#534: Employee Financial Wellness as Competitive Advantage with Nico Simko, Clair

In today’s work environment, financial wellness benefits are increasingly recognized for their role in enhancing employee satisfaction, retention, and productivity. Also, as we delve deeper into the modern workforce’s expectations, particularly among younger generations, it’s clear that innovative solutions like on-demand pay are not just perks but essential components of a competitive employee benefits package.

To explore these developments and their implications for both employers and employees, I’d like to welcome Nico Simko, Founder & CEO of Clair, with us today.


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Greg Kihlstrom:
 In today’s work environment, financial wellness benefits are increasingly recognized for their role in enhancing employee satisfaction, retention, and productivity. As we delve deeper into the modern workforce’s expectations, particularly younger generations, it’s clear that innovative solutions like on-demand pay are not just perks, but essential components of a competitive employee benefits package. To explore these developments and their implications for both employers and employees, I’d like to welcome Nico Simko, founder and CEO of Clair, to join us today. Nico, welcome back to the show. Do you mind giving us a little background on, you know, why you founded Clair as well as a little bit about what Clair does?

Nico Simko: Absolutely. Founded Clair because during college, I was an economics tutor, which was an hourly job. I got paid via physical check in the mail every two to three weeks. And then I realized at the same time that there was this cool thing called Venmo where you could pay your friends in a few clicks. And I was like, wow, you can pay your friends in a few clicks, doesn’t cost you anything, but it literally takes two weeks for your paycheck to run. And then you get a physical check in the mail, usually five or six days afterwards. This makes no sense. And so from there on, I kind of didn’t do anything for five years. But when Uber came out with Uber money, I was like, someone needs to invent this concept for the rest of the US economy. So for medium sized businesses, large sized businesses, mom and pop shops in all 50 states, and that’s how Clair started. Wonderful.

Greg Kihlstrom: Yeah, definitely. That’s great. And let’s, um, let’s start here by talking about financial wellness benefits in some of those high demand sectors. And so industries like retail and hospitality, and other similar industries, high demand, especially, there’s seasonality there as well. So you have high demand, high pressure. Financial wellness benefits can play a big role here in not only ensuring employee satisfaction and retention, but also in recruiting as well, because there’s a lot of competition during those key seasons. So let’s talk a little bit more about that. And so, you know, given the importance of these benefits, particularly to some workers, how should companies in high demand sectors like retail and hospitality think about incorporating these benefits, especially when gearing up for peak seasons?

Nico Simko: Yep. So most of the industries you’ve mentioned have seen that it’s very hard for them to attract and retain talent. The talent war, as you can put it, is real. And it’s been real and accentuated during COVID and it kind of remained like that. They need to be competitive. They need to show, without breaking the bank, ways for why an employee should come work for them instead of the person across the street. That’s the number one reason why they should have on-demand pay. The other reason is you want, at the end of the day, to have as happy of employees, even if they stay, but you want to have as happy employees and as less stressed employees as you can so they can serve your customers in the best way possible. So even if you don’t have a retention issue, even if you don’t have a hiring issue, How can you help people feel, for example, less stressed on a day-to-day basis? The number one cause of stress in the United States is financial stress. So ultimately, the thing you want to do is help them with that. And so that’s where Clair comes in. And most employers that are on our product sign up and encourage employees to use us for that particular reason.

Greg Kihlstrom: Yeah, and to build on that, you know, to the culture aspect, you know, there’s not only does that benefit the employees, but, you know, as, as you were saying, it, it benefits the brands as well with things like productivity and satisfaction. So, you know, how some of that might, you know, might sound obvious to others, but, you know, what are some of the benefits, you know, when, when you’re able to take the financial stress off of employees, what are, what are companies able to get from those employees?

Nico Simko: Well, absenteeism is pretty high when people are financially stressed. I’ll give you one of my favorite examples that was real. I talked to an employee who worked at a quick service restaurant and I asked him about their experience with banking and with just financial services as a whole. And they had signed up for Clair and they said, look, like, since I’ve signed up for Clair, I’ve stopped going to work for Uber at the end of the month. And I was like, what do you mean? It’s like, well, I kind of told my manager, like, if he wouldn’t let me go, I’d just be like, look, I’m sick, right? I want to go. And I was like, why is this? It’s like, well, because ends meet are hard, you know, it’s hard to make ends meet. So I will call and say, go drive for Uber and Uber pays me immediately. And so for them, that was like one thing is that they would just show up to work more. And the other way that this really impacted them, beyond that, I think, specific example, is we’ve seen in our application that people come for wage advances, meaning they come and take a bunch of wage advances. But as they’ve been with us for about a month, two months, they take less and less wage advances, which is a great thing. Because for us, that means they’re saving more, and they can plan for their financial life. And so sometimes you find people in this, we’ve all gone through this, where you’re just short on money for a specific period of time, and you just got to get over the hump. And so all of that is to say is we are able to service kind of all of these micro needs and combined together, they represent quite a big chunk of the population.

