Maximize Employee Financial Wellness, Tailoring it Individually

– First Published on Nasdaq –

How many of your employees are on sick leave as a result of financial stress? Is there a responsibility for employers to know this? And if they had this insight, what could and should they do about it?

You see, there is growing research to support this trend: Bank of America’s 2020 Workplace Benefits Report notes that 62 percent of employers feel “extremely” responsible for their employees’ financial wellness.

We all know that absenteeism – whatever the cause – has a significant impact on business. Many consultants, HR pros, and other executives can quote various absenteeism stats, but how many of us can quote the stats for absenteeism due to financial stress?

Add to this: We know the unprecedented pandemic and its ongoing consequences have added to money stress for many.

Manifestations of money stress

The effects of employee financial stress may include everything from arguing, trouble sleeping, feeling angry or fearful, mood swings, tiredness, loss of appetite, and withdrawal from others. Of more concern for organizations, without intervention, financial stress can lead to unproductive and potential rogue behavior. From unintentional misuse of company resources to outright misappropriation.

Financially sound at work

And it’s not just limited to absenteeism. Money-related stress can also lead to employees coming to work despite being physically or mentally unwell. They may be distracted, unfocused, and where machinery or other physical aspects are involved, a danger to themselves and others.

Therefore, the need for financial wellness is clear, but what role should an employer have in this? Financial stress rose for many people during the pandemic, and it’s not unusual to hear of employers feeling responsible for their employees’ financial wellness.

A cynic might think employers need to ensure a full quota of staff available for productivity. Still, from the identity conversations – assessing core strengths as they align with your identity, gifts, and brand – we’ve been having over the past several months, altruism is emerging as the employer winner. (In their simplest form, think of DNA Behavior’s identity conversations as helping individuals identify and leverage their superpower.)

Leaders are investing in financial wellness programs. They are responsible for asking the tough questions and looking to the financial services industry to deliver effective employee wellness programs they as leaders can implement.

Organizations want their employees to be financially sound and free from financial worries. And yes, it will:

  • Strengthen productivity, as financial worries don’t sidetrack employees.
  • Reduce expensive employee attrition.
  • Give rise to improved physical and mental health.
  • Increase employee engagement and retention, as you are known as being a caring company.

As more industry leaders seek employee financial wellness solutions, financial institutions can support them and their people by delivering focused quality education programs that address every level of financial challenge an employee might be facing.

Drilling down

But there is an essential first step: to uncover how individuals make financial decisions at a deeper level. Unknowingly, even. How are they hard-wired, for better and for worse, to deal with money and money decisions? Given that a financial wellness program must focus on the employee, it should clearly understand behavior and money insights, as well as the individuality of every employee.

Human behavior awareness drives financial wellness, by enabling employers to understand employees’ unique needs. (Also enabling employees to better understand their own innate money behaviors.) Simply integrating a financial behavior data-gathering questionnaire into existing technology tools begins to build in and leverage employee spending habits, cognitive-behavioral biases, financial decision making, goal motivations, and, importantly, their financial emotional intelligence.

A resource that can provide an organization with the behavioral component of its financial wellness program also is likely to be able to partner to educate your workforce through workshops, e-learning, and other options that improve their financial education.

Bottomline benefits

The bottom line will improve for organizations building ongoing financial wellness education programs. It decreases personal financial stress and improves employee wellbeing, health, and productivity. Likewise, the financial aspects of an employee’s job also will be smoother and less at risk due to the former money-stress connection.

Without a doubt, this is an employee program that is a win-win, as both organizations and their team members benefit, on and off the job. Especially so if it is a robust program with behavioral inputs that, again, are a win-win.

I am always interested in creative ways organizations – especially financial ones – are incorporating financial wellness programs into their culture and systems. Please reach out if you have, know of or want to chat about such programs.

See Leon’s other writings for Nasdaq here.

Identity Conversation Takeaway: Adaptability Comes with Knowing Your Identity

Over the past few months, Hugh Massie sat down with some of the most influential consultants and entrepreneurs. Through their identity conversations, they all shared the impact DNA Behavior and knowing their identity has had on their work. We also asked Hugh some of our own questions on identity, here are our takeaways.

Adaptable, Nimble, Responsive Comes from Knowing Identity

One of the most important notions Hugh discusses with Nikki Evans during this interview is the notion of adaptability.

We are in a world today that is extremely dynamic. The foundations of the world are extremely different. The effect that technology has on our everyday life is tremendous. Our ability to connect much easier has changes the way we communicate and work together.

We are also in a world that is financially complex and extremely interconnected. Because of the constant change in our environment, the notion of adaptability is a must. We’ve seen it happened numerous times over the past years. Businesses used to last for centuries, today, they don’t even make it past a generation. Whereas many factors can contribute to it, a company that doesn’t embrace adaptability will always struggle to sustain itself.

