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Making Financial Wellness Smarter With AI & Cognitive Computing

Marthin De Beer

A Better Way

Employee Financial Wellness is an important new employee benefit that is not well understood and often poorly implemented. Some provide education only without measurable, actionable next steps that lead to a secure retirement. Others provide advice with inherent conflicts of interest. 

However, AI and cognitive computing now make it cost-effective and scalable to offer employees completely customized financial plans and personalized advice that gets smarter and better over time. The more an employee uses the features of an AI-powered financial wellness platform, the more valuable the user experience. The intelligence in the platform builds on itself.

Importantly, a financial wellness program built with AI and cognitive computing can also help with a new, increasingly accepted priority: Making sure employers are serving the interests of all their stakeholders. In August, the Business Roundtable issued a Statement on the Purpose of a Corporation,” which calls on corporate America to be concerned not only with their shareholders but with all of their stakeholders, including employees, customers, vendors, and communities. Financial wellness for employees is a high-impact way to respond to that challenge.

The Power of Advanced Technology

AI and cognitive computing can fundamentally reshape financial wellness programs for at least three key reasons.

First, both technologies make it possible to offer customized advice to employees with vastly different needs. Millennials grappling with student loan debt and a mortgage need different advice from Baby Boomers trying to finance an adult child’s college education and achieve financial security. AI and cognitive computing can provide personalized recommendations and advice based on each individual’s unique circumstances. As important, the technology can adjust in real-time. If the stock market gyrates or an employee experiences a major life change, such as a marriage or a new child, the technology can quickly adapt and recommend new strategies and tactics.

Why are twice as many companies offering financial wellness programs today compared to four years ago? Because employees are increasingly stressed out. A recent study by PwC further validated why financial wellness should be a corporate priority:

  • Personal finance issues are the No. 1 stressor for employees
  • 35% of employees say financial stress impacts their ability to do their job
  • Less than half of all Baby Boomers are confident about their retirement

Second, the power of AI and cognitive computing make all the constituent parts of a sophisticated, financial wellness program work together seamlessly. To achieve significant employee engagement, a Financial Wellness platform needs to offer a wide range of personal financial management functionality, including goals-based financial planning, budgeting, and spending analysis, investing, debt management, estate planning, and insurance advice. AI and cognitive computing use the data from each element of the platform to inform other parts of the platform.

Third, AI and cognitive computing are particularly well-suited to accomplish a key goal of all financial wellness programs: Cumulative learning about personal finance. As an employee gains further confidence about their personal finances, an AI-guided financial wellness program can motivate them to take the next steps. Those steps build on the knowledge and experience gained from the previous interactions with the platform. It’s the classic virtuous circle applied to personal finance.

Technology + Humans = Success

An AI-inspired financial wellness program is highly effective, but it needs to be part of a holistic solution for employees. As AI and cognitive computing operate unseen in the background, humans often need to be front and center. It’s critical to have experts available who can discuss everything from planning for a life event to a debt reduction program to estate planning to buying insurance.

Our experience is that an enterprise-class digital advisor works best when complemented by a team of professional financial advisors who can offer fiduciary advice. The importance of fiduciary-quality advice can’t be underestimated. As a fiduciary, there is a legal obligation to provide employees with objective advice that is always in their best interests. When it’s crystal clear they are receiving independent advice, more employees are engaged in an employer’s financial wellness platform.

AI and Cognitive Computing In Action -- Practical Examples

So how does it all work?

One concrete example of AI and cognitive computing is providing employees with a personalized financial wellness score, an ongoing progress report on their journey to financial well-being. A financial wellness score gamifies the financial wellness process, making it more engaging and less intimidating. The intelligence in an AI-driven platform walks employees through the thicket of ideas and next steps at their own pace. The financial wellness score, in essence, serves as a constant feedback loop. It builds knowledge and confidence to keep moving forward.

Another example of AI in action is a financial wellness score for employers. Using anonymized employee data, employers can identify knowledge gaps and trends in the financial wellness of employees. With those insights, employers can offer new financial education programs, promote under-utilized benefits, or offer new benefits. Today, most employers have no understanding of their employees’ financial wellness. AI and cognitive computing make it possible to know what was unknowable before.

Yet another example is how AI and cognitive computing can help employees budget better and save more. AI can create an always-current budget that helps employees manage spending to fund their high-priority financial goals. AI and cognitive computing simplify the process by building an ongoing budget based on spending history from bank and credit card accounts and quantifying the short-term contributions required to fund long-term goals. By doing the work for employees, the technology avoids hours of data-gathering and drudgery. Intuitive, low-maintenance budgeting facilitated by advanced technology helps employees maintain spending discipline and stay on plan.

The Bottom Line

Financial wellness is a universal need, like quality healthcare and education. Yet, financial well-being has become challenging for many Americans due to rising housing costs, student loan and credit card debt, and the lack of financial knowledge.

A financial wellness platform powered by AI and cognitive computing can position Fortune 1000 companies as corporate leaders and employers of choice. At the same time, they can improve employee productivity, engagement and loyalty, while significantly reducing turnover, healthcare, and retirement costs. Best of all, employees will have an opportunity to plan and secure their future.Making Financial Wellness Smarter With AI & Cognitive Computing,

This article originally appeared in HR Technologist on December 27, 2019.