Holistic financial wellness: Adding a human touch is key

In a world of economic uncertainty, continued high interest rates and inflation, and a looming recession, Americans are looking for answers to their financial questions. More times than not, financial advisors are the chosen group or go-to knowledge experts to help with looming uncertainty.

A new study from eMoney Advisory (Looking Back to Look Forward: A 2022 Recap) shows consumers want personalization, peace of mind and the ability to act. They also need/want advisors to factor in all aspects of their lives – meaning getting into the numbers, their personal situations and making them feel seen and heard.

Presenting the data in an online webinar, Dr. Emily Koochel, Sr. Financial Planning Ed. Consultant with eMoney Advisor, said the end-users want an easy-to-understand presentation. [It’s important to] make sure we are checking in with clients and giving them the opportunity to ask questions and understand what they are being presented,” she said.

The data further showed that while consumers are seeking advisors for their professional help and support, only 39% are confident in being able to achieve their financial goals, and 49% are using negative words such as stressed, worried, overwhelmed and unprepared.

Interestingly, the report defines financial wellness as “a healthy relationship with money and a positive state of being resulting from one’s personal finance situation and the impact it has on other aspects of life, such as your mental, emotional, physical, relational and spiritual health.” Given that definition, Dr. Koochel said there was an expectation that both advisors and end-users would be on the same page regarding its importance.

However, when asked about underestimating the importance of financial wellness discussions with clients, only 64% of advisors said their clients place importance on financial wellness. However when asked the same question, 88% of clients say financial wellness is important to discuss with their advisor.

Similarly, advisors said 67% of their clients are receptive to financial wellness discussions but a staggering 90% of clients say they are receptive to the discussion.

“There are looking like they should match up but we are seeing a discrepancy,” added Koochel. “It’s important to understand that because effective communication is the cornerstone of financial planning. Any gaps will be exacerbated by times of financial stress and uncertainty many of which consumers are facing today.”

In fact, according to eMoney’s data, the top concerns for 2022 were inflation (75%), grocery prices (64%), gas prices (61%), and, paying bills (65%). Much of this started with the pandemic but continues and lingers. Further on the list was being able to provide, having a home, job security and recession.

This is where “holistic planning” can work – a way to look at the complete picture of a client’s life. eMoney asked advisors how comfortable they are discussing holistic planning and the data shows that they are more comfortable with positive and technical issues and less comfortable with difficult topics such as divorce, premarital planning or death.

Given the demands of holistic planning it “could feel as though you never have enough to serve your clients at the level they honestly deserve,” said Koochel. Which is why planning and systems are needed to help clients, something Koochel explained would happen 20% less if they were not in place. Things like the importance of technology are critical to an advisors’ firm (more than half surveyed feel that way) and 39% said it’s very important. No one said it’s not important at all. “What we know is that by adding the human touch with holistic planning we can work in conjunction to optimize the outcomes and increase the ease of planning,” she added.