CPD: Health and wellness in advice – powering better financial and lifestyle outcomes for your clients

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Focusing on and supporting your clients with their wellness will not only facilitate deeper, client relationships, it will increase your clients’ ability to realise the financial and lifestyle goals embodied in your advice.

Introduction

The topic of ‘wellness’ (or ‘wellbeing’) is one of increasing relevance to employers, product manufacturers, and – crucially – financial advisers. On one level this is because advisers should be always be mindful of major societal trends and evolve their service offering accordingly; but more importantly, because wellness can be one of the biggest single enablers of individuals achieving the financial and lifestyle goals embodied in your advice.

Understanding the global wellness phenomenon, the Australian context, and how this relates to the financial advice profession, will not only allow advisers to provide more relevant advice and product solutions, it will allow a much more holistic – and enduring – relationship to exist between adviser and client. More engaged clients in turn are more likely to appreciate the value of the advice they receive and are more likely to become advocates for advice.

The context – Australia’s health and wellness

Our celebrated national philosophy of ‘she’ll be right’ belies that fact that illness and injury strike thousands of Australians every day.

According to Zurich’s Cost of Care whitepaper[1], 2016/17 saw over 777,000 hospitalisations due to injury or poisoning and more than 130,000 new diagnoses of cancer. Over 600,000 Australians now live with coronary artery disease, 2 million with kidney disease, and nearly half the population will experience mental health challenges during their lifetime.

Whilst advances in medicine and treatment techniques are improving survival rates across most conditions, there is a cost burden – in Australia estimated at $30 billion per annum – which falls on all of us, as taxpayers and as individuals.

With this scenario playing out all over the world, it should come as no surprise that improving health and wellness has become such a major focus for individuals, businesses, communities and governments globally.

The growing wellness phenomenon

Around the world, wellness is a big focus and big business.

According to the data[2] released by the Global Wellness Institute in 2018, the ‘wellness economy’ was worth over 4.5 trillion – yes trillion – dollars, representing over 5% of global economic output.

Individual areas contributing to that figure include the $700 billion spent on nutrition and weight loss, the $120 billion ‘spa economy’ and the $640 billion wellness tourism sector. (Fitness spending was also estimated to be around the $600 billion mark).

There are many drivers of this growth.

Some are ‘demand side’, as individuals seek an antidote to unhealthy and stressful lifestyles. The mainstream nature of yoga and meditation speaks to this, as does the proliferation of sugar and gluten free options on supermarket shelves and the addition of ‘superfoods’ to the everyday lexicon.

But there are supply side drivers too.

Wearable technology, exemplified by the Fitbit and the Apple watch, has made our lives more measurable, and the gamification of health and fitness has undoubtedly provided the motivation millions needed to become more active. Beyond merely tracking activity, we are now seeing mobile devices delivering increasing amounts of immersive wellness ‘content’, as exemplified by Calm, the 2017 Apple App of the year[3]. For a $60 annual subscription, this app offers everything from calming music and meditation videos, to bedtime stories and mind training techniques. (At last count[4], Calm had more than 60 million downloads and 2 million paying subscribers!).

The last decade has also seen employers increasingly focus on the wellness of their people.

There is an obvious economic pay off from having healthier employees; employees in poor health report more than double the number of absences compared with their healthy colleagues. Even when they are at work, employees in poor health are likely to be less productive, less engaged and more stressed[5]. So big is this problem in fact, that in Australia the cost of this ‘presenteeism’ has actually been estimated at 4 times the cost of absenteeism[6].

Beyond having a more productive workforce, employees themselves actually appreciate their employers providing wellness support, and the popularity of employee wellness benefits has made them a powerful tool when it comes to attracting – and retaining – the best talent. A 2016 study by GuideSpark called Financial Wellness Research showed that 81 percent of employees feel that a financial wellness program would reduce stress, and 76 percent said that it would help them appreciate their company more.

The pillars of wellness

The Global Wellness Institute defines[7] wellness as the active pursuit of activities, choices and lifestyles that lead to a state of holistic health. Beyond physical health, holistic health or ‘wellness’ involves many dimensions interacting harmoniously.

There is a proliferation of research on the dimensions of wellness, and many different models. For our purposes we will reference work by Mercer[8], who have developed a model based on 8 pillars of wellness, as below

  1. Physical: taking good care of the body
  2. Emotional: expressing and managing feelings
  3. Spiritual: having meaning and purpose in life
  4. Social: enjoying regular interaction with others
  5. Financial: managing income to good effect
  6. Intellectual: having challenges at work which stretch and teach
  7. Environmental: thinking positively about the world
  8. Occupational: working towards satisfying goals

Whilst the role of financial advisers in supporting the financial pillar may seem obvious – and will be explored below, the linkages and interactions between the different pillars means that the impact of advice can be much broader. Advisers – and advice – can also play a role in improving the physical, emotional and spiritual wellness of their clients, giving true meaning to the concept of ‘holistic advice’.

