As CEO/President of FinFit, I am afforded incredible insight into the consumer financial markets and the financial health and habits of employees. We have learned directly from employees what they are experiencing financially, how they’re handling their personal financial situations, and the compelling products, services, and benefits within the market. Here are five trends I believe will be the most impactful for 2020.
The political environment, as we are all aware, is both hostile and polarized – with no better evidence than the recent market fluctuations. 2019 commentary in the marketplace called for 25% increases or decreases in the market depending on how things shake out this November. That’s huge.
With close to $4 trillion in assets within these funds making up 20% or more of all mutual fund assets (typically a holding of publicly traded stocks), a substantial decline in the stock market could be devastating to many. Given this real risk, we should expect 2020 to have substantially more activity within these accounts and I encourage our members to be active in their management of investments.
A recent study done by Fidelity Investments indicated that the average 401(k) balance now stands at $106,000. For many, this is their largest unleveraged asset. These are real risks with meaningful impact to a substantial asset; don’t let it ride – be involved. As an employer, encourage your employees to monitor their retirement accounts and be proactive.
Your data, your choice
Did you know that just four years ago we were creating more data in 24 months than had been created during all human existence? Here’s the crazy thing – we’ve accelerated that accumulation of data. The discussion surrounding the collection of personal information/data is never-ending. Who owns it, who secures it, who’s responsible for it, what can you do with it, what happens when you don’t use it correctly, etc.
The value of your data, meaning your financial, social, medical, geographic and other elements that define you and your activities has immense value to a large populous of organizations. Historically, various vendors accumulated personal data for free, bundled it up and sold off to the highest bidders.
We’re now seeing a considerable political and regulatory weight regarding the economics and use of the data. I would expect that we will soon see more stringent activity regarding ownership of the data and allowing individuals to retain their data if they so wish.
Instead, individuals will have control over this precious asset (their data) that can be sold or traded (permanently or temporarily) to their desired organizations for use only if agreeable to the provider of data. An example: you may choose to sell your data to a hospital investigating their impact on patient behaviors but elect not to sell your data to a political party who wants to determine how best to earn your vote.
It’s raining, it’s pouring
The [old, young] person isn’t snoring. They are using mobile banking and financial technology to ensure they have a healthy rainy-day fund. From saving apps to employer-based incentive programs to government and private business initiatives, there is a focus on changing a scary statistic.
According to a 2019 GOBankingRates survey, 58% of Americans have less than $1,000 in savings. This means that any significant financial challenge would require outside resources to solve, or else it would result in catastrophic financial failure.
The good news is that many FinTech companies are developing and supporting platforms and technologies that will allow for seamless savings; these programs will alter behaviors and ensure individuals are encouraged to develop rainy day funds while establishing positive, healthy saving habits. This is a fantastic step in the right direction, and I am excited to see the impact.
The next step will be to ensure that the behavior of saving is equally met with a behavior of maintaining. Raiding savings for wants versus needs will not accomplish the intention of behavioral change. Technology is making us stronger; coupled with education and motivation, Americans will be unstoppable.
Personal assets = additional income
We have all followed the incredible success stories around Uber and Airbnb. The premise of these operations (and their copycats) is that individuals can leverage personal assets that are underutilized.
The most substantial investments of middle America are typically their home and/or their vehicle(s). Why not leverage these underutilized assets to create personal financial value? I think it’s brilliant. These are tangible assets; individuals have far more intangible assets and I believe we will begin to see these “other” assets leveraged for value.
I mentioned the value of personal data, but what about your time, relationships and experiences? All these intangible assets can bring value to others and ultimately additional income to the individual offering access to them.
Employers embracing employee well-being
Call it culturally conscious or the millennial impact, but the ability to gain personal fulfillment and happiness from work reaps positive, productive outcomes. Employers are recognizing this desire and embracing the idea that if they are to compete for the best talent in the marketplace, they must adjust their corporate strategy to identify with employees on a personal level.
Employees want to work for more than just a paycheck.
Not long ago, employers believed that outside of a paycheck and a retirement savings option, their involvement in the financial affairs of their employees was off-limits. We should expect to see 2020 be a record year for employers delivering financial education, services, support and benefits to their employees.
Employers can’t avoid the fact that employees are more challenged financially than ever before. The statistics are prevalent across every news source. Every aspect of millennials’ financial existence is incredibly more complex than it was for their parents’ generation. But since the inception of the Internet (amazing that was only 30 years ago) and continuous technological improvements, employees will have efficient access to educational resources and support systems to ensure they are more informed and capable of creating financial stability in this complex world. Employers will develop more trusted relationships with their employees, and an employee base that is more stable and more productive.
David Kilby has been president of FinFit since it was founded in 2008. He has grown the company from a single idea into the nation’s leading Financial Wellness Benefit platform, servicing over 150,000 clients. Prior to FinFit, David led a multimillion-dollar financial holding company where he was inspired to find ways to help employees improve their financial health. He is committed to helping employees succeed today, and prepare to live healthier, more productive, financially stable lives.
Get in touch with him – he’d love to talk to you about your company, your employees and how he can help.