Bringing Financial Wellness Services into the Workplace December - - PowerPoint PPT Presentation

Bringing Financial Wellness Services into the Workplace

December 14, 2017

Welcome

Carmen Shorter

Senior Manager for Learning Field Engagement Prosperity Now

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• ne week

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Housekeeping

Prosperity Now’s mission is to ensure everyone in our country has a clear path to financial stability, wealth and prosperity.

Our Unique Promise

We open doors to opportunity for those who have been kept

• ff the path to prosperity.

We help people build wealth by making sure they have what they need to build a better future. We enable meaningful mobility through research, policies and solutions.

Mathieu Despard

Faculty Associate Center for Social Development / Executive Director UNC Center for Community Capital

Joanna Ain

• Sr. Policy Manager,

Federal Policy Prosperity Now

Pamela Chan

Project Director, Human Insights Prosperity Now

Santiago Sueiro

Program Associate, Savings & Financial Capability Prosperity Now

Today’s Speakers

Setting the Stage

Joanna Ain

Senior Policy Manager, Federal Policy Prosperity Now

▪The State of Workplace Financial Wellness Programs ▪Audience Q& A ▪The Financial Wellness Needs & Preferences of Young LMI Workers ▪Financial Wellness Services: Resources for Employers ▪Audience Q&A ▪Close

Today’s Agenda

Workplace Financial Wellness Programs

Research Findings & Projects

Mathieu Despard

Center for Community Capital, UNC-Chapel Hill

Co-Authors: Meredith Covington, Ellen Frank-Miller, Geraldine Hannon, Michal Grinstein-Weiss, Washington University in St. Louis

Research Program

• Aim: to assess the potential for and effectiveness of workplace

financial wellness programs (FWPs) among low- and moderate- income (LMI) employees Workplace FWPs have potential to reach LMI households at much larger scale than community-based programs

Support from the Ford Foundation, JPMorgan Chase Foundation, and W.K. Kellogg Foundation

Phase 1 Research

• 1. Employer survey (N = 93)
• 2. In-depth interviews (N = 24)
• 3. Intensive case studies (5 providers, 7 companies)
• 4. Employee survey (N = 16,652)

Emplo loyer Survey Fin indin ings

Companies offering FWPs motivated to help employees. Companies not offering FWPs unsure of FWP effectiveness

Emplo loyer In Interview Fin indin ings

• Definition of EFWP fluid; retirement focus
• Financial counseling/coaching offered through EAPs
• Reluctant to administer grant or loan programs for emergencies
• Greater barriers serving part-time and lower paid employees

Case Stu tudy Fin indin ings

Facilitative factors

• Management promotion, continuous communication
• Part of on-boarding, universal eligibility
• On-site services
• Bilingual services
• Administrative ease

Survey of f Lower- In Income Emplo loyees

Less than 10% said employers

• ffered a financial wellness

program (except split deposit) Much higher utilization among employees w/financial difficulties Most interested in split direct deposit; also interested in payroll advance loans, financial coaching,

• nline tools

Low-Income Emplo loyees

Self-selection - Utilization rates higher for:

• Financial management classes (p <.05) and tools (p <.01) among

employees who consider themselves to be careful budgeters.

• Payroll advances (p <.001), in-person financial coaching (p <.01), and

credit counseling (p <.05) among employees with difficulty covering expenses.

Low-Income Emplo loyees

• Similar income, but very

different balance sheets!

• Findings suggest some

distressed/not distressed bifurcation

• Workplace might be gateway

for more affordable credit products for distressed employees

Do Fin inancial l Well llness Programs Work?

Phase II Research – employee outcomes:

• Small dollar installment loans

(TrueConnect – Employee Loan Solutions)

• Financial Coaching

(Neighborhood Trust Financial Partners)

• Credit Building (Working Credit)

Assessing Outcomes

• Dosage effects: Do outcomes vary based on # of touches, hours of

coaching, types and # of digital engagements?

• Subgroup effects: Do outcomes vary based on demographic and

financial characteristics of employees? How do these characteristics interact with FWP services?

• E.g., phone-based financial coaching may work better among women with at

least $1,000 in liquid financial assets

Assessing Outcomes

• Credit outcomes: capture credit data for at least 3 time points –

interrupted time series design:

Assessing Outcomes – Oth ther Optio ions

• Waitlist control group: matched with the treatment group based on

motivation; services are delayed, assess differences with treatment group during delay interval.

• Treatment As Usual (TAU) control group:

Condition Credit score-pre Credit score-post Difference Coaching 580 605 25 Coaching + credit 575 615 40 Coaching + credit + savings 590 625 35

Assess the “difference in differences” among the 3 groups

Checking In

What questions do you have? Share them in the Questions box!

