Financial wellness is a great idea in theory, but a failure in practice.
I encourage you to replace financial wellness with financial peace of mind. Most of us don’t want to spend a ton of time thinking about money. Yet currently, most of us are stressed and anxious over it.
It makes a lot of sense to me for companies to offer financial peace of mind benefits to their employees. But American workers need solutions, not platitudes and talking points. My goal is to give you some real, actionable solutions to help your people get better at money.
I’m honored to be named to Investopedia’s list of the top 100 financial advisors many years running, and I’ve been helping companies offer effective financial benefits to their employees for over 20 years.
Here’s what we’ll cover:
Let’s get started.
The symptoms of the problem
There are a lot of them.
77% of Americans report being anxious about their financial situation, almost two-thirds are living paycheck-to-paycheck, and carry an average of $6,000 in credit card debt.
It’s estimated that companies lose $250 billion every year in productivity due to financial stress. It costs at least $6,000 to replace a worker who quits because of this problem. And 52% of employees are concerned with their financial health, which is higher than their concerns over their physical and mental health.
A recent Wall Street Journal article highlights a 26% increase in 401(k) hardship withdrawals over the prior year for private sector employees, and a 50% increase for public sector employees. .
These are expensive and potentially devastating problems for both organization and employee.
The actual problem
There’s this great scene in the movie The Social Network when the Mark Zuckerberg character is being deposed to determine if he stole the idea for Facebook. At one point, he’s had enough and he says, “If you were the inventors of Facebook, then you would have invented Facebook.”
If large banks and financial companies were capable of helping people become financially successful, they would have been helping people become financially successful. Here’s the problem: Financial literacy training/advice is commonly delivered by the provider of the financial product or service. For example, “Our employees learn about retirement planning from a representative of our 401(k) provider.”
You wouldn’t take diet advice from a McDonalds employee (please don’t do that), and you shouldn’t take health advice from a pharmaceutical company. While those are extreme examples, you get the idea.
Commonly, what you get from big banks/big financial companies is watered down, uninspired and ineffective. While it’s better than nothing, it falls short of helping people get better at money. Have you ever sat in on one of their sessions?
While there are plenty of good people within those orgs who want to do good work, they’re constrained by massive compliance departments and entire floors filled with attorneys. And, there are also plenty of other financial professionals who would sooner deliver a bullshit presentation on “financial wellness,” collect their exorbitant fees, and go about their day.
I know and believe there’s a lot of value in having an independent voice working with employees to help them get better at money. Let’s talk about how to actually do it.
Solutions
Solving any hard problem requires hard work. To take one final shot at Wall Street, it’s difficult to roll up the sleeves of a shirt with cufflinks, and it’s hard to get stains out of a tie.
To actually get someone to change their financial behavior, you must be able to connect with them and deliver an accessible message. Nobody’s perfect, and it’s imperative that fact be a central part of the message. I’m way more effective at my job when I lead with the myriad mistakes I’ve made with money. Most people are carrying around shame regarding their finances. To help them move past that shame and onto a better future, we need to meet them where they are.
Here are the five areas to focus on to help people find financial security (AKA, financial wellness):
To help their employees find success in these five areas, several variables must be present:
I want everyone to find financial prosperity. But we’ll never get there until we first have financial security. Focusing on these will help people get there.
Closing
Personal finance is critically important and unfortunately complicated. Getting your people on track for financial peace of mind is the correct goal.
People need more help than they’re getting. It’s my belief that there’s value in an independent perspective. We know that providing employees with a comfortable environment where they can learn, ask and get their questions answered, is really important.
When someone asks a specific question about money, it’s because they’re looking for an answer. We believe they should get one, not some vague response.
If our values are aligned, let’s chat.
Stay up to date by getting our monthly updates.
Check out the LifeBlood podcast.
You can access our Goals and Values Courses at no cost.
LifeBlood is supported by our audience. If you purchase through links on our site, we may earn an affiliate commission. Learn more.
Work with a coach to unlock personal and professional potential.
george grombacher 0:00
I think that financial wellness is one of those things that we can all agree on. Why wouldn’t I want to be financially? Well, why wouldn’t I want people I care about to be financially? Well, as an employer? Why wouldn’t I want my employees to be financially? Well, it’s a great idea.
