People aren’t going to sit down and think, today I’m not going to watch the next Mission Impossible movie. I’m going to sit down and study my personal finances,” he says. “People are diverse with unique personalities, with unique motivations, unique desires, unique goals. So we want people to establish good habits and demonstrate good behaviours around finances. But when we look at human nature, 90 per cent of all New Year’s resolutions are broken within the first six weeks. So why do we think that we are going to swoop in and really solve the problem through financial wellness?”
And , asks Allison, are we also asking too much of employers in expecting them to sort out deeply ingrained problems experienced by their employees?
“Thinking about companies investing in financial wellbeing, how much do they want to take on? What is the role of the employer to invest in this? I’m not saying that they shouldn’t. But is it realistic to expect that they’re going to help people become financially healthy, especially when the tenure of most employees is very short now?” says Allison. “My company and I take a different perspective because we want to manage expectations.”
Talking to Allison, who has been in the UK recently talking to life insurers about embedding his service within their proposition, the overall impression is of someone looking to present a realistic picture of what financial wellbeing support services can and can’t do for workers. It’s a perspective that involves taking a critical look at large swathes of the financial wellness sector
“There are studies that suggest that if you invest in a financial wellness programme, you’re going to get a three to one return on investment because of increased productivity alone. But the number of companies that have the capability to evaluate productivity and control for a variable like a wellness programme is very small globally,” he says.
“Even though my business is financial wellness, I take a contrarian approach in the sense that I think a lot of times businesses and companies are trying to solve the wrong problems. They’re putting a lot of effort into developing solutions without actually understanding what the needs of the individuals are, which leads to over-engineering of products and solutions, which leads to very complex, analytical, AI driven solutions that will help people make the best decisions. But if you can’t rub two pennies together, that doesn’t apply. A lot of solutions are geared to people that have money. What about the 90 per cent of the people that don’t?”
With so much complexity, how then should wellbeing solutions start to support employees? For Allison, it is about filtering employees towards the right support for them in an effective and data-driven way. “You might have the Salary Finance solution, the Moneyhub solution, a debt management solution, a budgeting solution. So as the user now I have to start navigating my dashboard, which is a problem. There was a big push 20 years ago to build these marketplaces of all these voluntary benefits, because we think we can solve all the needs of all of our employees. But they don’t know where to start and they don’t know where things are. You have to be pretty committed as a consumer to connect your accounts three times to three different systems and learn how all these things work,” he says.
So what is Allison’s solution to all this complexity?
“What we do is we take profiles of people and understand what’s really going on in their lives. And then based on very specific needs, we might introduce a Moneyhub to this percentage or a Salary Finance to that.
“We are effectively the filter for the marketplace. And it is predicated on developing profiles. What we do is not a 10 question financial health assessment. To solve your problem we have to get
you to come back to answer 50 questions. We do it at a very high success rate. The last client we launched with was an employer with about 300 employees and within 48 hours we had 50 per cent of the employees registered and 98 per cent of those individuals went through and completed the entire financial health assessment,” says Allison.
“There’s a perception amongst employees that if a service feels like Big Brother is getting insights into their personal financial life they’re not going to touch it. So we make it clear we’re a third party.”
Once the assessment is completed, employees get their own financial health playbook. “This is a report that says here’s your level of stress and here’s where you’re doing well and not well in these areas. Here are things you can do and here’s what you can connect with.
“So you said you’re not saving enough for retirement or you’re not maxing out your contribution to your 401k because you thought you already were. Or it might be you just had four children and you
have got £500,000 life cover but you
might need £1m, so we say here’s a fintech solution that can help you determine
how much life insurance you need. Or it could be here’s a service called Moneyhub that can really help you get on top of
your finances, or if you live paycheck to paycheck and spend more than you earn, here’s a partner coaching organisation. It’s all about the relevance.”
The other side of the data coin is the ability to hand the employee, as prospective customer or client, to the counsellor, coach, adviser, provider or other organisation.
“When we do the hand-off, that counsellor, that coach or that adviser actually now has your profile so they don’t have to go through that process of finding out what’s going on with you because that is not the best use of their time,” says Allison.
“This extremely robust data can also help a provider’s customers or even prospective customers drive very targeted communications and dare I say marketing, because with marketing, there tends to be a sell, but that’s what some of these businesses want.”
So if LifeCents isn’t aiming to take individuals all the way through the financial life improvement journey, how does it demonstrate its value?
“What we’re trying to solve for is engaging people to demonstrate that they are taking steps to improve their financial health. They’re demonstrating that they’ve learned something. They’re demonstrating that they are less stressed, they’re more optimistic, they’re committed to doing something. It’s like athletes – you can have the best athlete in the world, but if their head’s not in the game, it doesn’t matter.
“For ROI, for benefit providers or retirement plan providers, wealth managers, it is a question of how many relationships we create,” says Blake.
Readiness to reality
And what about the value given to the employees? “Are we going to claim we are getting people to save sufficiently for a secure retirement? No. We help prepare people to be ready to operate in reality. ‘Readiness to reality’ is a mantra that has gained a lot of traction, which is saying that we have helped people start the process of knowing where they are, is it good or is it bad, what they need to think about and what they need to do. Getting them to start doing those things and be engaged enough that they will connect to someone who can help them, that’s what we sell.
“This readiness to reality is something people really appreciate because, at least in the US, there is a greater appreciation of the need to be realistic about what we can do.”