Tag Archives: financial wellness

The Opportunity for Employee Well-Being

Companies that want a fulfilled, resilient workforce are making well-being a comprehensive part of their culture. The line between professional and personal lives continues to blur, and companies can use this as an opportunity to differentiate by moving beyond the traditional benefits package.

Well-Being Trends

According to a recent study conducted by the National Business Group on Health, midsize and large employers are expected to spend an average of $3.6 million on well-being programs in 2019. Well-being is expanding and evolving, driven by trends that include:

  • A focus on financial wellness and the adverse impact that debt, low savings and a lack of planning can have on productivity, engagement and health
  • A realization that mental health requires increased attention after the prolonged silence, and in some cases stigmatization, that have made it difficult to connect needs with treatment

Financial Wellness

Financial wellness is one of the most popular well-being initiatives. According to Wellable’s 2019 Employee Wellness Trends Report, more than 68% of employers say they will be investing more into financial wellness. Employees are looking to employers to provide financial wellness tools that will increase their overall well-being.

The Wellable report also finds that over 70% of millennials say they’ve delayed major life decisions due to their student loan debt, indicating the value of student loan assistance programs. Globally, over the past two years, 27% of workers report suffering from stress, anxiety or depression due to their finances, which diminishes employee productivity, engagement and health. With education costs skyrocketing, this issue isn’t going away. Expect participation in financial wellness programs – that address debt management, budgeting and financial planning – to grow considerably in years to come.

See also: Why Financial Wellness Is Elusive    

Mental Well-Being and Mental Health

In recent years, the spotlight on mental health and mental well-being has intensified. According to a 2017 national survey by the APA, the workplace was the third-leading cause of stress (61%), after money (62%) and the future of the nation (63%). Supporting mental resilience by reducing stress needs to be a key focus for well-being in the workplace.

Mental well-being is all about prevention and skill-building. Most of us never learned how the brain works or about the importance of training our brain for ultimate vitality. Instead, we are conditioning our brains to be distracted and overstimulated. The good news is that the latest neuroscience research proves that we can train our brain to perform more optimally. While adoption within the employer population remains slow, brain training apps are increasingly commonplace.

Solutions like Total Brain apply the latest brain optimization research to help employees learn skills, but the responsibility rests on employers to offer these types of solutions for mental fitness and mental optimization training to help employees improve brain health. There are also hundreds of apps, websites and online courses designed to enhance mental well-being.

In addition to providing mental well-being training to your employees, it is critical to focus on mental health benefits and interventions. Millions of Americans need additional support and resources for the mental health disorders that continue to plague our society.

The good news is that, like other chronic diseases, mental health disorders are treatable, and employers have a unique opportunity to improve the mental health of the 157 million U.S. adults who spend more time working than doing any other activity apart from sleeping. The key is that employers must take a comprehensive approach, including:

  • Access to care: No matter how much we do to create a culture of mental well-being, employees have to be able to access and afford treatment. To prevent higher co-pays and out-of-pocket costs, employers need to ensure that employees aren’t forced to access out-of-network providers for mental health care.
  • Comprehensive coverage: Employers must view a high frequency of claims in behavioral health as favorable instead of trying to mitigate these visits like with ER or specialist visits. Weekly therapy can be a very effective treatment for many, and employers should not be concerned about the number of visits an employee has if the employee is seeing qualified specialists.

The Way Forward

If organizations want to thrive in the next decade, they need to invest in the well-being of their employees. There is an opportunity to innovate, set yourself apart with a commitment to the health of employees and create a culture that talented individuals want to be part of for many years to come.

See also: Employee Wellness Plans’ Code of Conduct  

Take time to evaluate your ecosystem – culture, leadership, management, benefits, employee resources, third-party solutions, workplace environment and communications – then devise a plan, execute and make refinements when data exposes gaps. The result will be a safer, higher-performing workplace driven by empowered individuals who are committed to the well-being of the company that employs them.

Why Financial Wellness Is Elusive

In recent years, insurers have understood that many Americans face real financial challenges – whether saving for retirement or making ends meet on a monthly basis. Yet, no single company has differentiated itself in serving customer needs. Many companies that have a stated goal of improving financial wellness have focused instead on improving financial literacy.