But it just falls absolutely flat in practice. So the idea, financial wellness, awesome. The application of financial wellness, total crap,
doesn’t work in effective. I just, I can’t say enough bad things about
Unknown Speaker 0:43
the actual practice of it. And it’s more so the problem I have is that it’s been co opted, it’s been greenwashed.
Unknown Speaker 0:51
It’s,
Unknown Speaker 0:53
we sell 401k, we’re putting a 401k in place. And we have financial wellness, it’s just not it. I think that a better way to think about financial wellness, just to sort of reframe it a little bit and talk about what I really believe it to be, is financial peace of mind. There’s a lot of people out there, smaller than the other group. But there are a lot of people out there who are really interested in money in finance, in investing. There’s a lot of people out there that that that trade, stocks and trade, foreign exchange, and what to flip houses, and they just are really interested in money.
Unknown Speaker 1:37
But from a percentage standpoint, those people it’s very, very, very, very small percentage of people, the majority of people, overwhelming majority of people, the vast majority of people out there, don’t want to think about money, really that often. But they for sure want to stop worrying about it all the time. So that’s why I think financial wellness really is, and what we should make the goal of if you work in personal finance, if you help people with money, your goal ought to be how can I help the people that I’m serving,
Unknown Speaker 2:14
be financially secure, how can I help the people that I’m serving, enjoy financial peace of mind, knowing that my affairs are in order, that the things that I’m doing,
Unknown Speaker 2:27
my odds of actually achieving those and accomplishing those goals through those actions are are aligned, here’s what I want, here’s what I’m doing. And those two things will eventually meet. That’s what the goal should be. Let’s really strip everything away, and make it pretty simple. So it’s immensely valuable.
Unknown Speaker 2:50
What got me thinking about this is I actually first and foremost, my wife,
Unknown Speaker 2:55
bless her soul, she sent me an article, she works in human resources. And she talked about the article she sent me was how financial stuff, financial wellness, financial literacy, whatever term you want to use, it’s one of the most requested employee benefits that are out there. So the appetite is there, the need is unquestionably there. People want it, they need it. And there’s this behemoth of an industry that says they’re doing it, but they’re not really doing anything at all. So that’s, that’s what I’m interested in talking about today is
Unknown Speaker 3:32
this is directed towards people who want to help their loved ones become financially well. And it’s directed towards organizations, if you’re a leader within an organization, and you care for your employees, and you want to help them to become financially successful, and in so doing, help your organization to be more financially successful, I will give you resources to be able to do that. So the symptoms, that there is a problem as symptoms of the problem are everywhere. Two thirds of us live in paycheck to paycheck. 77% of us are stressed out about money.
Unknown Speaker 4:10
The average American credit card debt going up up up to around six or $7,000 depending on the demographic that you’re looking at. Majority of us overwhelmingly have very little money saved, we don’t have enough money to cover minor emergencies. And therefore, the next thing that I looked at was a Wall Street Journal article that just came out within the last couple of days, the beginning of February of 2023 talking about how the number of hardship withdrawals 401 K’s is going up. So in the private sector, ordinary companies, the amount of hardship withdrawals has increased 25% Since last year, public sector so government type employees up 50% from last year so these are all just signs that we are unwell
Unknown Speaker 5:00
financially these are the Simpsons symptoms of what I believe to be the greater problem. Do you remember the movie The Social Network? Love the movie, great movie. It’s a great scene and it it depicts or puts a narrative spin on the creation of Facebook. And the movie, the Mark Zuckerberg character has been deposed, and the Winklevoss twins and a couple of other folks are claiming that they are the founders of Facebook, and that Mark Zuckerberg stole their idea and created it. And he is Mark Zuckerberg super annoyed. He’s not paying attention. He’s super irritated. And he finally sort of loses it. And he says, if you were the inventors of Facebook, then you would have invented Facebook.
Unknown Speaker 5:52
What’s that got to do with this? Well, if finally a big financial companies or big banks were capable of helping people to become financially successful, than they would have been helping people to become financially successful.
Unknown Speaker 6:08
Downtown Tom. So that’s the problem
Unknown Speaker 6:12
is that we’re getting our financial advice from the providers of financial products.
Unknown Speaker 6:22
Would you take your health advice from a McDonald’s employee?
Unknown Speaker 6:27
Would you take your health advice from pharmaceutical employee?