When we speak of environmental changes, we don’t only refer to changes inside of a business, but also inside of people’s lives. And therefore the ability to flex is extremely important. Change can also be perceived as a chance to seize opportunities. As part of knowing yourself and your identity, you’d be able to take an opportunity when you see it.

In this day and age, you have to be able to make timely impactful decisions, all while knowing for sure that it is the right decision. We all have to be clear about our identity, our purpose, the impactful decisions we make in life, and how we execute them.

If we look at this on a bigger scale and from a business’s perspective, you will see that once individuals are aware of their identity and behavioral style, and able to seize the opportunities they are presented, their performance would have a tremendous impact on the business.

There’s Power in Individual and Group Identity

We’ve covered the topic of individual identity and how important to familiarise ourselves with our behavioral style. In addition to that, there is a concept of group identity and group purpose that is worth looking into.

You see, not only do individuals have an identity, groups and businesses have an identity as well. The team identity might revolve around the leader and who’s been brought up to the team, but it also can revolve around the product or service the business offers.

Although the world is moving towards a direction where it is less product-driven and more human-centered. So the business’s identity is drawn from its people.

It’s even reflected in today’s marketing efforts. The Marketing campaigns that get the most traction are the ones that address the human factor of the business and discuss founders and team members as opposed to just product and value delivered.

Final Thoughts

We’ve said it before and we will say it again. It is all about human behavior and identity. Your team, no matter the type of business that you run, has got to embrace its identity and be clear on its purpose. It is less about the bottom line and the results and more about clarity of purpose.

You see when you’re truly living your identity and your purpose the money will follow. The pursuit of money by itself may not be as fulfilling as you may think. It actually tends to be the one approach that destroys wealth instead of preserving it.

Financial Behavioral Wellness Catalyst

In this identity conversation, Hugh Massie sits down withTed McLyman. Founder and CEO of MyApexx Behavioral Solutions Group, Ted is an author, entrepreneur ironman triathlete, and passionate about human behavior.

Ted believes that the traditional rational approach to financial literacy and financial planning is wrong. The rational spender concept is a myth, and humans are not hardwired to work well with money. He developed the  Money Behavior System™ to help educate consumers on adopting better financial practices.

Click below to watch the full interview.

Identity Conversation with Hugh – Behavioral Design Influencer

Whenever I think of a behavioral design influencer, my dear friend Deborah De Jong always comes to mind. With a passion for interior design, she took interest in human behavior early on in her career.

Deborah is a renowned interior designer, TV personality, business consultant, and the Founder and CEO of Emmanuel One Pty Ltd. We’ve known each other for 19 years, nearly since the start of my journey in human behavior.

Joining me from Sydney, Australia, in this Identity Conversation, we discuss the way she utilizes behavioral science to create a design plan that matches her clients’ personalities.

Advisor-Client Chemistry

Do you have the right clients? This is a very topical issue for many financial planners, particularly those who have already built a business to a reasonable level. Actually, it is as important as the client selecting the right advisor.

In the end there must be a mutual relationship with the parties comfortable with each other. The relationship cannot start out (but it often does) with the client simply having dollars in the bank account and some financial planning needs, and on the other side the client believing the advisor has the skills and the necessary integrity. In fact, these are all assumed to get to the point of the first meeting.

Our business is all about looking at the behavioral style of the clients and also the advisors. So, not unexpectedly, the approach we take is to match clients and advisors based on their behavioral style. This is very much an inside-out approach, however all great relationships start below the surface. Human behavior is at the core. The great thing is that the Financial DNA system measures natural behavior which means we can reliably predict the behavioral style of the advisor and client in terms of how that person will always be, particularly under pressure. I would say that our approach must still be blended with a number of other more traditional selection factors such as client size, service style, values, expertise, etc. that are mentioned in Bob’s article.

To help the advisor we have developed an Advisor/Client Compatibility Matrix. The matrix is a one page grid which matches profile styles based on the level of modification that will be required between advisor and client. To be clear, it does not say you cannot work with someone, but it does say who will be easier (green box on the matrix) based on less behavioral modification – this is where communication, chemistry, etc. is likely to be higher. Hence, this is where the relationship will be naturally more sustainable over a longer period with less stress. So if you are an advisor wanting to segment your client base a reliable starting point is now provided.

I do not necessarily advocate that you fire those clients who will require more behavioral modification (red box on the matrix). This will be a warning sign that you have to put more work into adapting to maintain the relationship. Although what you may wish to do is allocate these clients to a partner who is different to you or hire someone who is different to you to provide a complementary style. Many advisors have found this approach to be foundational for selecting their next hire. Or in how they deliver client service with a team-based approach. Hence, the planner may get the relationship started and then another person on the team steps in.

Are you interested in the value of your practice? Importantly for advisors, this approach also helps you to identify to whom you sell your business. The sustainability of the relationships and hence the revenue is critical to business value.

Taking the Mystery Out of Investor Behavior

As we all know wealth mentoring entails helping your clients achieve greater financial goals. You provide them with guidance and assistance that unlocks their full potential, manages their emotions, and allows them to live with meaning. Which raises 2 questions: what is your role in advising clients? Is it to help them manage their behavior or to get the highest maximum performance?