As a result, they haven’t seen as many improved outcomes as they’d hoped. Others, who have tried to remove customer barriers to action, have found that their efforts sometimes lead to unintended consequences (e.g., auto enroll and auto increase leading to increased hardship loans because of inattention to underlying cash management issues). In addition, those competing for share of wallet in the financial wellness space have traditionally taken an “inside-out” view, highlighting their own product features but leaving customers to sort out which types of products they can piece together to meet their varied needs.

Moreover, many traditional financial wealth advisers have focused on the narrow, super-affluent customer segment, whereas a broad swath of customers who desire advice and guidance remain effectively un(der) served. According to a 2017 PwC Financial Wellness survey, 53% of respondents who are currently employed felt stress dealing with their personal financial situation, and 46% of respondents indicated that financial stress was their primary stressor.

As of now, recent advances in technology and analytics, including in robo-assisted advice (made possible by artificial intelligence and advanced analytics), are dramatically reducing the cost of providing financial advisory services, creating a sizable market opportunity as competitors can develop sustainable business models to target a much wider range of customers. At the same time, advances in digital experiences available to consumers have started to heighten customer expectations about the transparency, accessibility and personalization of financial advisory solutions for anyone serving this space, including insurers. Finally, technology advances and transformative portal and services architectures are paving the way for platform economies that allow connectivity across multiple providers.

Delivering integrated financial wellness solutions

To win customers, insurers must understand what customers want, rather than focus simply on what their own products can do. In the short term, this means addressing the need most customers have to maximize their monthly budgets. In the longer term, customers want to prepare for retirement, potential emergencies, healthcare needs, college expenses and transferring wealth to younger generations.

While customer needs may seem simple and straightforward, providing advice about them is anything but, given the complex and changing economic and financial conditions facing younger workers in particular. On average, millennials are saddled with almost 300% more student debt than their parents and are earning 2.9% in average annual returns on 401(k) plans, compared with 6.3% returns for Baby Boomers. Many younger workers will need to work longer; in fact, federal data suggests that the average millennial will need to work until age 75.

See also: Ethics of Workplace Wellness Industry

Helping customers understand and manage their financial wellness suggests a need for a broad solution centered on them (not a basket of off-the-shelf products). This solution includes:

  • Personalized financial information accessible via a digital platform that takes into account personal circumstances and changing lifetime needs,
  • Access to an adviser/coach/counselor who offers tailored guidance, actionable solutions and answers to specific questions on a range of topics (e.g., health, wellness, finances, insurance benefits, legal services), as well as
  • Access to a wide range of customizable financial products and solutions (e.g., 401K/403B accounts, life insurance, auto/home insurance and college saving plans).

Competing with others for integrated financial wellness

While retail banks, wealth managers and financial planners are typically viewed as being the best-equipped to help individuals achieve their financial goals, many of them have focused primarily on helping wealthy customers accelerate their wealth accumulation and secure access to credit, rather than the protection aspects of wellness. More recently, they have started to consider the implications of a broader definition of financial wellness; in contrast, employers have been concerned about their employees’ holistic financial wellness and how it affects their productivity for years.

Millennials are expected to make up 50% of the workforce by 2020 and 75% by 2025, and the extent of their financial stress is particularly concerning for employers. An alarming 47% of those who feel financial stress say that they’re either missing work occasionally or their productivity at work has been affected by financial worries, and even more of them – 50% – said that they’re spending three or more hours each week at work dealing with personal financial issues.

Employers will continue to be a critical touchpoint for insurers because they serve as an effective point of access to deliver financial wellness programs to employees, and have access to a significant amount of employees’ personal financial information. Employees tend to view employers as an objective party that seeks to protect their financial well-being rather than profit from them, and employer effectiveness in delivering financial wellness solutions can improve employees’ perception of and satisfaction with their compensation (which in turn has a real impact on a company’s performance).

The competitive landscape

Considering customers’ holistic needs, the size of the financial wellness market and employer motivation to provide employees financial wellness programs, the fundamental question is how insurers can capture the market before competitors do.

It won’t be easy. The financial wellness marketplace is crowded. It ranges from traditional, established players like financial advisers at financial institutions, retirement providers, individual and group insurers all the way to consulting firms, health insurers and emerging insurtech companies. This competitive landscape is especially complex because these institutions’ capabilities
are fluid, not static; many of them form partnerships and make acquisitions to obtain leading-edge capabilities and frequently revise their business models to incorporate emerging forms of innovation.

