More Money, More Stress: Defining Financial Wellness

Andrea Herron 00:01
Have you ever wondered how a company is able to offer unlimited time off or be a pet friendly office? Curious how HR leaders manage the well being of remote or essential workforces? If so, you’ve come to the right place. Hi, I’m Andrea Herron, head of people for WebMD health services. And I’d like to welcome you to the HR scoop. On this podcast, I talk with other HR leaders to explore the world of unique employee benefits, and about the challenges of managing unique workforces, because well being isn’t a one size fits all approach. On this episode of the HR scoop, I talked with Sabina Bhatia, Chief Customer Officer at pay active about one of the most common and underrated areas of human stress, money and finances. From simply understanding what financial wellness means to conscious capitalism to how technology can help. Join us as we answer all your financial wellness questions. Welcome to another episode of the HR scoop. Today, we are so thrilled to have Sabina Bhatia. And as the Chief Customer Office,r Sabina advocates for positive impact on the livelihood of workers with financial wellness tools provided by pay active. She also spent 20 years on Wall Street as an analyst to assist financially stressed companies or to restructure their financial positions. And we are so happy to have her here today to discuss not a brand new topic, but a topic we haven’t really dived into so far. And that is financial wellness. So welcome, Sabina.

Sabina Bhatia 01:40
Thank you, Andrea. So excited to be here.

Andrea Herron 01:42
Yeah, you’ve got quite a history of some pretty amazing things. But before we jump into that, I think it would be really helpful for our audience to just start with the basics. And let’s define what financial wellness really means. Because we hear that tossed around all the time now. But let’s just decide once and for all, you’re the expert here, what is financial wellness?

Sabina Bhatia 02:05
Sure, Andrea, and you are correct. It’s tossed around a lot. It seems like when you walk into a conference, almost anything is considered to be financial wellness. And I really think we need to think about it seriously the impact of a truly impactful Financial Wellness Benefit. Now, who is the American worker? In why are we talking about financial wellness, and just a few weeks back? I believe that was just when you and I initially spoke about doing this podcast, the Harvard Business Review came up with a very detailed report that talks about the plight of the American worker.

So who is the American worker? Is it you and me? Or is it the 44% of Americans that are employed in low wage jobs, and at the frontline of industries, Andrea, these are the people you and I bump into when we check into a hotel. When we check out of a grocery store. Those package handlers that were dropping our groceries are necessities to plus years during the pandemic could we have survived without them. And these are also your hourly workers who come in every day, they clock in clock out, and then they have to wait for two weeks to get paid.

We need to financial wellness for this American workforce. So earn wage access really gives them access to the earned but unpaid wages before the two weeks cycle. It’s not alone. It’s not credit. It’s it’s nothing that you haven’t earned. It’s nothing that is not yours. So now with earn wage access, one checkbox you can check and that is that liquidity concerns are taken care of. But that’s just not enough financial wellness should have longevity, you need a benefit that is wholesome to someone. So, from there we go to the whole discussion about livelihood expenses, and we use the word livelihood and in fact Andrea we also created a livelihood index and we went from state to state to state to understand what the livelihood of the person looks like. livelihood is just taking care of your basic necessities, food, water, shelter, transportation, very basic needs. If your income is able to cover all this, then what is left out of that you are living above the livelihood index and app pay active, that is exactly what we want to serve. So we want to provide the earned wage access benefit.

But beyond that, we built so many other tools, savings, a smart spent tool, that once you’ve taken care of your expenses, you’re empowered to save, right? But how do I do it, you don’t walk into a bank and say I want to open a savings account, probably not the best route. So they’re able to do that. Then the the other thing to think about, and after this, I’ll pause because I know I’ve been talking for a while, and I’m probably boring a lot of people. But how pause. But the other thing to think about is the same American American workforce that’s living paycheck to paycheck has to clock in, clock out and wait to get paid, and doesn’t have the liquidity.

It’s really expensive for them to be poor, to not have the liquidity. And what does that expensive to be poor me, when you don’t have liquidity, you end up paying overdraft fees, late fees, disconnect fees, all these fees, some financial institution will monetize off your status. And instead of saving, that’s what you put. So any benefit you provide cannot have a short term solution. If it does, it’s not financial wellness. So our goal is really to get the workforce out of day to day struggle and build a more long term comfortable financial picture. And we do it in many ways. But that’s how we see financial wellness.