Unknown Speaker 6:34
I hope not to either one of those things. Please don’t. Please don’t take your nutrition advice from the folks at McDonald’s. And don’t take your overall health advice from the good folks at Pfizer, or any of the other ones. You get the idea. So think about it like that, like Oh, yeah. misaligned incentives, misaligned incentives,
Unknown Speaker 7:02
just really doesn’t make a lot of sense. So
Unknown Speaker 7:07
have you ever sat in on one of the sessions that big financial companies or big banks provide on financial wellness? Have you ever checked one out?
Unknown Speaker 7:21
They’re not very good.
Unknown Speaker 7:25
Split, spoiler alert.
Unknown Speaker 7:27
They’re vapid,
Unknown Speaker 7:29
they’re ineffective.
Unknown Speaker 7:31
They’re boilerplate.
Unknown Speaker 7:34
They lack any substance. They lack any character, they lack any air entertainment value. They are just not very good.
Unknown Speaker 7:47
The checking boxes now.
Unknown Speaker 7:51
Is that because he’s a terrible people? No, I’m sure that there’s plenty of wonderful human beings that are financial professionals, at big financial companies.
Unknown Speaker 8:02
The reality is, there are robust compliance departments and every one of these financial firms that are literal, build floors on very, very, very tall skyscrapers, very, very big cities full of attorneys who are working, because that’s their job to nitpick every little thing that you say.
Unknown Speaker 8:27
And certainly, if you were to ask one of these people a question
Unknown Speaker 8:32
about what should I do? What should I do in my situation that, oh, we can’t offer you financial advice. Well, that’s weird. Aren’t you? The finance isn’t your job? To help me become financially well, isn’t it your job to help me with my money and my finances, but you can’t comment, or help me to actually
Unknown Speaker 8:53
help me with with my finances or with my money?
Unknown Speaker 8:57
It’s a little bit strange to me, doesn’t really make a lot of sense. And then
Unknown Speaker 9:03
set aside those good people who just find themselves in a tough situation. There’s also a bunch of bad people who are more interested in checking a box and say, yep, took care of the financial wellness for XYZ customer client this year. And then they go about, you know, collecting big fees, and doing whatever else that they’re doing.
Unknown Speaker 9:27
Reality is hard problems require hard work to solve.
Unknown Speaker 9:35
Another reality is, it’s awfully hard to roll up. French cuffs with cufflinks. It’s tough to roll those up to do hard work. You don’t want to get your tie too dirty.
Unknown Speaker 9:48
And for all of our Lady professionals out there who are financial professionals falling into this category, whatever your clothes are, it’s tough to it’s tough to you just don’t want to get those dirty either.
Unknown Speaker 10:00
So a
Unknown Speaker 10:02
lot of things stand in the way of
Unknown Speaker 10:06
that are preventing
Unknown Speaker 10:09
the current offering the current iteration of what we consider to be financial wellness, from actually helping people to be financially well, but those are a couple of them. Symptoms are people don’t have any money we’re broke, are drowning in credit card debt, we’re not saving any money, we’re taking out hardship withdrawals from our 401 Ks. And a lot of the reason for that is you’re getting crappy advice, you’re getting crappy information.
Unknown Speaker 10:37
And that’s because you’re getting your advice and your information and your guidance and your literacy training, and everything else from the provider of the actual financial product. So it’s not shocking that it’s not working out quite as well as potentially you would like it to be. So there are really what I consider to be five things that if you focus on this easy, doesn’t require immense expertise.
Unknown Speaker 11:07
But I think first and foremost, let me take a step back.
Unknown Speaker 11:11
That in order for
Unknown Speaker 11:14
financial stuff, to be absorbed by somebody, it has to be given by somebody that they can identify with.
Unknown Speaker 11:23
So some yay, who, in a really, really expensive suit, talking about some crap that nobody understands, like asset allocation and the right diversification and risk tolerance and large cap mutual funds and this debt. The other thing,
Unknown Speaker 11:42
I don’t think that that really moves the needle. Obviously, it doesn’t.
Unknown Speaker 11:46
The only time that I’m able to connect with people are one of the reasons I’m normally able to connect with people, is because I lead with the fact that I have made most of the worst decisions, or I’ve made a lot of the worst, I’ve made all the bad financial decisions. Fortunately, I’ve also made a lot of really good financial decisions. But my 20s were wrought, were littered with terrible financial decision making.