Greg Kihlstrom: Yeah. And I mean, that’s, you know, so having, having that, even if it’s a small reserve, sometimes it’s like, that’s their mind is on work and plus, you know, it’s, it’s like that win-win, right. It’s like they’re, they’re the, the companies are getting what they need. Cause their employees show up and they’re focused on their work and the employees are paying their bills on time and putting a little bit away for, for a rainy day and everything like that. So, yeah, I mean, it sounds like, um, like a win-win there. I wanted to talk a little bit then about just the concept of on-demand pay and its effects. We mentioned some of the benefits and kind of started out talking about the benefits, but with studies indicating a strong preference for on-demand pay among employees, how does this Again, you know, we talked through the company and the employee relationship. What about those end customers? You know, what are the how are the end customers benefiting from from this kind of win win with the company and the employee?

Nico Simko: So the reality is, it’s just quality of service that they’re going to get. I mean, there’s this famous phrase, right, which is like. Treat your employees the best way possible, because in return, they will treat your customers the best way possible. And I think that’s the that’s kind of the mentality. You know, I run a business myself, you know, we have dozens and dozens and dozens of employees in different divisions. And it can’t be more real, is that if I’m kind to my employees, if I’m supportive in times when it’s tough, and also sometimes being kind is also giving harsh feedback, but showing I care, they’re also going to care a lot about the outcome of the product they’re building because they want to keep their job and they want the company to succeed. And so that’s the self-fulfilling prophecy.

Greg Kihlstrom: So why don’t you talk a little bit about how exactly does Clair work and how are you facilitating this demand for on-demand pay and maybe talk about how it works. And then if you could talk about some outcomes for companies as well, that’d be great. Yep.

Nico Simko: So the way it works, Currently, employees at businesses will hear about us mostly within their payroll workforce management system, or they’ll hear about it from manager or QR code on the wall. And what they’ll hear is this, sign up for a new bank, and as soon as you clock out of work, a portion of your paycheck is available. That’s the value prop. Do you want a new bank account? If you’re open to it, we can give you this FlexPay option. They sign up, they get at least a portion of their paycheck every month. We don’t force them to. Absolutely not. They can ACH money out to another bank account whenever they want. But most of them will spend on the card. And these consumers are now able to honestly be better banked. And in case their gas station and their card that they swiped is not working, then they get the ability to flex their pay of money they’ve earned, but not yet received.

Greg Kihlstrom: Yeah. Yeah. And so, you know, what kind of, what kind of outcomes do you hear from your customer? You know, the, the brands that hire your company, you know, what, what kind of stories are you hearing from them as far as, you know, how this is benefiting their, their employees as well as their, their businesses?

Nico Simko: So the employers are benefiting primarily with, the ability to sell a benefit that is still not kind of status quo. So they can be differentiated when they hire people and they can convince people to come work at their place instead of the place across the street. And they benefit by having people want to go work there. They also, people will think twice before quitting a job with those kinds of benefits. Of course, it’s not the whole thing, but it does help. And then finally, they’ll also have less absenteeism that comes out of, you know, people not feeling like they just need to go work a gig job for half a day because they need cash right now.

Greg Kihlstrom: Right. Right. Yeah. And so last topic I want to talk about related to all of this, but diving a little bit more into, as we see there’s certainly different generations have different preferences, different needs and things. And so we’ve got Gen Z continuing to enter the workforce and their expectations are certainly shaping how employers are looking at employee benefits and things like we’ve discussed. Considering this increasing presence of Gen Z in the workforce, you know, are there, you know, are there different key factors? Or, you know, what key factors should employers be considering to meet those expectations, particularly in terms of things like financial wellness and benefits?

