Financial Wellness in the Age of Pandemics

Pandemics are not only a public health crisis, but also a crisis of employee confidence. Tech-savvy advisers and employers can help.

COVID-19 has demonstrated that pandemics are not only a public health crisis, but also a crisis of confidence among employees about their financial future.

Unlike previous financial shocks, however, companies have an opportunity to lower the level of their employees’ anxiety by offering tech-powered financial wellness programs that also provide advice from human financial advisers who have been through economic turmoil before

Organizations offering this kind of holistic financial wellness as an employee benefit can help their workers address their investment, budget, personal spending, risk management and estate planning issues that have all surfaced since the COVID-19 outbreak. 

Comprehensive financial wellness can help reduce financial stress, the top concern of employees in the workplace, according to a study from PwC. And, perhaps just as important, financial wellness in a time of great need sends a strong message about a company and its leadership team’s commitment to corporate responsibility.

A New Model

New financial wellness models powered by technology are quite different from previous ones, which were largely one-dimensional financial literacy offerings or calculators.  

Financial wellness in this context means fiduciary advice is provided in two complementary ways. The first is a digital platform powered by artificial intelligence (AI) and cognitive computing that gets progressively smarter and more effective in advancing financial wellness. The second is access to seasoned financial advisers who can provide guidance to employees through various life events and offer wisdom in times of panic.

In essence, it’s the best of both worlds in terms of financial planning and wealth management. 

The digital platform helps employees create a customized, goals-based financial plan that factors in every aspect of personal financial management. The digital adviser considers many financial variables that are part of an individual’s life and moments that matter. It then produces a personalized action plan for saving, investing, spending, debt management and risk management.

As new information or circumstances arise, or as market conditions change, the plan and advice are updated in real time. Employees can see the big picture 24/7—and understand how they are progressing toward their financial goals. Over time, AI anticipates next steps and offers advice to help employees see around the curve.

The Human Component

The human component is equally as important. Especially in a crisis, a financial adviser can head off disastrous financial decisions people often make under stress. The goals-based plan in the digital platform shows the adviser an employee’s total financial situation and facilitates conversations about the more complex aspects of financial decisions. The breakthrough in this approach is that the human and digital advisors are seamlessly integrated for the employee and accelerate their financial wellness journey.

The fiduciary aspect of the platform is another key innovation. A fiduciary has a legal and moral obligation to put the best interests of a client first. Technology has enabled both the digital and the human advisers to act as fiduciaries. For employers, fiduciary advice provides peace of mind by avoiding the introduction of the unscrupulous to employees. This standard helps ensure employees receive unbiased recommendations that have their best interest at heart. 

It’s Working

The market volatility of the past two months has resulted in employees being worried about their retirement and 401(k)s. We at BrightPlan provide insight to management teams and work with them to deliver tailored programs such as webinars and education about financial planning during a crisis.

Interestingly, our data show that employees are not making large withdrawals from their financial accounts. In other words, they are avoiding the classic mistake in a market downturn.

The digital platform factors market volatility into a goals-based planning approach, to calculate a high probability that a financial goal can be achieved even in worse market conditions. So if media headlines are sensational, but the probability of achieving their goals remains materially the same, the platform is helpful in reassuring employees and urging them to stay the course.

Anonymized employee data also plays another crucial role. It can identify knowledge gaps and trends in the financial wellness of employees even when there isn’t a crisis. With those insights, employers can promote under-utilized benefits or offer new benefits that can add value to employees. Today, most companies have little understanding of their employees’ financial wellness. AI and cognitive computing make it possible to know what was previously unknowable about the level of employee financial wellness and stress at a company.

A Responsible Corporate Citizen

The current situation has demonstrated that innovation has fundamentally changed the concept of financial wellness. During the crisis, it is playing an especially important role for both employers and employees.

Reducing stress increases productivity and strengthens employee loyalty. It also exemplifies corporate leadership and compassion in moments that really matter.


Editor’s note:

Marthin De Beer is founder and CEO of BrightPlan, a financial wellness platform built for the Fortune 1000.

This feature is to provide general information only, does not constitute legal or tax advice, and cannot be used or substituted for legal or tax advice. Any opinions of the author do not necessarily reflect the stance of Institutional Shareholder Services or its affiliates.