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What Does Financial Wellness Mean?

Wellness is a hot topic, and that means not only physical, but also financial, health. Financial wellness is relevant to, and an aspect of, retirement readiness. A June 21 panel at the 2016 SPARK National Conference in Washington, DC included a discussion of financial wellness and what it means.

Clients are key to how it is defined, panelists indicated.

“We don’t,” responded Ben Taylor, VP and DC consultant for Callan’s Fund Sponsor Consulting Group, when asked how his operation defines financial wellness. Rather, “We focus on clients’ goals, highlighting the various needs they’ll have in retirement and healthy income replacement,” he said.

Cammack Consulting senior partner Mike Volo made similar remarks. “Clients are defining it on their own; [plan sponsors] have difficulty making sense of it,” he said, adding that the new trend is working with plan sponsors to help participants meet their challenges and hurdles, such as student loan debt.

Financial wellness also spells opportunity, according to Julian Regan, VP and principal at The Marco Consulting Group. Financial wellness is a “tremendous opportunity for growth” to Regan, who adds that it offers opportunities for alignment of interests between consultants and record keepers. “Trustees like the fact that they can get all the data from record keepers,” he added.

And some are even more bullish about financial wellness. “At Mercer, we are incredibly focused on this topic,” said Muriel Knapp, a principal at the firm.

To Knapp, financial wellness “goes beyond retirement plans.” She said that there is more to it than accumulation; financial wellness also incorporates liability as well as preparation for shocks — sudden life events, destruction and the costs they entail — and unforeseeable expenses. “Short-term issues are a critical factor,” said Knapp, who noted that even in high-income areas employers make payroll advances to employees to meet such needs.