Supreme Court Justice Potter Stewart famously remarked about pornography, “I know it when I see it.”
Unfairly perhaps, the phrase “financial wellness”—or just “wellness” to her friends—has similar problems. It often defies description, especially by notoriously analytical financial services people.
Of course it’s a squishy concept, highly subjective to the people (clients) we’d like to be feeling it. “Wellness” sounds catchier than “success,” which is what most people expect when they work with financial services providers. But how do you make an assessment that someone has achieved “wellness” at a single point in time when their conditions are bound to change? They’re likely right now going through a nearly infinite array of life situations and family dynamics.
We would hope that by wellness we generally mean that people feel good in their health, finance, security and ability to transfer wealth. But there’s no easy map to follow to achieve these things. And that makes trouble for advice providers who don’t listen well or can’t be empathetic and purposeful in providing the needed guidance and solutions. “Wellness” doesn’t fit in a product box. And if we can’t define it, do people need to hear it?
Peace Of Mind
Most basically, “wellness” should mean “peace of mind.” That’s how Frank McAleer of Raymond James defines it, and it’s his job to help advisors and clients translate it into a business plan. That means asking them, “What is the list of stuff you most worry about or that could go wrong as you live longer?” “What about family members for whom you could become responsible?”
The lists won’t be the same for a 26-year-old DC plan participant and a 60-year-old pre-retiree, nor will they be for a 75-year-old with dementia. Nor for their family members.
So is this just a slogan in search of a business plan?
If it’s something more, the concerns about it will have to be tied to something tangible. If the clients don’t achieve peace of mind from their retirement plans, benefit offerings or services offered by their financial advice providers, they can be lured away by something or someone who does offer it. Nothing motivates action more than fear—and people are genuinely afraid of financial ruin, specifically that they will run out of money or have to sell their homes and move into assisted living.
Five Ways Advisors Can Create Feelings of Wellness
There are five things that advisors can do to create feelings of wellness, and beyond helping clients, these measures can help the advisors themselves increase net new assets and gain a higher share of their clients’ household wealth.
1. Use Common Sense Language
Even discussions about asset allocation and investment policy can be made simpler for clients, rewritten for their perspective without technical concepts and compliance disclaimers. The language you use is the fastest way to change the perceptions of your firm.
2. Design For Better Outcomes, Not Best Efforts
Most of the retirement plans we put in place for clients rely on a stock market that behaves well. We rely on our knowledge of the capital markets and smooth out distortions and plan for longer time horizons. But after all that’s done, there are still risks of catastrophe, and when it happens, it still comes as a shock to clients. Unhappy news, for instance, awaits those who start to unwind assets or annuitize after a significant market correction.
My late father, who worked for universities his entire career, knew nothing about markets or investing, but he knew when the stakes were too high for his peace of mind, as they might likely have been for clients in 1987, 2001 and 2007. He surprised me at one point when he said he had converted all his 50/50 plans to annuities.