Welcome to Insider Insights, where we dive into hot topics facing the financial services industry. Today, we're excited to have with us Deb DuPont, assistant vice president of institutional research and workplace benefits research at LIMRA and Loma, and Kelly Benson Bray, member relations director at LIMRA and Loma, to discuss opportunities to improve financial wellness across a range of demographics.
Well, good afternoon or good morning or whatever time it is.
Here at here at LIMRA, we have been studying wellness and financial wellness in particular for a number of years now because it is so deeply relevant to our business and that of our and that of our members and our various stakeholders. So it's it's it's deeply relevant in the insurance, financial service, and in in the benefits industry, and it affects all of our stakeholders there from member member companies right on down to individual consumers and and benefits participants. So, in twenty twenty two, we introduced the LIMRA Financial Wellness Index as a starting point for wellness conversations.
This index is actually based on a number of factors on the answers to about fifteen questions.
It's based on a number of factors on the answers to about fifteen questions that that center around three main themes. So one is confidence. How confident are you in your in your current financial situation, in your ability to understand finances, in what you can do? The other is practical and current looking.
Can you pay the bills? Can you save a little bit on the side? How do you feel about your your finances? And the third, of course, is forward looking.
Do you have an ability to plan for the future? Can you put a little aside for retirement? Are you meeting your longer term financial goals? So from from those questions, I said about fifteen fifteen questions, we developed and introduced the Limmer Financial Wellness Index in twenty twenty two.
That uses a scale from zero to ten, with zero being consumers or workers who are deeply financially distressed to ten to a ten who which would represent consumers or workers who are doing quite well, who are financially stable. We found that the average consumer in twenty twenty two had a limit Limor financial wellness score of five point five seven. That's sort of sort of firmly in the middle of that scale, so it's not terrible, but it also does leave a great deal of room for improvement.
Unfortunately, when we redid that index in twenty twenty four after a variety of factors have probably come into play, in twenty twenty four, the number had dropped by eleven percent.
So, the average consumer reported a financial wellness, aggregate score of about four point nine five.
Now that's a number. It's a place to start a conversation.
What that number and what looking at it from an all consumer standpoint lets us do is compare different populations.
So we can look at the we can look at those at those responses and those scores by gender, by generation, by income, by working status, by by race and ethnicity. So we do find that certain populations are are sort of more financially vulnerable, more at financial risk for a variety of reasons than are others, and that comes to play with financial advisers, with, financial services companies, and also certainly in the workplace.
Kelly, I know you've you talk to companies and people all the time. What's your what are your thoughts on this?
Yeah. I think as you look at the overall, financial wellness of employees in the workforce today, we see a couple of things that stood out to me. First and foremost, our younger populations are really the ones that are at biggest risk. Right? They're just starting into their, careers.
And in a recent, survey that we did with one of our members, sixty three percent of the millennials and gen z's were saying they don't feel comfortable with their finances. They don't feel comfortable financially planning.
So as we look at some of those younger generations and look at the opportunity we have in the industry to help them plan, it impacts across the board. Right? It it impacts their mental wellness. It impacts their ability to be productive at work, and it impacts their ability to long term plan for financial shortages or things that may come up.
And so I think as we start to look at bringing that group into the workplace, we really do have an opportunity to help them, further plan. And in looking at some of the other opportunities that we have around that generation, you also have to look out at the boomer generation that will retire in the next five to ten years and how that's impacting their ability to retire. So lots of opportunity in this industry to really make a difference for people where they live and work.
You know, that's a really good point talking about generations, and we're at an interesting point with the workforce where we have more generations in the workforce right now than we ever have before. We also have gen generation beta sort of jumping in jumping in and starting to jump in where I think we see anecdotally that some of those issues perhaps with with Gen Z, some of those insecurities, some of those deeper financial wellness threats are probably exacerbated even more.
And that's that's another interesting point that we see in our research is the populations that we know are potentially at risk. Certainly younger, as we've talked about, women, members of the LGBTQ plus population, certain certain ethnic populations, they are certainly more financially vulnerable than workers in general than consumers in general, but they don't buck the overall trends. They exacerbate them. They're more extreme examples, but some of the trends that we see in consumers and in the workforce relative to stress and financial wellness are a little bit more universal. The learnings are gonna come in into how we help them address these trends.