As in the market as a whole, seamless and personalized digital delivery remains vital to provide customers a worthwhile, user-friendly experience, as well as generate actionable insights insurers can use to tailor and enhance their financial wellness offerings.

See also: A Wellness Program Everyone Can Love  

We believe that whoever gains a meaningful share of the financial wellness market will:

  • Focus on understanding and addressing customers’ holistic financial protection needs, rather than use the traditional “inside-out” orientation just to sell products and services.
  • Offer personalized, actionable and digitally enabled financial wellness solutions that include financial products, advisory services and educational resources that continually promote improved outcomes.
  • Effectively target specific customer segments.
  • Develop ways to drive engagement with consumers through an advanced digital platform with real “human” support at moments of truth.
  • Demonstrate positive ROI to employers.
  • Derive the rich, data-driven insights into customers that enable continued improvement of financial wellness offerings.

Implications

To compete effectively, insurers will need to determine a distinct basis for differentiation and focus investment in those capabilities that are key to strengthening their way to play in the market.

Potential ways to play include:

  • Analytical segment specialist – Defined by the use of data-driven insights to better understand customers and provide tailored solutions to effectively meet their employees’ needs.
  • Consumer experience expert – Defined by the provision of seamless end-to-end customer experiences, primarily through digital or mobile channels, to deepen relationships with both the employer and employee.
  • One-stop-shop provider – Defined by providing employers and employees the ability to access and purchase all desired products or solutions in a single place using an ecosystem approach.

Real opportunity exists for insurers in the financial wellness space as the market’s current business model strains under changing socioeconomic conditions and a challenging investment environment. While the financial wellness niche was siloed in the past, forward-looking insurers must strengthen their market strategy, offerings and capabilities to gain market share in this highly crowded, competitive and converging marketplace.

This report was written by Jamie Yoder, Juneen Belknap, Kent Allison and Caitlin Marcoux.

Employee Benefits: Themes for 2018

Here are the themes I am seeing most often in health and welfare benefits:

ThemeFinancial Wellness – Americans are struggling to get ahead, and the middle class is declining. Successful retirement and wealth planning for many people is a simple act of good accounting decisions multiplied over many years. Instant gratification has eroded good decision-making, and large majorities of people have no savings or retirement funds. Smart employers are taking steps to help their people make good decisions and become better stewards. This encapsulates retirement strategy, education, student loan assistance, emergency loan assistance and the like.

Sub-Theme: Student Loan Repayments – Extremely hot benefit right now; it’s one of the most requested benefits by new employees.

Theme: Dependent Care – People are living longer, and in sub-optimal health. Huge portions of the workforce are now having to spend large quantities of time managing the health and care of their dependents and loved ones. Smart employers are looking for ways to relieve this burden and improve the productivity of the workforce.

See also: Dissecting Landmark Decision on Wellness  

Theme: Hospital Department Quality vs. Physician Quality – More and more data is becoming available regarding hospital and doctor quality scores. How do we think about it? How is it used? Which firms are stepping forward to help people access quality? If I contract directly with a hospital, am I hurting patient access to the highest-quality providers who aren’t with that hospital? These questions are important and could be addressed with the right sessions.

Theme: Member Steering and Plan Strategy – The best plans are seeking new and improved strategies to steer members. As more cost and quality data becomes available, proper healthcare procurement begins to depend on the firm’s ability to steer members. A few firms are leading the way to get exceptional procurement and steerage, and most employers could learn much from them to save millions and get control of (arguably) the hardest budget item in the firm.

Theme: The Care-Knowledge Gap – There is a devastating time period between when a therapy is discovered and when the therapy is available in most major hospitals. This gap has grown to 17 years; thus, the healthcare of 2035 is available today if you can find it. Smart employers and activist entities are working hard to reduce this wait time to save lives and accelerate the improvement of American healthcare.

Theme: Augmented Primary Care – Primary care has had a rough decade. At worst, it has been vanishing, and, at best, it has been acquired and used as a referral source for hospital systems. Smart employers realize that, for them to get control of their spending, they need to partner with primary care doctors whose interests are aligned with the employer and the member. This interest is to keep members healthy by consuming the minimum effective quantity of healthcare services, from professionals operating at the top of their respective licenses, in settings offering the best value. Direct primary care represents the best approach to achieve this objective, and building appropriate technology into these settings can significantly reduce the dependence on the greater hospital system.

