Workplace Wealth And Wellness: Advisors’ Next Revenue Stream

Financial Wellness Creates Better Workplace Outcomes For Employers And New, Long-Term Clients For Advisors

Americans face a pressing issue as they grapple with the challenge of saving adequately for their retirement years. Research by Fidelity Investments indicates that a 40-something individual with a $60,000 yearly income should ideally have a substantial savings cushion of at least $180,000 – three times their annual income.

However, the average 40-year-old in the U.S. has just $105,500 tucked away in their 401(k) accounts. These statistics underscore a growing concern about individuals’ financial preparedness as they approach retirement.

Further compounding this issue is the alarming financial literacy gap that exists nationwide. FINRA data reveals that only 34% of Americans are capable of correctly answering at least four out of five fundamental financial literacy questions. These queries cover vital topics for financial wellness including mortgages, interest rates, inflation and risk assessment.

The repercussions of this illiteracy stretch beyond economic implications, seeping into the realm of physical and mental well-being. The link between poor financial wellness and adverse health outcomes encompasses everything from heightened stress levels and depression to unhealthy dietary habits and an array of physical ailments.

However, a glimmer of hope emerges through the proactive approach of forward-thinking employers. Recognizing the far-reaching impact of financial wellness on their workforce, these employers are implementing comprehensive financial wellness programs. These initiatives go beyond traditional 401(k) plans, offering employees a holistic and transparent view of their financial landscape, including debt management assistance among other benefits. The programs empower employees to navigate their financial journey with more confidence.

An Opportunity For Advisors To Bolster Their Book

The wealth management industry is evolving, and clients are demanding more personalized, holistic planning. The importance of this transition cannot be understated, especially as employers increasingly acknowledge the intricate connection between financial wellness and workplace productivity. This recognition opens doors for advisors to bridge the gap between traditional wealth management and the broader spectrum of financial well-being.

Financial advisors have a unique opportunity to diversify and expand their practice by catering to these employees. Savvy advisors are incorporating other planning services into their practices while managing clients’ held-away assets, such as 401(k)s and 403(b)s, tapping into a new revenue stream while potentially steering their clients toward more favorable financial outcomes.

A compelling example is Empower’s acquisition of Personal Capital during the pandemic. This strategic move reflects a broader industry trend – the pursuit of a comprehensive, 360-degree financial perspective for retirement plan participants and individual investors.

The integration of personal assets and liabilities, combined with the ability to track progress toward tailored financial goals, promotes a well-rounded approach to planning. This shift from narrow investment-centric management to a more holistic financial wellness outlook offers mutual benefits for companies, their employees and advisors.

Emphasizing workplace financial wellness creates a symbiotic relationship between advisors and their clients. Investors are empowered to enhance their financial well-being through the application of digital tools and a transparent overview of their assets while financial professionals can gradually transition investors toward an advisory service, paving the way for potential future services, such as estate planning or inheritance management.

By supplementing conventional retirement programs with advanced digital tools and comprehensive financial plans, employers equip their workforce to make more informed decisions about their complete financial world, allowing employees to better navigate life’s pivotal events. It also offers advisors access to a new pool of investors – working professionals.

Financial Wellness Benefits All

The increasing synergy between workplace wealth and wellness is poised to redefine the financial advisory landscape. Employers’ efforts to integrate financial wellness tools into their benefits packages is yielding tangible outcomes including higher employee satisfaction, augmented productivity and increased employee retention rates.

Advisors who take advantage of this revenue stream can build lasting relationships with investors that extend beyond retirement planning. Ultimately, the convergence of financial wellness and advisory services creates a win-win scenario, with a chance to revolutionize both the workplace and the advice industry.

Doug Fritz is Co-Founder and CEO of wealthtech strategy consultancy F2 Strategy.

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