Financial Wellness

Whilst there are many different definitions of financial wellness/wellbeing, for the purposes of this article we will draw on research conducted by the University of NSW on behalf of Financial Literacy Australia[9].

Their research defined financial wellness as ‘when a person is able to meet expenses and has some money left over, is in control of their finances and feels financially secure, now and in the future’.

In seeking to identify the drivers of financial wellness, the UNSW study found a variety of factors, at an individual, household and societal level, were capable of having an impact. The most influential drivers were found to be financial capability, financial inclusion, social capital, income and health.

Financial capability – a combination of financial knowledge, decisions and behaviours – and financial inclusion – access to appropriate and affordable financial services – were both found to be positively correlated with financial wellness.

The ability to rely on friends and family and/or community services was also found to be a positive driver of financial wellness, as was the value, stability and source of income.

A linkage between physical and mental health and financial wellness was also clear, and whilst the impact of poor health on one’s income earning ability seems obvious, the strong interrelationship between mental health and an individual’s financial situation is also borne out in numerous other studies.

70% of respondents to a global study[10], stated that good financial health had a positive impact on their physical health, while Australian research[11] conducted by the Beddoes Institute found that thinking about money can have a negative impact on our overall health and well-being.

The Beddoes Institute paper, Money, Well-being and the Role of Financial Advice, also found the quantum of the impact differed by gender. Specifically, women were found more likely than men to feel sad, stressed and anxious by thinking about money.

Gender based differences were also found by Coredata in research commissioned by Financial Mindfulness[12]. Their research found women were more likely to be more financially stressed than men (33.4% v 27.6%), in a study which also revealed how financial stress leads to anti-social behaviour, relationship conflict and breakdown, isolation, sleep loss and symptoms of depression.

Incorporating wellness into financial product offerings

In a product sense, the link between wellness and life insurance is perhaps the most overt and over the last few years we have seen most retail life insurers incorporate some aspect of wellness support into their product offerings.

These offerings vary in design, from simple product discounts to comprehensive programs of app- based content. (see our case study below).

Zurich LiveWell[13]

LiveWell is an app-based program which provides tools for individuals across three wellness pillars: Body, Mind and Community. By logging activity across these pillars through the LiveWell app, members can progress through different membership tiers and qualify for discounts on their Zurich life insurance. Customers also have access to generous discounts through chosen retail and wellness partners such as The Iconic and Jenny Craig, together with “Loving Life”; Zurich’s lifestyle and dining rewards program.

Eligible activity ranges from steps, cycling to reading articles, doing a fun run or even donating blood. Members are supported across these activities with tools such as activity trackers, guided meditations, medical encyclopaedias, healthy recipes and lifestyle quizzes.

Improving the wellness of clients has a multi-faceted impact that helps create a virtuous circle of positive impacts.

For clients:

  • Access to wellness resources at little or no additional cost;
  • The opportunity to benefit from lower premiums, either through the removal of loadings as health improves, or through any premium discounts associated with such programs

For financial advisers:

  • Increased opportunities for clients to engage with their cover, helping drive more regular contact and;
  • Increased perceived value
  • Access to comprehensive support tools.

For life insurers:

  • Healthier lives mean Improved claims experience, keeping downward pressure on premiums, and helping with product sustainability;
  • Increased client engagement drives better perceptions of value and more advocacy for life insurance as a category.
  • Improved retention, which in itself improves sustainability.

For our community:

  • Reduced burden of ill health on our society
  • Improved productivity of our workforce
  • Reduced strain on health system and associated funding

Implications and considerations for financial advisers

The nature of the advice offering, and the adviser-client relationship, puts financial advisers in a uniquely powerful position to improve the wellness of their clients.

Advisers are particularly well equipped to support in 3 of Mercer’s 8 Wellness Pillars – financial, physical and emotional.

Financially educating clients and providing practical assistance in areas such budgeting and cash flow, debt management, savings, tax and insurance, can help build financial capability and a sense of ‘being in control’, in turn driving financial wellness.

To the extent that anxiety about financial circumstances is proven to drive adverse mental health outcomes, advisers should equally focus on the positive emotional benefits that clients derive from being more financial confidence and having more tangible plans.

And, thanks to the comprehensive wellness support many life insurers now offer, advisers are now able to make a tangible, positive impact on the physical wellness of their clients.

Advisers are largely supportive of this product design trend, as borne out by Strategic Insights’ 2016 Health and Wellness Adviser Survey[14]. This study, which compared major wellness offerings and associated adviser satisfaction, found only 1% of those advisers surveyed did not consider Health and Wellness programs as an important area for consumers.