Andrea Herron 06:46
That’s so interesting. And it makes me think of the memes where the just don’t buy avocado toast and you’ll you know, save all this money but not getting avocado toast or a $5 latte once a week is not going to make the difference. And someone overdrafting or you know, getting caught up in credit card debt. And I do think financial wellness is similar to mental health in a lot of ways. Because it’s stigmatized in the workplace. Because although an employer provides the financial means that people depend on to live, it’s also considered a personal responsibility to my to manage your finances. And so there’s this very interesting dynamic of, we’re going to provide this to you, but it’s also your problem similar to childcare.

And I think over the pandemic, childcare has become more of a workplace concern, because there wasn’t any, and people still needed to work. And then also, you know, this financial wellness and how it does impact the workplace and people’s ability to perform and be present and creative. And you can’t do that if you are, you know, drowning in debt and stressed out and on edge because you can’t pay the bills.

Sabina Bhatia 08:02
You’re correct, Andrea, and it’s become a rude awakening for a lot of employers, that the transactional relationship they had with the American worker, the same American worker we defined that you’re going to come in, you’re gonna fulfill a task, and I’m going to pay you after two weeks is not going to work anymore. Right? Today, they have a lot of leverage, the whole definition of essential worker has changed. It’s not just healthcare, or a form of healthcare, it’s retail, it’s groceries, it’s logistics, it’s everything, right? Those that had to go out to take care of us while we were hiding at home, scared of the pandemic, right. So that relationship has changed.

And now that workforce is coming to the employer base and say, your benefits have to be aligned across the organization. I cannot come in every day, and sometimes can’t even come in because they don’t have transportation costs to cover. Right? I don’t have the income for it. But it cannot be that transactional. I want a benefit that incentivizes me to stay with the organization. So as I speak to employers every day, and we talk about fall, solving the turnover issue. And RIA they’ll come and tell me, Samina, I wish I had a turnover issue. My problem is I can’t even recruit. So can we please step out? And can we please step back and take a fresh look at what financial wellness should be or what the needs of the worker are because that is what I want to fulfill. And I have a very simple response to them. Like if you’re going to step up, and you want to make that change.

This is what the American worker one It’s the earth helped you keep the economy intact and helped you build this economy, especially your most recent past during the pandemic. So why don’t you help them to put them in a position where they can actually contribute, but also reap the benefits of that economy. So keep that the liquidity. So though that might doesn’t have to go in predatory fees, instead, they take that money, spend it on taking care of their own needs, and sending the cash flow back into the economy. So benefit from the economy that you helped build? And they’re like, Wow, so that is really where we’ve gotten

Andrea Herron 10:43
today. Yeah, that reminds me of a conversation I just had a few days ago, with a manager about, you know, having hourly workers come in, maybe they live further out in this city, and the commute costs are the parking costs, and then asking them to take that on after being remote for two years is going to be a challenge. And I mentioned that because I think that probably applies to a lot of people out there with staff and trying to phase in a return to an office situation. And yes, there are a lot of jobs where you do need to be physically present. And so that is something to consider. But if not, I think it is wise for all of us to look at those jobs, in particular, to decide does this person really need to be in every day? Is it three days? Is it like, what is the value? And you know, how does that impact their wages and their ability to even get to work to make the money that they’re going to spend to get back and forth?

Sabina Bhatia 11:41
True? That is the case. However, Andrea, we now have another problem. And the other problem is this whole gig economy, right? And the Freelancers, right, so once again, looking at remote work, or those that come in, you might be able to convince them to come in, if you realize that this is what that number looks like, right? Just in the US about 60 million, or 36% of the workforce considers themselves to be freelancers. So to your point, yes, you have to be collaborative, you have to build that relationship with the workforce and say that if I can save you money in transportation, or I can give you money for transportation, because you can afford to ride, it’s better for you. And it’s better for me. So that change in mindset of not having a transactional relationship with your worker. But instead of a partnership and collaborated and having a benefit and fulfilling the needs in alignment of the entire organization, you just have to do that we keep we cannot ignore that anymore.

Andrea Herron 13:06
So aside from you know, the few things that we’ve already mentioned, are there other things that you would recommend an HR professional, think about if they wanted to implement any kind of financial wellness solution to be actually beneficial, and not just the checkbox? You know, we offer an extra savings account, which there’s nothing wrong with that. If that’s what you can do. It’s better than you know, nothing. There are lots of easy things we can do. But do you have any other suggestions or things that you’ve seen work really well, for someone who wants to implement a better solution?

