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How to Embed the Three Pillars of Financial Wellness into Your Planning Process

Celeste Revelli August 24, 2021

Woman preparing a budget

Financial professionals have always played a role in improving their clients’ financial wellness by helping them plan for the future and recent events have shined a spotlight on how important that planning is. A new definition is coming into focus that positions the financial plan as a living document that seeks to elevate and deliver on a client’s desired quality of life.

In this article, we demystify the three core tenets of financial wellness—control over daily finances, emergency preparedness, and goals for the future. We dissect the planning framework for financial wellness to break it down into digestible pieces that can easily be integrated into your current workflow.

Control over Daily Finances

For most people, financial wellness isn’t a sprint, it’s a marathon. And financial professionals should be helping their clients progress towards financial wellness the same way they would coach a runner for a marathon—first examining day-to-day habits and behaviors and building out a plan from there. Financial professionals should ask their clients hard questions about their daily spending habits and encourage them to evaluate their existing routine through the lens of their life goals.

For instance, if it comes to light that a client spends a significant portion of their budget each month on fine dining experiences while not meeting their investment milestones, we should ask:

  • Where do you see yourself in five years? Twenty? What does your life look like?
  • How will fine dining contribute to your quality of life in the long term and allow you to realize the vision you just described?
  • What other priorities might you miss out on by overspending in this area? What would you lose by reducing your spending by 50 percent?

Not only will these questions help you build a deeper connection with your client and better understand what motivates them, but they will also give your client an opportunity to draw their own conclusions about their financial state and why it’s important to take control of their daily finances, rather than continue to let their daily finances control them.

Financial Preparedness for Emergencies

Life happens; jobs are made redundant, natural disasters strike, medical emergencies occur when you least expect them. No matter how much we try to avoid the unexpected, there will always be unforeseen obstacles to overcome, and although emergencies come in all shapes and sizes, there is one factor that unites them all—they’re expensive. And on top of that, the general population isn’t prepared to shoulder the expense.

Last year, Motley Fool surveyed 2,000 American adults1 on the state of their emergency fund and found:

  • Thirty-nine percent of people do not have enough money on hand to cover a $400 emergency
  • Fifty-six percent of people have less than $5,000 in savings
  • The average withdrawal from savings due to COVID related difficulties was $3,191

This tells an interesting story: If the pandemic cost the average person thousands of dollars, 39 percent of the population was not equipped to deal with it, and the 56 percent of people who were prepared depleted their savings by more than half.

As the U.S. emerges from the pandemic, there has never been a better time for financial professionals to revisit the importance of an emergency fund with their clients. After long-lasting uncertainty, clients are ready to tighten up their financial well-being and eliminate the growing financial stress that has taken root over time—stress that 68 percent of our survey respondents report feeling during the pandemic2.

Financial Goals and Aspirations for the Future

It’s natural to want to place long-term financial goals at the other end of the spectrum from granular financial actions like daily expenditures and emergency funds, but, all three of these pillars should thread fluidly into one another. Your clients’ aspirations for the future should shape their day-to-day behaviors and inform the short-term goals you establish together.

Long-term goals must be flexible, personalized, and omnipresent, rather than static and templated. Every client has their own definition of how life should be lived, and if money is the currency that allows that definition to manifest, the financial plan you create for them should map to that definition as well. Frame long-term goals with your clients as the lifestyle they aspire to.

Say your client has the following desires for the future:

  • Buy a house within the next two years
  • Become debt-free before retirement
  • Retire comfortably by the age of 55

Once these are solidified, you’d then reverse engineer them into tangible, short-term behaviors, such as:

  • Allocating a certain amount each month to a house fund
  • Paying down credit card balances each month
  • Contributing to a savings account to keep those balances low
  • Dedicating a large percentage of each paycheck to a 401(k)
  • Establishing a regular meeting cadence with you to revisit goals, review progress, and discuss changes

That’s just it—financial wellness does not have a clear start and finish; it’s a collaborative, ever-changing journey where the financial professional, the client, and the client’s finances move in unison. Modern financial professionals don’t view financial planning as a transaction, but rather an ongoing process to take their clients where they want to go, accepting that the destination may change over time and no two journeys are the same.

Ensure your clients’ financial plans evolve as their lives do by implementing action steps like revisiting the plan on an agreed-upon frequency, changing the plan and recommendations as needed, creating projections for reaching future goals, and stress testing the plan to address financial preparedness and keep goals on track.

The Financial Wellness Mindset

As you begin to integrate the new definition of financial wellness into your planning process, remember to:

  1. Think today. What financial behaviors can my client change today to build a better tomorrow?
  2. Think “what-if?” If my client lost their job or encountered a financial crisis of some kind, how would they sustain themselves and their quality of life?
  3. Think tomorrow. Where does my client want to go in life and how can I provide the stepping stones and ongoing education they need to get there?

Each one of these questions flows into the next to create an integrated path forward that connects your clients’ hopes, dreams, and physical and mental well-being to their daily, emergency, and future finances.

For too long, financial institutions have neglected the connection between money and the psychological, physical, and spiritual impact of wealth management—but this siloed thinking is coming to an end.

Moving forward, wealth will not only be evolved and evaluated using a holistic framework, but it will also take a fluid form, moving in tandem with the ebb and flow of the human experience to support financial wellness across the totality of our lives.

To learn more about helping your clients with their financial wellness, read our eBook, Deepening Client Engagement Through a Focus on Financial Wellness.

DISCLAIMER: The eMoney Advisor Blog is meant as an educational and informative resource for financial professionals and individuals alike. It is not meant to be, and should not be taken as financial, legal, tax or other professional advice. Those seeking professional advice may do so by consulting with a professional advisor. eMoney Advisor will not be liable for any actions you may take based on the content of this blog.

Sources:

1 Backman, Maurie. “Study: Average American’s Savings Account Balance Is $3,500.” Motley Fool, September, 2020.

2 eMoney 2020 Financial Wellness Survey Results: COVID-19 Increases Financial Stress. eMoney Advisor, 2021.

About the Author

Celeste Revelli, CFP®, is the Director of Financial Planning at eMoney Advisor. She oversees advanced financial planning client support and services, as well as eMoney’s internal and external financial planning education programs and department operations. With over 10 years of experience in the financial services industry, Celeste received her CFP® designation in 2014 and graduated from Loyola University Maryland in 2008.

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Welcome to
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Tips specific to the eMoney platform can be found in
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