Unknown Speaker 12:09
And I’m perfectly comfortable telling people that because it’s true,
Unknown Speaker 12:13
but it also makes me relatable. People say, okay, yeah, this this guy, or this gal, I can I can identify with them. They’re a human being. We’re talking about stuff that we have a lot of shame over people carry a lot of shame around money, it’s confusing. It’s a lot. It’s intimidating. And I’d rather just not deal with it. It’s got a lot on my plate, I’m going to put this stuff off, I’ll worry about it later. The thing about money is that it’s really time sensitive. So when I do have the opportunity, when you’re putting somebody in front of your employees,
Unknown Speaker 12:49
to motivate them, to inspire them to make changes to make difficult changes, to look at hard things. This person better be able to meet them where they are better be able to connect with them in a human way to say wherever you’re at, it’s okay. But let’s put a plan together for getting you to where you want to go. That’s the trick. Do I believe that this person has my best interest in mind? Can they help me to get on the path to success? It’s essential. And here’s the five things. Number one is we need to help people get a handle on their cash flow. These are all simple. These are all fundamental things.
Unknown Speaker 13:28
This is not secret knowledge.
Unknown Speaker 13:31
By no means need help people get a handle on their cash flow. And most people this was me and my 20s have no idea how much money we make. We have no idea how much we spend. We don’t really know how much debt we have. We don’t know the value of our assets. So we need to know that. We need to consistently be tracking all of our financial transactions pretty simple, easy thing to simple thing to fix man so easy to make a habit of doing that. Number two is we have to have a budget. I have to have a plan for my money. That’s all a budget is is a plan for your money.
Unknown Speaker 14:01
Budget will tell me if I’m on track. Am I on track to meet the goals that I’ve set for myself? Or am I behind? Both are equally valuable? I know that I’m doing great awesome, keep keep it going. If I know I’m behind, okay, it’s an opportunity for me to change gears. Me to mix things up a little bit or to shift change, change what I’m doing have to have a budget.
Unknown Speaker 14:24
Number three is debt.
Unknown Speaker 14:26
Not debt management. It’s debt elimination. We need to have a plan for getting you out of credit card debt credit card debt is the worst it is a burden. It crushes us it keeps us stuck.
Unknown Speaker 14:39
When I’m when I’m stuck in credit card debt, I am at best treading water. At worst. I’m sliding backwards into more credit card debt. But I’m treading water. Not moving ahead financially I’m not pursuing proactively pursuing my most important financial goals and objectives. financial peace of mind financial security
Unknown Speaker 15:00
far away from me. So I need to plan on getting out of credit card debt. Number three, cash on hand
Unknown Speaker 15:09
that people are having to pull money out of their 401 K plans early is clear evidence. And it’s not a surprise that they don’t have it, you know that they don’t have any other money. It’s the most fundamental thing. And here’s how much you need, you need six months worth of expenses saved up,
Unknown Speaker 15:29
then I don’t say that casually, I know it’s a lot of money, it will be hard to do that.
Unknown Speaker 15:36
I tell you this, once you have that, you will have financial peace of mind.
Unknown Speaker 15:43
I have no control over what happens to me. I don’t know what’s going to happen to the stock market. I don’t know what’s going to happen to my health, I don’t know, I just don’t have any idea. I don’t have control. But I can position myself for success and have it in an emergency fund, which fully funded emergency fund is six months worth of expenses in cash. That’s financial peace of mind.
Unknown Speaker 16:06
But I have that, I can let the tension fall out of my shoulders.
Unknown Speaker 16:12
And that allows me to focus on what I really want to focus on. If at that point, I want to really get into money and learn all about the market. Great, let’s go. More often than not more commonly, it’s, I want to focus on other stuff, I want to I want to play pickleball, I want to just spend time with my family. I want to learn Spanish, whatever
Unknown Speaker 16:40
the set will allow you to do that. And then finally, the fifth thing is, then we want to create beneficial financial habits.
Unknown Speaker 16:48
In order to do that, we need to address your financial beliefs.
Unknown Speaker 16:53
We need to really spend a lot of time actually setting writing down our goals for what we want. And then we need to figure out what our values are. And when we do that, think about beliefs are who you are. Goals are what you want. Habits are what you do. So we line those up. We are positioned for success like that. That’s a pretty awesome thing right there. So
Unknown Speaker 17:21
all right. So those are the key areas that I really encourage you to focus on as you’re developing your financial wellness program. And then think about how do we actually deliver this thing, there’s three different ways that I think are really, really, really important. Number one is, you need to make or encourage you, you need to make independent learning opportunities available. So people will like autonomy, I want to be able to choose how to pursue these things. Okay, so you can have make online courses available to them, you can find all these things for free online, you can find great videos on cashflow management, on budgeting and on getting out of debt on saving up at your emergency fund on goal setting. You can find YouTube videos on all of those that are free, make those available to your to your team.