Right. And I I think over the years, you know, we kind of started with giving them access to a financial planner or maybe it was just an opportunity to talk to a financial adviser.
And now with, like, seventy four percent of employees saying they expect to have help with finances coming from their employer, I think there's a broader opportunity for us to make a big impact, not just with, you know, here's an access, but really helping them take advantage of it. And one of the things from our research that was kind of startling to me is that thirty percent of those people that have a retirement plan have actually already dipped into it. Right?
So not only are we not saving, but we're also dipping into what we have saved. And so I think there's a bigger opportunity across the board for all generations to say, okay. How do we help you really plan? Early on in my career, I got an opportunity to take a really extensive financial planning course.
I was grateful for the opportunity, to really dive into what it meant to be financially sound. And so I think not only just helping people get to an advisor, but helping them define what that means. We're seeing especially in these kids that are coming into the workplace, like you say, the beta generation, they've not had some of those opportunities in their careers. And with more people working remotely and in contract positions like we've seen in our research, we need to look at how we're developing that and how we're really giving that to people, and I think there's a big opportunity to be really creative with some of the products that we offer.
I love that, the the the sort of mandate to be creative with some of the products and not just products, but, you know, wellness is holistic.
It's not just financial. It's emotional. It's physical, and each one of these sort of feeds into and plays off of each other, but wellness solutions have to be holistic too. You know?
You've got services. We've got products. We've got tools. We've got it got education.
All of these things need to work together to help people build that wellness.
The other interesting thing that you talked about is we we see all the time. We know that while people value advice, everybody wants a financial adviser, especially Gen z, and younger younger individuals want advice.
Unfortunately, they're sometimes not the best prospects for traditional financial advisors, so we need to be, again, creative about how we reach them. The older the older populations are much more likely to have financial advisors in the first place.
We need to be creative, and we need to be sort of, like, multidimensional and help employers to be multidimensional in how they bring wellness solutions, the services, particularly services, tools, and education to employees and to consumers.
You know, the products are there.
Yeah. I think it needs to be multi tiered too. As you look at those, financial products that are out there, they they're the same things that we've seen over the years sometimes, and then some of them are starting to get creative. I'm starting to see some of our members and employees start to have people in the workplace where you can talk about finances with someone that's been successful at their level. Instead of just saying take this course, you get to talk with someone that's really done it before. Or, you know, maybe it's someone like me as a woman or a single man in the workforce.
Maybe I have children. Maybe I don't have children. What does that look like? And really helping someone reach out to someone like me.
And then part of that too comes down to, you know, short term management. How do I manage my bills? People with thirty percent saying they'll they'll go bankrupt from one check to another, that's startling. How do we help them just manage those short term?
And then protection, insurance. What's the value of being protected against that one time catastrophe in your life, whether it's medical or emotional or physical? What does that look like? And then long term protection, those milestones.
I don't think a lot of young people think about retirement.
I didn't when I was younger, and so helping them really realize that comes pretty quickly. You need to plan for that long term, and then measuring the impact with your employees. Don't just give them the advisor or give them the tools, but really measuring the impact. Because I think one of the things that we forget is financial stress at home or in their personal lives also helps them be not as productive at work. And so, there's really a return on the investment for employers to meet them at every one of those stages.
Agree completely, and we do see our research totally bears out the fact that, you know, finances and emotions and physical sort of health related issues can cause workplace distraction. They can get in the way of productivity.
So, there's a clear benefit for employers right there.
You you spoke about benefits as well.
People admit, and younger generations as much as the older, that that workplace benefits are so absolutely critical to their financial security. One of the interesting dynamics in our survey work that we found was that while everybody, close to half of people do say that workplace benefits are, in fact, entirely necessary to their financial security, those who use a wealth financial wellness program are much more likely to say that their benefits are critical and very effective in helping helping to reduce their financial stress.
So there's a there's there's a a justification for that benefit spend right there for employers Exactly.