Sabina Bhatia 13:38
I encourage every HR executive, every organization, to think about the fact that checking a box that says financial wellness is one thing. But the form of financial wellness you offer is even more important. So what you do is important, but how you do it is even more important. So let me give you an example. Someone, a worker comes to me and says, You know what? I need $180 I’ll Google and I could find them the top 10 Best payday loan places to go to that is not an ideal situation, yes, they might be able to get liquidity. But you know, with an average APR of 300 400 500%, that is not the right solution.

That is not the way it needs to be done, especially when you do have another solution available. So the approach that we’ve taken, and this is something we were, you know we were practicing even before we became a B Corp. And the whole conscious capitalism movement came out, right for us. You know, our customer, ideally, our mindset is with the user. My customer is actually the user Although I spend most of my time talking to employers, about their people, our client is the user. So the kind of benefit which we provide them, and what we charge them is very, very important. So, I would say, the whole big corporate movement, and us being a B Corp has legitimized how we react in the industry, how we create products and services, and what the impact is on the user. Same thing, you know, we are talking more and more like almost every one of them wants to, you know, discuss financial wellness, they want to talk about, you know, what is this whole concept of business for good. And I said, your business needs to have purpose. So, whoever the employer or the HR executive talks to about a benefit, please ask them, What is your purpose? What impact should I see? Forget me, I checked the box, but with my employees, what would they say about you? And why are you a better alternative, versus the others out there? So, that is how I would guide that.

Andrea Herron 16:13
It’s a great point. And if you can’t explain what value your company adds, or why people should care, what’s the point? What’s the purpose? Forget everything else, and just start right there. That is step one. For sure. And, and not just the executive team, but can your employees cling to something, as well, um, because we know people want value and purpose in their work life. You know, I’m, I’m interested from your perspective, because you’ve had such a long career kind of in this financial industry in various ways. You know, what trends have you seen, coming going? What do you see for the future related to financial wellness? Like, what journey are we on?

Sabina Bhatia 16:58
What I have seen is, so we invented this category about eight years back. I’m president and CEO, of a doctor Sopran. Chef. And since then, we see so many little little companies come up are afraid Awa. I think the trend was to try to provide a short term solution. I solved the problem. Move on, I saw your problem long one. Well, that is not solving the problem for a lot of the users, that is not solving the problems of those 44% of Americans that served us for two years, right. And you talked about kiddos who can stay at home and do their job, and who cannot write, these are those same workers. So my housekeeper, she doesn’t make $1 Unless she doesn’t step out of the house to do the job. That’s the essential workforce. So a lot of us just paid them on a monthly basis throughout the pandemic, because otherwise they won’t earn a penny. Right? So we have to find a way to serve that. Because it’s really sad.

When you see 60s 65 million of Americans living paycheck to paycheck, this is the richest country in the world, Andrea, the richest country in the world. And in that country, we have a tiny third world country sitting there, there’s something wrong. So I’m rich axis is great than is a short term solution. But we really need to change the mindset. And we ask employers to support us to do that, because they have the power. Right. So that’s where comes the business for good. And there’s so many B corpse over there who talk about business for good, right? We pay active is a B Corp. A mean, you’ve heard of names like at leader, they are a big a big Corp, you know. So there, there is a laundry list of companies now that are saying that I am going to make a trifecta impact. And that isn’t going to make an impact on on the American worker, I’m going to make an impact on the communities. And we’ll make an impact on businesses. But businesses have to step up to make that change. So I see more and more of that.

I’m sure you hear a lot about conscious capitalism. And see, I’ll be honest, right? I came from Wall Street. 20 years there. The audience I served was very, very different. Right? Yes, yeah. Exactly, to say the least. But what I learned after the 2008 crisis, when we are when we are all suffering, think about the American workforce, what are they going through? So I had actually gathered so much intel on so many industries. I thought I could put it to better use right Right. So that is one thing.

The other thing we’ve seen, is this whole talk about technology. what can technology do to help the purpose. And I remember Andrea, might be a sad story, but still makes me laugh. And sometimes I regretted when 2008 happened, you know how many times I interviewed with Bloomberg, I really wanted to work for that organization. And I always got rejected for a simple reason. Because I did not understand they were a technology platform. I understood them as a financial services platform, to not necessarily completely different that, you know, one is part of the other. So we today have built a technology platform that helps the user and helps the employers to get a good benefit in the hands of the employees.

Because otherwise employers are stuck in the payroll schedule, they cannot change that. Right. So that is also a trend we’ve seen. But once again, you have to use technology for good, right. So that is another change I’ve seen happening. So we are very, very sensitive with what we do with our technology, Intel, right here in the business. And, and I see it very clearly, because I am not an engineer, by background. You know, I have an MBA in finance, I just I did not have that tech part of fintech. But when I came here, I had this new and true appreciation for engineers and technologists, that the platform you can build that is fair and impactful to the US.