See also: Wellness Works? Prove It–and Win $$$  

Themes Losing Steam: These topics appear (to me) to be losing their luster very quickly:

  1. Wellness
  2. Medical tourism
  3. Price transparency
  4. Disease management
  5. Private exchanges
  6. PBMs and non-specialty Rx

How AI Affects Financial Services

Artificial intelligence is using structured and unstructured data in financial services to improve the customer experience and engagement, to detect outliers and anomalies, to increase revenues, reduce costs, find predictability in patterns and increase forecasts’ reliability…but it is not so in any other industry? We all know this story, right? So what is really peculiar about AI in financial services?

First of all, FS is an industry full of data. You might expect this data to be concentrated in big financial institutions’ hands, but most is actually public, and, thanks to the new EU payment directive (PSD2), larger datasets are available to smaller players, as well. AI can then be easily developed and applied because the barriers to entry are lower with respect to other sectors.

Second, many of the underlying processes can be relatively easier to be automatized, while many others can be improved by either brute force computation or speed. And historically FS is one of the sectors that needed this type of innovation the most, is incredibly competitive and is always looking for some new source of ROI. Bottom line: The marginal impact of AI is greater than in other sectors.

Third, the transfer of wealth across different generations makes the field really fertile for AI. AI needs (a lot of) innovative data and above all feedback to improve, and millennials are not only happy to use AI but to provide feedback and apparently are even less concerned about privacy and giving away their data.

See also: Strategist’s Guide to Artificial Intelligence

There are also, of course, a series of specific challenges for AI in the financial sector that limit a smooth and rapid implementation: legacy systems that do not talk to each other; data silos; poor data quality control; lack of expertise; lack of management vision; lack of cultural mindset to adopt this technology.  

So what is missing now is only having an overview of the AI fintech landscape. There are also plenty of maps and classification of AI fintech startups out there (probably the best ones are this and this), so I am not introducing anything new here but rather simply giving you my personal framework:

  • Financial Wellness: This category is about making the end-client life better and easier, and it includes personalized financial services; credit scoring; automated financial advisers and planners that assist the users in making financial decisions (robo-adviser, virtual assistants, and chatbots); smart wallets that coach users differently based on their habits and needs. Examples include [robo-advisors and conversational interfaces] KasistoTrimPennyCleoAcornsFingeniusWealthfrontSigFigBettermentLearnVestJemstep; [credit scoring] AireTypeScoreCreditVidyaZestFinanceApplied Data Finance;Wecash;
  • Blockchain: I think that, given the importance of this instrument, it deserves a separate category regardless of the specific application it is being used for (which may be payments, compliance, trading, etc.). Examples include: EuklidPaxosRippleDigital Asset;
  • Financial Security: This can be divided into identification (payment security and physical identification — biometrics and KYC) and detection (looking for fraudulent and abnormal financial behavior — AML and fraud detection). Examples include: EyeVerifyBionymFaceFirstOnfido; and FeedzaiKountAPEX Analytics;
  • Money Transfer: this category includes payments, peer-to-peer lending; and debt collection. Examples include: TrueAccordLendUpKabbage;LendingClub;
  • Capital Markets: This is a big section, and I tend to divide it into five main subsections:

i) Trading (either algotrading or trading/exchange platforms). Examples include: EuclideanQuantesteinRenaissance TechnologiesWalnut Algorithms; EmmaAI; AidyiaBinatixKimerick TechnologiesPit.aiSentient Technologies;TickermachineWalnut AlgorithmClone AlgoAlgorizAlpacaPortfolio123Sigopt;

ii) Do-It-Yourself Funds (either crowdsource funds or home-trading). Examples include: SentifiNumeraiQuantopianQuantiacsQuantConnect;Inovance;

iii) Markets Intelligence (information extraction or insights generation). Examples include: Indico Data SolutionsAcuity TradingLucena ResearchDataminrAlphasenseKensho TechnologiesAylienI Know FirstAlpha ModusArtQuant;

iv) Alternative Data (most of the alternative data applications are in capital markets rather than broader financial sector so it makes sense to put it here). Examples include: Cape AnalyticsMetabiotaEagle Alpha;

v) Risk Management (this section is more a residual subcategory because most of the time startups in this group fall within other groups as well). Examples include: AblemarketsFinancial Network Analysis.

See also: Innovation Maturing Into Major Impacts  

If you want to read the entire article, please check that out on Medium.