Nico Simko: Yeah. I think the idea is, is to really stay attuned to what motivates somebody to be at their place of work. and the culture that they’re building and the environment that they’re building for them. The reality is most employees who leave, leave because it’s not the right culture or because their pay is just, you know, completely unfavorable. But sometimes like, you know, if as a business, you’re not able to afford above market comp, you might have a chance of getting as good, if not as bad, you know, better employees to come in and then be retained if you build an amazing culture. It of course requires more work. It requires to have a mission. It requires to have something bigger than what they currently have, but it’s not impossible. And so thinking of that holistically, and there’s many forms of technology they can use. They can use for workforce management. We don’t do that, of course, but there’s amazing workforce management solutions these days that are out there. One that I can shout out. is seven shifts in the restaurant space. There’s also this amazing company called When I Work. Those are brands that have done an amazing job at just delighting their customers. And so thinking of that holistically in the employee experience, you’re going to retain your employees much more than the person across the street, because most businesses, unfortunately, don’t care that much about their staff.

Greg Kihlstrom: Yeah, yeah. I mean, so are you seeing that there’s marked shifts between generations, you know, and what they need, or, you know, a lot of what you’re talking about seems like, these are just general truths of, you know, people want financial security, they, they need work, but you know, they want financial security, they want their employers to take care of them. And, you know, when they do, they can focus on all those things. But, you know, do you see any marked shifts from, you know, millennials to Gen Z to, you know, in terms of any, you know, any priorities?

Nico Simko: Yeah. The view is that as crazy as it may sound, and it might be like not the answer you’re necessarily looking for, is that Gen Z is at the end of the day, Yes, they’re more connected. You know, yes, they use words that maybe other generations don’t use. Yes, they spend a lot of time on social media, but they’re looking for the same stuff as we all do, right? They’re looking for something aspirational, but they also want to make a living. And so I would say like, I would advise not to create kind of almost a distinction there. But to kind of live with the times, and one of the things that we talk a lot about, even at Clair internally, is the need to be working out of an office, working from home. And I think if you make decisions as an employer with common sense, I think you can get a lot more out of your employees. Because a lot of people try to optimize for the rule, or they try to optimize for things that are to some extent, you know, academically or hypothetically correct. But it doesn’t necessarily mean that’s the right thing for common sense of what’s going on right now in your business. Oftentimes those things are the same, but sometimes they’re not. And when there’s that level of discrepancy, that’s, I think, what hurts a lot, you know, the culture. And that’s what helped, you know, that hurts with Jay-Z years. So I’d say like a lot of it applies. And I think that also means you’ve got to treat the Gen Z, I want to find the right word, but it’s like population or like, you know, members of that age group, the same way you treat everybody else. And if that means that, you know, if you have an in-office policy, because for a particular job, you know, you need these people, you know, on a whiteboard or you need to make sales calls. Like, I don’t think we should adapt that if it’s known that it’s best for the business. Because I think there’s, I think that in the long run, it will go back to, this is going to be a reversal to the mean around, you know, what makes sense from business and also like employee experience and employee growth perspective that, you know, will kind of be the same across different generations.

Greg Kihlstrom: Yeah. Yeah. I mean, you know, it sounds like, and I’ve run into this in, marketing work. And, you know, I think Google was early on in, in this idea of, you know, it’s, it’s kind of life moments and places that we’re at that are a lot more I guess unifying or however you want to look at it, then it is an arbitrary age. So in other words, if somebody in Gen Z is starting a family and someone, a Gen Xer like myself is starting a family, there’s a lot of things that tie us. We have a lot of similar needs, maybe some different because different stage in life, but there’s a lot of similarities there from a financial and a a wellness perspective, there might be a lot of similarities there as well. So I mean, it sounds like that’s kind of what you’re saying as well. Is that is that true? That’s true. Yep. Yeah, yeah, definitely. Well, Nico, thanks for joining us today. I’ve got one last question for you before we wrap up here. And, you know, want to look ahead a few years here. And, you know, we talked about kind of, I would call it the win, win, win is, you know, when when companies are treating their employees well, not only did both of those groups benefit, but their end customers benefit as well. But if you could look out a few years, what are you seeing? What do you have your eye on as far as financial wellness and employee benefits that companies should be preparing for?

Nico Simko: Yeah, I think from a benefit standpoint, I’m a big believer that For most Americans, and especially for the hourly workforce, banking with a bank that is completely separate from all of the data that your employer has is going to be seen as a liability, not as an asset. Right now, we’re thinking of a bank as an asset, right? You have this thing, gets your paycheck, but I think it’s going to become a liability. Why? a lost opportunity of having better access to credit, better access to credit building, better access to pre-tax benefits such as commuting and 401k. And I think it’s about time financial services gets tied back to the world of employment.