Andrea Herron 21:48
So are you saying that not everything on the internet is true? And good? Okay, you heard it here, everybody.

Sabina Bhatia 22:01
I’m saying Do your research.

Andrea Herron 22:03
It’s kind of advice is solid, solid advice. And you’re exactly right. Technology keeps coming up, over and over in, how are we going to move everything forward, and payroll benefits companies, people, no exception? There. If anything, we’re it’s the last kind of monolith of the old school way of doing things with very rigid systems and structures that have yet to be as individualized and tailored as really anywhere else. So you’ve mentioned a couple times conscious capitalism. And I think that is a really interesting topic and one we have not discussed. So would you mind explaining what that is, and kind of how you see that playing out?

Sabina Bhatia 22:48
You know, there’s something that I mentioned. And that is, if you speak to a business, if you want to provide a financial wellness, that really makes an impact as the business what the purpose is. And for us, our purpose has always been to free the American worker from the liquidity crisis, the two week pay cycle crisis, let them participate in the economy that they’ve helped build. I, you know, sometimes when I speak to users, I tell them, I’d say, you know, your livelihood is my life’s work, that it’s really as simple as that. And so having that purpose brings you to the path of true conscious capitalism. What is your purpose? And how are you going to use your business for good, and that is how I see a business stepping up, and making a quantifiable impact on the community. And that could be in the form of the benefit in the form of pricing in the form of what truly financial wellness could be? Is it just giving them an alternative that is better than a payday loan? Or is that giving them a benefit that is great for them long term. So just a fair and good platform for our users. That’s how I see conscious capitalism,

Andrea Herron 24:15
I think that really could branch out into so many other areas related to employees and benefits, because I think of, you know, being conscious about where you’re spending your money and putting your money, right, like at the end of the day, so is that? What do your employees care about? Is there a certain 401k platform or not platform but kind of group of, of investments that work better for your values, you know, what groups are you partnering with? Who are your vendors, you know, how are you aligning all of what you offer to what matters to your specific staff, and that’s going to be different company to company, but hopefully always in line with what’s best for the humans that work there. So I think That’s really interesting and something that I would encourage people to think about, you know, where are you spending your money from training, you know, learning and development initiatives to how you’re supporting staff with all the array of benefits and choices that they have into where Are you donating? And how are you giving back to your community? So I think that’s a really, really good point.

Sabina Bhatia 25:22
Thanks, Andrea, you just talking about employers again, the other thing that we’ve seen is, and I should have mentioned this to you before, when you asked me about the trends that we see is when you talk about that hybrid workforce, so if I was an employer, how can I ignore the fact that things that are happening in their lives at home, now that they’re working from home, can be ignored, you can’t do that anymore. So income, you know, health issues, whatever it might be, we cannot aggravate that we have to support it. I tell human resources, you know, you are the source. You’re not just human resources, you are the source of happiness. And Human Resources has a very negative connotation. If my HR director asked me to come to our office, I always presume it’s something horrible. But that’s not what we are seeing today. We partner with businesses that are caring, and they truly care for their people. And they understand that that is how I make an impact on the bottom line of my business. So that is also a form of conscious capitalism. I’m going to do the right by my people.

Andrea Herron 26:41
Yeah, I agree. And that the entire HR people function has really, I think, gone leaps and bounds into being a strategic partner in adding value to organizations. And it’s been a delight to see, but we certainly do still have plenty of work to do. So before we let you go, I wanted to ask you the last question that we ask all of our guests here, which is to tell us something about yourself that most people may not know,

Sabina Bhatia 27:09
well, I can tell you something that I wanted to do again, and I was asked not to do. So I and then we’ll tell you a little bit about me. I’m a certified skydiver, and a certified scuba diver a

Andrea Herron 27:24
bit of an adrenaline junkie. I’ve always I’ve always thought about it. I’ve never done it.

Sabina Bhatia 27:30
Yeah, I’ve done in about 32 times. Yeah. Wow. Yeah. It’s, it’s, it’s a beautiful thing to do, which I guess I’ll have to hold on to it for a while.

Andrea Herron 27:40
I feel like a 33rd. Time is in your future. Thanks. All right. Well, thanks again for joining us. It was a great conversation and a pleasure to have you.

Sabina Bhatia 27:52
Thank you so much, Andrea. Thank you for having me.

Andrea Herron 27:57
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