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Financial Literacy and Financial Wellness Products

, | April 28, 2021 | By

by Joe Mendel – 

“All the Perplexities, Confusions and Distresses in America arise not from defects in their Constitutions or Confederation, not from a want of Honour or Virtue, So much as from downright Ignorance of the Nature of Coin, Credit and Circulation.” – John Adams, second president of the United States

The recent appearance of products and services by financial institutions that promote financial health and wellness is much more than just a competitive reaction, passing fad or “product du jour”.  The genesis is deeply rooted in the fact that financial literacy has been a long-standing issue in our country as it has never been a part of a core curriculum taught in many schools.  And it continues to be of concern as uncovered by the recent COVID-19 pandemic crisis, as it has never been so clear as to how many families are living paycheck to paycheck and are just one domino away from the tipping point.  But this worry goes way back – as far as the American Revolution and one of our founding fathers.

From the time of John Adams, signer of the Declaration of Independence, second president of the United States and first president to live in the new “White House” it was recognized that understanding and practicing personal financial hygiene was important to the success of the young new nation.  At that time financial transactions were relatively simple compared to the complexities of financial situations today.   Most people used cash for daily purchases and credit was elementary.  Today the on-demand habits of consumers of all ages are challenged with the multitude of financial products and instruments available to them and are faced with the complexity of understanding how to use basic products such as simple checking, savings, investments, and credit facilities as they conduct their daily financial transactions.  The ease of transaction coupled with the proliferation of credit offerings can easily lead to overextension of credit and further financial problems.

  • Nearly 40% of all Americans cannot cover a $400 Emergency1,
  • 18% of those making more than $100,000 annually live paycheck to paycheck2
  • 40% of U.S. adults have less than $1,000 saved to deal with unexpected expenses3,
  • 70% of employees are saving less for retirement than they think they should4,

That coupled with the trend of self-service with respect to retirement planning has left many without adequate lifecycle funds.  Alan Greenspan, former Chairman of the Federal Reserve recently commented “The number one problem in today’s generation and economy is the lack of financial literacy.”

The literacy deficiency is not limited to retail banking.  The asset and wealth management industry is on the cusp of what is being called The Great Wealth Transfer (GWT) which will see roughly $68Tn in assets being passed down from the Baby Boomers to their heirs over the next two decades. And of this incredible amount of wealth, it is estimated that $22Tn will pass to women by the end of 2020 and will increase to $48Tn by 2030.  Industry statistics report that less than 22% of women who will inherit money have a wealth management plan in place and more than 36% have no guidance at all.  A recent McKinsey report states that “Women in the United States – more so than men – seek hyper-personalized, outcome-based financial advice that meets their real-life goals”.

This presents an unprecedented market opportunity for Asset and Wealth Management (AWM) firms over the next few years to positioning their firms to compete for these assets under management (AUM).  It likewise presents a unique opportunity for retail banks.

The National Financial Educators Council (NFEC) reports some startling information also. The NFEC is a social enterprise organization committed to creating a world where people are informed to make qualified financial decisions that improve their lives, the lives of their loved ones, and the lives of people they impact around the globe. The NFEC spearheads the financial wellness movement around the world through advocacy and raising awareness and develops high-quality, unbiased financial wellness resources in collaboration with top educators, personal finance experts, and financial professionals with the primary objective of helping people improve their financial outlook.  Founding materials based on empirical research, psychology, and educational methodologies yields resources that inform the industry and set the standards for financial wellness promotion.

Here are a few quotes and statistics that even further validate the financial illiteracy that underpins the need for financial programming.

“Lack of knowledge about personal finance costs Americans over $280 Billion Dollars” – National Financial Educators Council

“A mere 31% of young Americans thought that their high school education adequately taught them good financial habits” – Bank of America Report 2016.

“To date of 61,000 participants only 59% received passing grades on a financial literacy test with 68% being the average score” – National Financial Educators Council

“Only 16.4% of students are required to take a personal finance class.” –  NextGen Personal Finance5

“Currently, only four states — Missouri, Tennessee, Utah, and Virginia — require that high school students take a stand-alone personal finance course to graduate.” – Jump$tart Coalition as reported by GenFKD

“Only 7 states require standardized testing of personal finance concepts.” – Council of Economic Education6

“Financial education programs benefit 100% of students. Compare this to only 19% who will need high school-level algebra in their job.” – US Department of Education7

“According to the Council for Economic Education, only a third of U.S. states require high school students to take a personal finance class in order to graduate. And one in five 15-year-olds in the U.S. lacked basic financial literacy in 2017, according to the Program for International Student Assessment, a global exam that measures knowledge in areas such as math, science, and reading. With state-mandated personal finance programs few and far between, the task of teaching financial literacy falls largely to parents.” – US News8

Clearly there is a pressing need for a formalized curriculum of financial literacy that is foundational and must take place within the educational system.  But this leaves a great opportunity for financial organizations today to take up some of the slack and reinforce financial wellness through a series of products and solutions that educate and promote healthy financial behaviors. As a result, the recent trend for financial institutions to offer financial wellness products is a direct result of the continued deficiency of financial literacy with our population.