But whilst it is clear that advisers can drive improved wellness, some may still question whether this is an area they should be involved in at all. The truth is, they probably already are.

As Zurich’s Cost of Care[15] paper makes clear, the financial cost of ill health is large and increasing. Being able to adequately fund these costs – either through insurance or savings – should be an important component of any financial plan.

Similarly, the continuity and security of income, which underpins our ability to contribute to superannuation, manage debt, and build wealth, is reliant on our continued good health.

And many a sound financial plan has also come unstuck due to relationship breakdowns.

Whatever financial and lifestyle goals lie at the heart of your advice, they are likely all at risk of being undermined by the physical and or emotional ill health of your clients, unexpected or otherwise.

As well as facilitating deeper, more engaged client relationships, the ultimate payoff of a focus on wellness is an increased ability for clients to realise the financial and lifestyle goals embodied in your advice.

Tips on incorporating wellness into your advice process

The Financial Planning Association (FPA) has published an e-book on this topic , available via their website www.moneyandlife.com.au. This e-book – ‘Wellbeing and wealth, a place for health in holistic financial advice[16] – includes many excellent tips for advisers looking to understand the place for wellness in the advice value chain and wanting to incorporate wellness into their advice framework. These include:

  1. Keep initial discussions short and positive
    Briefly mention the topic, the relevance of it, and your connection to it. Introduce the topic in a positive way, perhaps by telling them about a health or wellbeing benefit you’ve experienced or heard about from a colleague.
  2. Check in frequently
    A single conversation is unlikely to have an impact. Build up to a more meaningful discussion over time, by keeping the subject top of mind each time you talk to your client. (This also creates more opportunities to connect with your clients).
  3. Be respectful of diversity
    People from different generations, cultures and socioeconomic backgrounds will have a range of standards and expectations for a healthy lifestyle. Look for ways to be encouraging rather than judgemental!
  4. Follow your own advice
    This may be the hardest of all, but you will be much more credible as your clients’ health mentor or advocate if you’ve taken steps to make changes to your own behaviours and health outcomes. Managing your own exercise and diet, and stress levels gives you a sense of what does and doesn’t work, and these insights and successes can be positive cues for your clients.

Conclusion

The economic burden of ill health is considerable and increasing, and is placing individuals, families, businesses and communities under increasing financial pressure. The rapidly growing focus on health and wellness is a response to this and has driven a multi trillion-dollar industry and global behavioural transformation.

From an advice perspective, poor health and wellbeing can be one of the biggest obstacles to individuals achieving their financial and lifestyle goals, significantly undermining the value of a financial plan.

Financial advisers are uniquely placed to help improve the financial, physical and emotional wellness of their clients, and they are now supported by a range of wellness resources, especially those available in retail life insurance offerings.

Focusing on and supporting your clients with their wellness will not only facilitate deeper, client relationships, it will increase your clients’ ability to realise the financial and lifestyle goals embodied in your advice.

The case for incorporating wellness into your advice proposition and processes is thus clear.

 

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References:
1. The Cost of Care, the missing link in the strategic financial advice equation,Zurich Life & Investments, 2019
2. Global Wellness Economy Monitor, October 2018, globalwellnessinstitute.org
3. How to use Calm, the Apple award winning meditation app that’s now valued at $250m’, Kaylee Fagan, Business Insider Australia, March 2018
4. ‘Calm’s Michael Acton Smith has come to Hollywood to put audiences to sleep’, Rina Raphael, Los Angeles Times, October 2019
5. Willis Towers Watson, 2017 Global Benefits Attitudes Survey, November 2017
6. Workplace Wellness in Australia, Medibank Health Solutions and PricewaterhouseCoopers, 2010.
7. globalwellnessinsitute.org
8. Care for physical, mental and financial wellbeing, Dr Wolfgang Siedl, and Eve Read, uk.mercer.com, 2018.
9. Exploring Financial Wellbeing in the Australian Context, Muir, Hamilton & Noone et al, Centre for Social Impact and Social Policy Research, University of NSW, for Financial Literacy Australia, September 2017.
10. The Health & Finance Correlation, Mark Achurch, investmenttracker.com.au, May 2018
11. AFA Whitepaper, Money, wellbeing and the role of financial advice, a gender based approach, The Beddoes Institute and TAL, May 2016.
12. Personal financial stress devastating lives, Financial Mindfulness media release, November 2017.
13. Zurich LiveWell program empowers and rewards customers, Zurich Life & Investments media release, June 2019.
14. Health and Wellness Research Adviser Survey, Strategic Insights, October 2016.
15. The Cost of Care, the missing link in the strategic financial advice equation, Zurich Life & Investments, 2019
16. Wellbeing and wealth, a place for health in holistic financial advice, FPA and AIA, moneyandlife.com.au, October 2018

 

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