Shannon McLay wants people to get real about money. At The Financial Gym, a business she founded in 2015, “financial trainers” coax people to talk frankly about their finances, their insecurities, and their hopes and dreams. The goal? To teach the gym’s members how to avoid the mistakes that keep them chasing financial goals like a hamster on a wheel.
At The Financial Gym, candid sessions are hosted in a homey environment, where wine and beer served from a “Money Bar” to ply the truth about people’s tough money issues.
Every week, dozens of guests participate in finance-themed events like the “Wine & Learn Wednesdays,” “Budgeting Bootcamps” and “Fairygodboss,” a session where women can learn how to close the wage gap. On April 20th, there was even a “Weed-O-Nomics” course teaching people how to budget for the now-legalized recreational drug.
The Financial Gym prices its advisory plans at $85 a month. This includes a monthly meeting, an on-call financial advisor, and a financial fitness plan suited to their life goals. For couples, monthly rates start at $145. For students, it’s $35 a month.
“I wanted to price it like a regular gym,” explains McLay. “I wanted to create something that real people could afford.”
Key Question: Why don’t traditional institutions offer supercharged financial education programs they can charge for? Is there anything preventing a bank or credit union from turning their financial literacy initiative into a revenue stream?
Crafting a Homey Experience to Minimize Financial Anxiety
Located in midtown Manhattan, The Financial Gym looks as little like a traditional banking office as is possible — an intentional part of McLay’s strategy.
McLay designed the gym to feel like a home away from home. For instance, the gym is equipped with cozy workspaces that double as private meeting rooms with sliding barn doors.
“I don’t want this to feel like a workspace,” she said. “Most people work on money in their home. We want this to be like their second home.”
Similarly, trainers at The Financial Gym wear casual workout clothes or jeans. Staff t-shirts spout inspirational money-related mantras on them.
“How do you get comfortable with someone who is wearing a suit?” McLay said. “You can’t.”
McLay envisions the future of the Financial Gym as a chain in cities across the US, where people will be able to go to manage their finances, the same way they’d go to the gym to get in shape. “I want people to see the gym and know that they can come in and figure out a real way to sort out their finances,” said McLay.
Gym members can also drop in to use the space and its free wifi.
Key Insights: Money is a touchy subject. People are more likely to talk about their health or sex life than their financial situation. Any financial education initiative will have more impact when sessions are hosted in a space that eases people’s fears, reduces their stress and gets them to relax. This means ditching the cold, stuffy “corporate office” and abandoning a sterile “classroom” environment.
Expanding The Gym: Coming to a Branch Near You?
In early 2019, McLay plans to open a second gym in Brooklyn. There are also plans to open four more locations: Atlanta, Dallas, southern California, and Washington, D.C.
“Banks have real estate we like — branches that we could remake into Gyms.”
— Shannon McLay, The Financial Gym
Down the road, she sees the potential for partnership with a banking institution, sharing her “gym” approach with a bank or credit union. She thinks traditional players could definitely use the help.
“All I’ve really done here is reinvent the branch bank,” says McLay. “Banks have real estate we like — branches that we could remake into Gyms.”
For this kind of partnership to work, banks have to think beyond the product-pushing tradition, she says. While trainers will recommend certain types of services — she’s a big believer in robo-advisors, for example — she doesn’t want her concept to devolve into a product channel.
McLay envisions the future of They Financial Gym as a chain in cities across the U.S., where people will be able to go to manage their finances the same way they’d go to the gym to get in shape. “I want people to see the gym and know that they can come in and figure out a real way to sort out their finances,” said McLay.
Key Question: When will a traditional retail financial institution partner with The Financial Gym, or license a franchise from McLay?
Some have wondered why McLay doesn’t translate her model and methodology to an app or a website. But McLay says some people don’t like the automated, AI-driven tech experience. One client confessed that she had tried one of the major personal financial management sites, but hated the way that she felt it was judging her. Periodic messages like, “You’re spending too much on coffee!” annoyed her, and were counterproductive.
Everyone has a different learning style. Some people are visual learners, others auditory. Some people prefer a DIY, self-taught, self-help model. The Financial Gym caters to those who like to learn by interacting with an instructor in-person.
Turning Financial Education Into a Business Model
The concept for The Financial Gym stems directly from McLay’s past experience in the financial industry. As a former financial planner at Merrill Lynch, she felt that traditional institutions weren’t addressing people’s financial needs and problems.