Financial Health and Wellness Products

Financial Health and Wellness means different things to different organizations and each approach accordingly.   Retail Banks, Digitally Native Banks, Neo-Banks and many fintechs include basics of financials tutorials and video classes, wellness planners and calculators and dashboards and metrics.  Further there are organizations that facilitate offer analysis of spending patterns, classifying/ categorizing expenses, building budgets, and/ or aggregating accounts from multiple third parties.   Others also include tools that help consumers build their financial knowledge and/ or skills which include credit repair, credit monitoring, and credit building services.  Still even more progressive organizations use gamification to prompt good financial behaviors by offering rewards for healthy activities.  Companies such as EverFi offer Workplace Banking Education programs which “empowers financial institutions to deepen relationships with existing clients, attract new clients, and engage new retail consumers by providing personalized financial education and product recommendations as an employee wellness benefit.”  Built on a digital-first mobile platform it personalizes learning experiences for consumers with engaging content and interactive exercises that allows them to practice what they learn.

Benefits of Health and Wellness Programs

The benefits of including programs of financial wellness into the portfolio of offerings has many benefits, some of which are bulleted below.  The return on investment in this area goes well beyond financial revenues and includes contributions to the community and to individual personal values.

  • Renewed faith and trust in financial services organizations as partners
  • Improved brand reputation
  • Improved customer experiences that competitively differentiate the organization
  • More comprehensive understanding of customer behaviors which will be the foundation for intelligent analytics for predictive and prescriptive selling
  • Reduced costs-to-service for better educated customers
  • Reduced fraud losses and charge-offs
  • Increased Customer Lifetime Values (CLTV), reduced churn and improved retention rates
  • Well informed consumers that ae not in financial crisis

Four Takeaways for Financial Literacy

  • Understand that Financial Illiteracy has deep roots and is a fundamental threat to our society and is teetering on an explosive impact to the future health of financial institutions,
  • Consider implementing Financial Health and Wellness offerings as a core offering to your client base,
  • Make the programs interactive and offer rewards (gamification) for completion of levels or attaining healthy financial goals,
  • Become a Good Corporate Citizen by active participation in the march to reduce financial illiteracy as a benefit to society.

At RCG Global, we help Financial Service organizations understand the complexity of remaining viable and competitive in the on-demand economy.  We have been successfully solving complex business problems for financial service companies globally since 1974.  Our clients rely on us to help them harness the speed of now that drives evolution to the hyper-business age.  We know companies struggle to exist in an ecosystem of three simultaneously co-existing states, where the adoption of an evolutionary mitosis process constantly transforms and evolves operational and engagement models.  Our engagement model has evolved also to provide the expertise necessary to identify evolutionary solutions and get you from strategy to impact efficiently and with minimal disruption, allowing you to off-load, mitigate and de-risk your most critical initiatives.

We ask questions to solve business problems.  We engineer the velocity necessary to create competitive advantage through impactful outcomes.  We make your strategy a reality by compressing the time between strategy on paper, to execution, to impact, maximizing returns on investment while creating competitive advantage.

Contact us.  We can help you make a difference.


Works Cited

1. Federal Reserve (May 2019) “Report on the Economic Well-Being of U.S. Households in 2018” Retrieved from

2. Willis Towers Watson (2020, Feb 11) “Despite improvement in their financial wellbeing, U.S. workers remain worried," Retrieved from

3. PwC(202) "PwC’s 9th annual Employee Financial Wellness Survey" Retrieved from

4. Willis Towers Watson (2020, Feb 11) “Despite improvement in their financial wellbeing, U.S. workers remain worried" Retrieved from

5. NextGen Personal Friday "Who has access to financial education in America today? Retrieved from 

6. Council for Economic Education

7. US Department of Education "Science, Technology, Engineering and Math (STEM) Education

8. U.S. News (2018, Mar 29) "7 Lessons to Teach Your Kids for Financial Literacy Month" Retrieved from