A Conversation with Alok Deshpande on Financial Health

Alok, thanks for speaking with me this morning. Financial Wellness is an important topic that impacts everyone.
Sure thing. You’re absolutely correct about the significance of this subject. Glad to share my perspective with you and provide employers with ideas to educate employees. We have the pleasure of working with employees in all stages of life. It’s never too early or late to confidently plan your financial future.

To begin, how would you define financial wellness?
Financial wellness is primarily about helping people make better financial choices, one choice at a time. Most people have similar financial goals — payoff debt, save more, retire comfortably and pass something along to your children. To reach these goals, it’s critical to make good, independent choices, one after another.

Actually, this is a good time for me to share that I prefer the term financial health over financial wellness. Financial health is, in many ways, akin to how we view physical health. We’re not either good or bad. It’s not binary. Instead, we’re all somewhere on a spectrum and trying to get out better. This is absolutely true with money.

I like that. Financial health. What do you feel are the key components of financial health?
Breaking it down, there are a few ways to look at financial health. Purely on the numbers, it’s understanding your Savings, Debt, Income and Expenses (SDIE) based on your age. There’s a combination of those numbers that make sense for each person at different stages of life.

The other angle on financial health is having the tools to improve and/or stay financially healthy. We call them the 4Ps:
1 – having a PLAN with structure, which can be broad but actionable and in order;
2 – finding the right PARTNER to talk with about your financial goals and better educate yourself about money;
3 – selecting the best PLATFORM, which includes products and calculators to help execute the plan such as a budgeting app; and
4 – defining your PURPOSE by asking the following questions: Why are you actually doing this? What or who am I doing this for? Financial health is a lifelong journey. You want to be sure you’re clear on your goals.

If an employer would like to provide a financial health benefit to their employees, what are some of the best ways to get started?
If you’re tasked with doing this for your organization, the first thing you should do is talk with different sections of the employee base and understand their different financial situations. Ask them about the main financial concerns that’s stressing them right now. Don’t talk to vendors first – instead, focus on your employees.

For example, if a segment of your employees are focused on helping their child go to college, then deliver a benefit that speaks to that. Talking about debt or retirement to that group will fall on deaf ears. Instead, support the needs that keep employees up at night. There will be multiple segments so remember it’s not a one size fits all. Ultimately, this is what drives engagement and overall buy-in.

In the same vein, once you decide on what you’re doing, call it what it is. Stay away from terms like ‘financial wellness’. Instead, tell them you’re going to have a meeting to help people understand college savings options and how to manage it. When you call it what it is, people with the pain will respond. If employers can help with the pain, they’ll find employees become less stressed about their finances, which benefits both parties.

Excellent advice. You’re clearly passionate about this and have a lot of valuable ideas on how to get started. Can you share some of the things you learned over your career in working with individuals with money and financial wellness more broadly?
Absolutely. One theme stands out to me. Research shows, as does my experience, that people know about one-third of what they think they know about money, but they’re embarrassed to admit it. It helps tremendously when people can acknowledge what they do not know and accept the fact that the information will be difficult to implement.

For employers, the key is in helping to solve people’s problems proactively. Did you know that more people go to the doctor than to the gym? People have things going on – just giving the broad ‘financial wellness’ content doesn’t meet them where they are. Problems need to be solved one at a time in a way to get employees to be financially healthy. Making good decisions independently – car, house, credit card – will give you greater confidence that collectively, you’ll be financially healthy. If you go broad strokes first, you lose the impact you could have.

Last question. Do you feel there is anything missing in the world of financial health?
A few jump out.

First, we don’t have enough independent providers of products. I understand that they do everything possible to keep it objective; however, that’s a tall order when your business model is driven by products. We need more independent guidance.

Additionally, the pendulum is swinging heavily toward technology solutions for financial planning. Many of these tools are effective and interesting but they apply to only those who know about money, which is a small portion of the population. Most people need someone to talk to or a coach. They want help with specific pain points and I don’t think tech-only solutions do that well. We’ve found that the human conversations make the lightbulbs go off and employees start to see each step toward their financial health.

Thank you, Alok. I’m grateful for your time, and I’m committed to using the term financial health going forward. We appreciate your wisdom and expertise.
Glad to connect, Katie. Thanks for having me.

Alok Deshpande is a personal finance expert and the founder and CEO of SmartPath, a financial wellness company. He started SmartPath in 2010 to provide unbiased financial guidance to middle class families. Today, SmartPath reaches tens of thousands of individuals every year through financial education and coaching programs at companies and graduate schools.

Alok is also the author of Fuel: The Most Important Number in Your Financial Life. He’s appeared as a financial expert and guest contributor in the Wall Street Journal, ABC, NBC, TechCrunch and more. Learn more about Alok and his company at www.smartpathfinancial.com.