Unknown Speaker 18:08
And then I really encourage you to find some resource that will that will give them live or in person the ability to interact with somebody who can actually answer their questions.
Unknown Speaker 18:19
So some, like financial coaching of some kind, just some kind of a resource like that, where somebody can say, You know what, I’m stuck on this thing? Should I be contributing to my 401k pre tax? Or should I be doing it after tax? Like traditional versus Roth?
Unknown Speaker 18:35
Should I you know, should I be doing a college savings plan for my kid? What, what makes the most sense, or I’m stuck on this budgeting thing? How what what do you think I should do so invaluable to be able to get that kind of resource.
Unknown Speaker 18:51
And then take advantage of of your wonderful community, you have a built in community with within your company. So put in place some opportunities to be working together on things. And it doesn’t always need to be money stuff. You can have community initiatives like like like a wellness committee of some kind that can focus on healthy eating and exercise and mental health and relational health. And certainly financial wellness can be one of these things. And there’s different things that you can be focused on. And he can link all these things together. Think about just as an example. Having
Unknown Speaker 19:27
an opportunity to as a as a company, everybody brings their lunch in, and maybe you do it one day a week to get started. Or maybe you do it Tuesday, Wednesday, Thursday and y’all eat lunch together or you do some kind of a potluck. That’s an opportunity for you to save money because it costs a lot less money to bring your lunch to work versus going out to eat for lunch. So it’s an opportunity right there to check off a couple of boxes of of eating more nutritious food that’s more controllable when you bring your own food in. And obviously from a financial standpoint and opportunity to
Unknown Speaker 20:00
be saving some money there. So lots of opportunities to do that.
Unknown Speaker 20:04
Just really want to revisit this whole thing is really focused on what on financial peace of mind helping people to find financial peace of mind.
Unknown Speaker 20:13
There’s a personal case for that and a business case, the cost of employee employees that are not doing well financially is enormous. It’s something like $250 billion a year, maybe it’s higher than that. At that level, it’s just sort of
Unknown Speaker 20:30
Monopoly money. But I don’t know how much it’s costing your company. It’s costing your company something.
Unknown Speaker 20:37
And then from a personal standpoint, from from a human standpoint, the more you can help your employees become financially secure, that’s going to strengthen their family, their interpersonal communicate, or their their family relationships, their personal relationships, behind infidelity. financial matters are the number two cause of divorce in America. So it just causes stress. You know that, like we all know that financial problems are super stressful. So there’s so many different compelling reasons for pursuing a financial wellness program. There’s a business case for it, there’s a personal case for it. I think it’s fundamentally the right thing to do. But there’s a lot of wrong ways to do it.
Unknown Speaker 21:25
And don’t take somebody’s word for it that just because they say, Oh, we offer financial wellness, okay.
Unknown Speaker 21:33
Do you or is it just some some nonsense that isn’t actually going to help anybody or get anybody anywhere? It’s just a rubber stamp. So thanks for the time.
Unknown Speaker 21:47
We’d love to connect with you on it. If you have any questions I’m always thrilled to to do that. My contact information is not hard to find. You can find me at George grombacher.com.
Unknown Speaker 21:58
Happy to reach out or rather I’d be happy if you reached out and I’d be happy to connect with you.
george grombacher 22:05
Do your part by doing your best
Transcribed by https://otter.ai
We’re here to help others get better so they can live freely without regret
Believing we’ve each got one life, it’s better to live it well and the time to start is now If you’re someone who believes change begins with you, you’re one of us We’re working to inspire action, enable completion, knowing that, as Thoreau so perfectly put it “There are a thousand hacking at the branches of evil to one who is striking at the root.” Let us help you invest in yourself and bring it all together.
Feed your life-long learner by enrolling in one of our courses.
Invest in yourself and bring it all together by working with one of our coaches.
If you’d like to be a guest on the show, or you’d like to become a Certified LifeBlood Coach or Course provider, contact us at Contact@LifeBlood.Live.
Please note- The Money Savage podcast is now the LifeBlood Podcast. Curious why? Check out this episode and read this blog post!
We have numerous formats to welcome a diverse range of potential guests!
