Dimensions & Insights: How inclusive principles can transform financial wellness

In a time where financial independence is increasingly prioritized over traditional retirement, the need for an inclusive-focused approach to financial planning has never been more critical. I recently spoke with Jacque Reardon, Head of US Marketing at Franklin Templeton, who offered insights into the evolving landscape of financial independence—drawing on data from the company’s annual Voice of the American Workplace (VOTAW) survey.¹

In our conversation, Jacque highlights trends and underscores the necessity of integrating inclusive principles into financial strategies to address the unique needs of a diverse and multi-generational workforce. Learn more about our discussion in the following highlights.

In recent years, the idea of being financially independent has become more important. This is shown by the VOTAW data, which rose more than 7% this year. I think it's definitely been a cornerstone of our research over the last couple of years that folks are actually migrating more toward that idea versus perhaps traditional retirement or other financial wellness,” Jacque explained.

However, many individuals have noted that achieving financial independence is becoming more elusive. “Sadly, the likelihood that people feel like they'll actually reach financial independence has gone down,” she noted.

The VOTAW study found fewer workers were confident about the likelihood of achieving financial independence, reflected in a 6% decline year-over-year.

This paradox highlights a critical issue—while more people aspire to financial independence, fewer believe they can achieve it.

The retirement savings gap is a symptom of the obstacles faced by savers. Jacque recently participated in a symposium discussing “Retirement Savings Equity and the Pursuit of Financial Independence,” with panelists from Morgan Stanley and Deloitte. There is a collective retirement savings shortfall across all workers, and the gap is particularly notable among women and minorities, according to Deloitte. When people start saving, income levels and interrupted careers due to raising children and caregiving are some of the challenges.

A major factor contributing to this challenge is financial stress. Jacque noted, “Most of the concerns that people express are about finances. If you inquire about their worries, chances are they will mention a few financial matters,” Jacque observed.

The VOTAW survey found worries over earnings, maintaining a way of life and health care expenses are major stress factors.

By incorporating inclusive strategies to meet the needs of clients, advisors may help them feel more confident about their financial choices on the path to fiscal autonomy.

“Data from the VOTAW supports the need for a holistic approach to financial health,” Jacque said. The financial industry, she argues, has been overly focused on retirement savings at the expense of other financial needs. “We are, unfortunately, as an industry, super-obsessed and super-focused on retirement,” she said. "Instead of helping individuals really think across the spectrum of financial needs."

Jacque's point is supported by data from the Employee Benefit Research Institute (EBRI),² which shows that while retirement savings are crucial, other aspects of financial health, such as managing debt are also important. In its 2023 survey, EBRI found many workers were concerned about saving enough for retirement and nearly two-thirds of workers noted their debt was a problem.

Addressing these areas can alleviate immediate financial stress and contribute to long-term financial stability.

More companies have reported offering financial wellness benefits, yet they have noted these are underutilized. The VOTAW survey found 49% of employers offer a financial wellness platform but only 28% of employees use it.

Employees may need assistance understanding their benefits, especially younger workers. According to the VOTAW survey, while 72% of workers reported facing challenges in understanding employee benefits, this issue is even more pronounced among Gen Z, with 86% struggling in this area. This highlights the need to tailor benefits communication and education to meet the unique expectations and preferences of this generation, ensuring they can fully utilize and appreciate the resources available to them.

An inclusive approach also ensures that financial planning, advice and resources cater to the diverse needs of all individuals, considering factors such as cultural differences, socioeconomic backgrounds and unique financial goals. This holistic perspective can help bridge gaps and create a more equitable financial landscape.

Financial inclusion is not just a moral imperative but a fundamental component of economic recovery, Deloitte found in a recent report on financial inclusion.

The post-pandemic analysis found that addressing inequities is crucial in ensuring an equitable recovery that empowers and uplifts those who have historically faced barriers to financial wellbeing. In particular, financial inclusion has emerged as a viable solution that can enhance the availability of financial resources and tools to those who need them the most and foster economic growth and improve the quality of life. Integrating underserved communities into the financial system can lead to more robust economic health, the study found.

The VOTAW survey also found a shifting balance between financial health and other health domains, such as physical and mental health. Historically, people viewed these areas as equally important, but recent data indicates a shift. “This past year, our research has shown that the stress related to financial health and the importance individuals put on it far outweighs other areas of health—upwards of 15% year-over-year,” Jacque revealed.

The imbalance suggests that financial stress is now a dominant factor in overall well-being. A survey by PwC found that 57% of employees cite financial matters as their most significant source of stress.³ This heightened focus on financial health underscores the urgent need for comprehensive financial wellness programs that address diverse financial challenges.

To help people get out of debt, Jacque wants to find solutions that are right for them. Upwards of 84% of people are saying, ‘I want more personalized resources, I want more personalized benefits when I think about addressing and planning for the future,’” Jacque cited from the survey.

By offering customized guidance and support, financial institutions may help individuals achieve their goals. Again, an inclusive approach to personalization considers the unique circumstances and challenges faced by diverse groups. For instance, financial strategies that address the specific needs of women, people of color and low-income households can help close the financial equity gap and promote financial well-being.

To improve the engagement of participants with their retirement savings, industry leaders can consider several ways to support them:

• Gain deeper understanding of the participant base through data collection
• Offer customized workplace savings plans to meet individual needs and be more inclusive for all savers
• Personalize overall benefits to support employees in managing their financial wellbeing, including debt and emergency saving
• Improve communications to help more workers understand their benefits and actively take advantage of them