Susie Logan, Standard Life Brand and Marketing Director examines what is meant by financial wellness and the opportunities it offers for financial advice.
The concept of financial wellness has been gaining momentum over the past few years.
To understand what financial wellness is, it’s important to know it’s not about affluence or lack of wealth.
Those who have inherited their wealth, or who have worked hard to earn it, are not financially well if they don’t know how to manage their money to achieve their goals.
And those with a modest amount of money can still be financially well if they properly manage their finances and live within their means.
Financial wellness is also not just about people engaging with their money.
Rather, it’s about people feeling in control of their finances, knowing their money is safe and that they have made the right choices with it, both for them and their families.
Some facts and figures about the current state of financial wellness in the UK paint a stark picture.
For example, 35% of the public is reported to be stressed, and 20% depressed, because of financial worries. Furthermore, 15% of people are over-indebted – including 5.8% of those in the highest income decile - and yet only 6% have accessed advice.
Then there are the pension freedoms which are putting an extra burden of responsibility on the individual.
These are just a few factors that contribute to the need for people to seek financial advice.
The role of advice has never been more important. It can create the peace of mind that financial wellness requires.
Financial wellness is a reasonable goal for everyone, regardless of their wealth. And the opportunities are real - but opportunities bring challenges.
For everyone who plays a role in financial services, it’s clear the industry is going to have to evolve to support client needs now and in the future.
Demand for advice – the advice that’s so necessary to ensure financial wellness – is growing.
Capacity to meet that demand is a huge issue. And not only is demand growing, clients have increasingly higher expectations. Advisers will need to know their customers better than ever before.
A significant challenge for advice is managing relationships at scale. This is where technology can excel and be harnessed by firms to:
It’s important we know the starting point of financial wellness in the UK in order to work together to make a difference. Because making a difference is what we can aim for when we work together.
And we’re playing our part by investing in our technology and support services to help enable the advice industry to increase financial wellness levels across the UK.
Standard Life accepts no responsibility for advice that may be formulated on the basis of this information.
The views expressed in this blog should not be regarded as financial advice.