That wellness programs increase the efficacy of benefits. There's a very clear correlation.
Exactly. And as workplace benefits continue to grow, which is what we've seen, in our harnessing growth research that it will continue to grow, and providers are gonna get more creative about how that grows. I think there's a bigger opportunity to also weave in our benefits with the financial wellness opportunities and make a huge difference for employees. And I think, you know, if you look at some of the top financial stressors and what it does in their personal life, Like we see that like fifty six percent impacts their sleep, fifty five percent impacts their mental health, fifty percent impacts their self esteem.
That's incredible to me that it would impact them on such a personal level. And then looking at their physical health and their relationships at home, it has an additional impact to those things. So I think as you look at your employee with those workplace benefits, you address the whole employee, and we have a great opportunity to do that with our products. And we're starting to see that in our research where those that have addressed it in the workplace are more successful, and their employees are much happier with their benefit packages.
And when they do address it, employees really appreciate the effort. Satisfaction with those efforts is very, very high across populations. And, in fact, sometimes younger employees, some of the more vulnerable populations that we're talking about here, are more appreciative of those wellness and benefits efforts on behalf of their employers.
Right. And if you look at some of the things that we're facing in today's world, there's an opportunity with some of the catastrophes that we have, the flooding, the fires, and things, to help people plan for those events in their life. But also when that happens, giving them a resource to turn to for financial help and financial wellness is a huge quality of life opportunity for an employer.
And a terrific example of how you can't in these discussions and certainly in crafting wellness programs and solutions, you can't separate completely the financial from the emotional or from the physical because they all they all feed into each other.
Right. And we did see in, some of our supplemental health research that we did that, well over seventy percent of employees are looking for their employers to meet that whole employee, their whole self, and meet them where they live. And so that's a huge mandate to employers to really look at people as that whole entity. What is my whole life like? Not necessarily just give me, you know, once a year to help me plan for my four zero one k contributions, but more as, you know, me as a whole person. And we're seeing that reflected in leave of absence, upticks, and things of that nature that really impact the financial.
People are looking for more flexibility with product and with service, and they want the human touch around it.
That's very much reflective of today's today's workplace as much as anything else, this sort of post pandemic world where it feels like all the norms have sort of blown up. And the opportunity and the challenge of wellness in the workforce is has never been greater. The foundation for wellness is in fact the paycheck, so there's a very there's a very elegant fit of helping people build and achieve financial wellness and the other types of wellness with the workplace, and employees want and expect that. They're open to it. They feel that employers have a responsibility to help them with more than just benefits, but to help them with their actual wellness.
They're open to receiving that type of guidance from both their employers outright, but also from employer endorsed endorsed sources such as benefits providers and other employer endorsed experts.
Yeah. The other piece is is that as compensation becomes a real focus, and we've seen that over the last three years of employment, they do consider this type of help part of their compensation package. So it it also helps compensate compensation and retention and attract the right right talent.
So addressing this wellness quandary has clear benefits basically across the entire value chain from, from consumers and employees right up to our right up to the companies that supply these solutions. Exactly. But I love I love the word you used earlier, Kelly. It's it definitely requires creativity. It requires new approaches.
And, fortunately, both technology and the industry is poised to deliver, I think.
I think they are, and I think it gives us a unique opportunity to meet employees from hire to retire. Right? So it's not just about WAVO working for us. It's their opportunity to retire and be a part of that retirement. There's creative things that are happening, with post retirement and people that still keep in touch with an employer through those opportunities. We've seen one of our members have big dinners for their post retirement groups and talking to them about how they're doing. I think that's valuable information that you can then take back to your current employment population.
So get creative. Go outside of the norm of what you've done, and really meet people from higher to retire and post retirement.
Perfect. Well, we've done a lot of talk in this conversation about the Loomer Financial Wellness Index. There is, in fact, a great deal more information online about the index and about populations at risk and some of the other financial wellness issues that we're all faced with today. So please do visit limra dot com for more information.
Thanks for listening to LIMRA's Insider Insights podcast series. To hear future podcasts, subscribe at LIMRA.com/podcast.