The Financial Gym began with the idea that a planner shouldn’t be selling anything but advice.
“Usually the only way financial services firms make money is by selling things,” McLay says. “Everybody’s got a product to push.”
Go to an insurance agent for financial planning advice, and you are likely to walk out with an annuity or a whole-life policy. In McLay’s opinion, people who sell things see the world through the products that generate commissions for them.
McLay toyed with the idea of launching a nonprofit that would help people with their money. But her first angel investor — who had handed her a $100,000 check — urged her to ditch that idea.
“People won’t value it if they don’t pay for it,” she was told.
It’s a little like Weight Watchers. Part of Weight Watcher’s success is that people pay — in part — to weigh in. Even if they skip their weekly pep talk group meeting, they have to report in with their current weight. That can have more impact than simply stepping onto a bathroom scale, which comes free and no one knows what the scale said.
Similarly, fear and shame are two key factors that McLay says keep people from taking steps to improve their financial lives.
“People are more afraid of going to a bank than going to a gym,” McLay explains. “People understand the importance of keeping physically healthy, but often they don’t know about money.”
Working Out at The Financial Gym
“Our workout equipment is wine and Kleenex.”
— Shannon McLay, The Financial Gym
Clients have their own personal trainer, who works with them from the beginning. McLay hires them for different reasons. Some seem to have had the right mindset about money from the beginning of their financial lives. Others have made mistakes, and suffered the bruises and tears of getting money very wrong. They can bring the lessons they learned to their clients.
One of the key points trainers impart to clients is that managing one’s finances requires making hard choices.
“You can’t always get what you want,” says McLay, “but you can have what you need.” Part of the goal is determining where the client wants to be, and what they must sacrifice so their money works toward that goal, not being dribbled away on other things.
Sometimes The Financial Gym’s trainers have to get tough with members to help them see their errs. McLay remembers a client whose financial goal was to be able to afford to travel extensively. During one periodic review, she got her wrist slapped while her trainer admonished: “You said you want to travel, but you just spent $700 last month on Über rides. That’s not the kind of travel you want to do.”
Emotions and money are virtually inseparable, McLay explains. Talking about money makes many people anxious. But until an individual or a couple confronts the financial demons that hold them back, they can’t make progress.
McLay speaks of a couple The Financial Gym has worked with. Husband and wife are successful attorneys, seemingly a recipe for financial security. Yet the money being spent on clothing was a source of constant friction between them. And it was not the wife’s spending. What was driving her crazy was her husband’s mounting clothing bills.
“He came from nothing,” McLay recalls, so for him, affirmation that he had made it meant constantly buying the best clothes he could find. The spending strained their marriage.
Some of what clients hear is discipline, some of it is common sense skillfully applied, some of it is frugal ingenuity.
McLay says one young couple wanted a big wedding. In part this meant cutting things out to save for it, and some of it hinged on finding creative ways to lower the costs. For example, instead of hiring an expensive limo service, the couple found that they could rent luxury cars and ask friends to serve as chauffeurs for a day.
The Financial Gym ultimately holds onto 70% of the clients that start programs. The 30% who don’t stay generally drop out within the first three months. Of those who stick it out, McLay claims a 90% success rate. In a few cases, she says, success may involve personal bankruptcy — some situations require immediate relief, with a commitment to getting back on the right foot.
Gender Matters With Money Management
McLay says there is clearly a difference between men and women when it comes to finances. She notes that her client base consists of about 60% women and 30% men. Half of the Gym’s clients come as singles, the rest as couples.
Frankly, she says, “guys get dragged in,” even when they are actually the problem, like the clothes-horse lawyer. (She adds that that couple was near divorce when they first came to the Gym.) She likens this to the classic guys-don’t-ask-for-directions meme. They don’t like to seek financial advice or help with budgeting either.
Until recently, the Gym’s trainers were all women, but soon McLay will be bringing aboard her first male trainer. The work takes not only financial acumen, but the ability to relate to clients and to manage the emotional baggage that they check in with. Tears aren’t uncommon, some of them shed when people “get naked” and lay their frustrations on the table. Some clients cry when they see their financial goals in sight.
“Our workout equipment,” says McLay, “is wine and Kleenexes.”
She adds that one thing that gets men to sit still for their first session is the fact that The Financial Gym allows them to talk money over a beer.