I have always said that financial planning risks are the sum of human behavioral risks (client and advisor) and market risks. Our whole Financial DNA program for investors and advisors has been predicated on this. Whilst the market itself cannot be managed by a client their reaction to it can be which comes back to human behavior management. There is university research which shows that 5% of a person’s wealth comes from their investments and 95% from their behavior.

I do believe 75% or more of our role is to save clients from themselves by helping manage their behavior. This involves educating, guiding, coaching and empowering them. What we call “Wealth Mentoring”. By adopting this approach you will be helping your clients obtain superior returns which far out weigh any level of fees that you can charge. The reality is that the key to successful investment is managing behavior.

Wealth Mentoring Transforms the Client Experience and Enhances Value

For the Wealth Mentoring approach to be successful the advisor must transform the client experience they provide. The client needs to experience the feeling that their life is more than money, their money has been humanized, a sense of improved relationships, discovery of life purpose and meaning, and finally a tailored portfolio built from the inside out. Then there must be an ongoing development experience involving wise counsel with the client knowing they have an improved quality life. Understanding their behavioral style and preferences is fundamental to all of this. Behavior shapes life decisions which in turn influence financial decisions. The linkage is very close.

Importantly, the value proposition to the client needs to be communicated. There are many tangible and intangible benefits of this approach. Research shows average mutual fund investors will over a 20 year period do themselves out of nearly 60% of the return produced by the average equity mutual fund. This means the average investor will significantly underperform the market and his own investments. So, if the average mutual fund return over the last 20 years is 10.81% and the average equity fund investor has averaged 4.48% then there is a 6.33% difference which represents the cost of not having a good planner. Hence a financial planner charging fees of 1% per annum and/or a retainer is very good value.

What is great is that now we have turbulent times lots of other leading commentators are coming out of the woodwork and giving this message loud and clear. We are at the start of a cultural revolution in the role of advisors in financial planning and the investors attitude to it. A revolution that is client centered and one from which everyone who plays the right game of managing behavior will be big winners. The philosophy of Understanding People before Numbers is here to stay.

The Advisors Value Proposition of a Wealth Mentoring Approach

We have recently performed a research of 100 advisors with AUM over $50m. The conclusion is that far more client discovery could be performed and there is plenty of scope to introduce more fee based services which address the life of the client.

In my view what is ever good for the client will generally be good for the advisor in the long run. Lets look at why a behavioral “wealth mentoring” approach is good for the advisor’s bottom line let alone the credibility of their financial planning process and business.

The ROI for an advisor of adopting a systemized behavioral approach is driven by the ability to aid advisors in:

1. increasing client acquisition rates
2. increasing wallet-share among existing clients
3. providing the justification for higher advice fees
4. increasing client retention rates
5. improving advisor productivity
6. increasing the business value.

Advisors who integrate a behavioral system into their practices find that they achieve these ROI goals by:

1. Establishing trust more rapidly with prospective clients through anticipating their communication, investment, and lifestyle needs

2. Gathering more assets from existing clients by positioning themselves as the client’s trusted advisor. Wealth mentoring facilitates client interactions that go well beyond investments and provides the basis for a deeper relationship with each client.

3. Supporting higher planning and advice fees through the offer of a powerful discovery process. Financial advisors may also use client centered systems to add new revenue generating services such as couple or family facilitation, executive life balance programs etc.

4. Improving relationships with problem clients. Advisors often struggle with a segment of their clients because their natural behaviors differ greatly with those of the advisor. While advisors may keep these relationships in good times, rocky markets require more careful facilitation to help clients feel understood.

5. Advisor productivity increases because once you know the behavior of the client it is easier and quicker to identify their needs, manage them and keep them committed to a plan. Alot of time can get burned for an advisor dealing with client changes and problems after year 1 which could have been addressed up-front.

6. Greater documentation of who the client is enables relationships to be transferred to other people within the practice and also when it is sold. This has a very positive impact on business value.

In terms of metrics, here is what we base the wealth mentoring value proposition on:

1. We have seen trends that advisors who adopt a client centred methodology are increasing their gross asset under management revenues by 25% or more per annum from new clients. Further, we are seeing them increase their fee for service revenues by 15% or more per annum. Also, there is enhanced client retention. Of course success from using any system is also up to the effort of the advisor.

We believe it is possible in respect of an average practice to help the principal advisor double their net take home profit over a 4 year period. This is achieved from segmenting the client base so it is fundamentally more productive and building the AUM and fee for service revenues from the top 100 or so clients. This is a substantial return on investment from our costs and the coaching cost.

2. From point 1, there is the ongoing business benefit that the increased revenues and profits translate to increased business value on sale. What we have also seen is that the behavioral data enables greater transferability of clients which is fundamental to the business value as revenue and profit sustainability post the sale are fundamental to the value.