Liz Davidson, founder and CEO of Financial Finesse, in El Segundo, California, says, “We must ensure that all financial wellness providers act in the best interest of employees by following an established set of standards, or we run the risk of this movement becoming a euphemism for financial services companies, payday lenders, high-interest-rate purchasing programs and others who want to rebrand themselves to gain back trust they have lost. This pollution of an industry that has collectively changed millions of lives for the better is not only unacceptable, it is dangerous to the financial security of millions of Americans.”
In a recent paper, Davidson defined a state of financial well-being as one where a person maintains:
- A manageable level of financial stress;
- A lifestyle at or below his financial means;
- A strong financial foundation including adequate emergency savings, no high-interest debt, and a sufficient insurance and estate plan to protect assets, income and loved ones; and
- An ongoing plan to achieve future financial goals.
A person who is financially well makes good financial decisions, has a higher level of satisfaction with his current financial situation, and a greater level of freedom to pursue life on his own terms.
Aditi Gokhale, chief marketing officer of LearnVest and head of LearnVest@Work, in New York City, says LearnVest defines financial wellness as the ability to feel confident about your money and optimistic about your future by having access to the proper technical tools as well as human support. It requires having a simple, actionable and realistic financial plan that is personalized to the individual and focuses on protection, optimization and growth.
“Financial wellness is not just about numbers—it’s about knowing you have control over your finances in the short term, and that you’re set up to achieve your long-term goals, whether that means paying down debt, retiring on your own timeline, buying a home or taking a dream vacation. Moving closer and closer to those goals over time is a strong sign of financial health. And, as we often say at LearnVest—it’s about progress, not perfection,” she tells PLANSPONSOR. NEXT: Financial wellness includes action, not just education