Creating Opportunities for Young Workers to Thrive

Pamela Chan

Project Director, Human Insights Prosperity Now

Prosperity Now’s portfolio of projects looking at how the workplace can be a pathway for building financial wellness among LMI workers. ▪Understand challenges*

▪ Background review of existing publications and services ▪ Listen and learn events with practitioners and policymakers ▪ Research study to understand the perspectives of young, LMI workers

▪Advance products & solutions

▪ Workplace financial wellness services directory & resources for employers** [in collaboration with CSD] ▪ Share human insights from young workers and recommended practices from past innovation pilots with service providers and employers

▪Broker cross-sector relationships

▪ Advisory group of Human Resources and Workplace-Based Financial Wellness experts

*Made possible with a grant from Prudential Foundation. **Made possible with a grant from JPMorgan Chase & Co.

Financial Security at Work

Why focus on young LMI workers?

▪Millennials earn $10,000 less than Baby Boomers at the same age. ▪Millennials hold half the amount in assets than Baby Boomers at the same age. ▪Millennials have half the net worth of Baby Boomers at the same age.

Today’s young adult less financially well off than their parents were at the same age.

From Young Invincibles

Millennials in 2013 Baby Boomers in 1989 Income $40,581 $50,910 Total Assets $29,350 $61,277 Net Worth $10,900 $23,035

Allison (January 2017) Financial Health of Young America.

Challenges:5

▪ Not planning ahead as much ▪ Less likely to utilize formal financial products ▪ Exhibiting lower levels of financial literacy “People have really foundational challenges around their finances. Budgeting, managing money day to day. If you want to help someone prepare for retirement, you have to start

with those foundational issues.”

• - Vishal Jain, Prudential Financial

Young adults often struggle more with finances than older adults.

From FINRA Financial Capability Study

Gary R. Mottola, “The Financial Capability of Young Adults—A Generational View,” FINRA Investor Education Foundation, March 2014,

Young workers are more likely than older workers to report that finances affect their work.

From PwC Survey

“Employee Financial Wellness Survey,” PwC, April 2016, http://www.pwc.com/us/en/private-company- services/publications/assets/pwc-2016-employee-wellness-survey.pdf

Dealing w/ Financial Stress Finances Distract Work Productivity Impacted by Finances Missed Work Due to Finances

Millennials 64% 37% 25% 12%

Gen X 56% 29% 16% 8% Baby Boomer 40% 19% 11% 4%

Study Overview: Interviews with Young Workers

49 Young, LMI Workers Interviewed in 4 Cities

▪Financial issues experiences ▪State of help with finances ▪How employers can help ▪View of workplace financial wellness services

Topics Discussed

What’s going on in the financial lives of young LMI workers?

“It’s just I get really stressed because I don’t know how to really describe it, but it’s like I

know that I have these bills, and I know I have enough

money to pay the bills, but when I’m going to pay them I

• guess. Yeah. Just they keep

adding up.”

– Portland Interviewee From Related Survey Research

▪ Job Situation*

▪ 21% have a temporary or uncertain job ▪ 49% of PT employees doing so because only option or employer cut hours

▪ Income volatility**

▪ 70% of people ages 18-24 experience ▪ National Average: 55% experience

▪ Expense volatility – Month to Month Change***

▪ Median change for non- discretionary expenses: $452 ▪ Median change for discretionary expenses: $410

Making ends meet is a stressful struggle.

*Board of Governors of the Federal Reserve System (December 2016) Experiences and Perspectives of Young Workers; **Farrell & Greig (February 2016) Paychecks, Paydays, and the Online Platform Economy; ***Farrell & Greig (February 2017) Coping with Costs: Big Data on Expense Volatility and Medical Payments.

▪ 36 respondents reported having debt

▪ Median: $4,300 ▪ Max: $93,000 ▪ Min: $500

▪ 20 said debt worried them ▪ Most common debt held:

▪ Education debt ▪ Credit card ▪ Automobile debt.

▪ For some, monthly payment is challenges; others weight

• f total debt

“[My student loans] are

• high. I

I can manage th them, but it it kee eeps me fr from bei eing able le to go back [t [to sc school] l] until it’s paid off…It keeps me from being able to do stuff that I really want to do.”

• -Houston Respondent

Paying existing debt brings feelings of anxiety, sadness and regret.

“Well, basically, the the mon

• ney tha

that you you ge get for r yo your r pa paycheck, it it go goes to oth

• ther

r thin

• things. So

you really can’t save a lot of money even though you’re trying to save. Just can’t. You’re like cutting back on stuff – but still you can’t save up.”

• - Houston Respondent

From Federal Reserve Survey of Young Workers

▪ 55% of young workers cannot pay their living expenses if out

• f work for 4

weeks. ▪ 60% of young workers cannot pay living expense if out of work for 3 months.

Not having savings is frustrating.

Savings Goals Mentioned in Study

• Emergencies
• Car
• Clothing
• Housing
• Healthcare
• Investment
• Education
• Retirement

Board of Governors of the Federal Reserve System (December 2016) Experiences and Perspectives of Young Workers;

21 11 9 13 23 43 Other Teacher/Mentor Financial Institution Friend Online "Family" Member

Access to actionable and relevant help is limited.

Sources of Help Used (# of Respondents)

“If [only] there could be…an actual place that I could go to get

more explanation.”

• Portland

Interviewee

“[My siblings], they mean well

• n some things, but some

things they can’t really advise me on…like this kind of stuff – college expenses – I couldn’t

really go to them about advice on that because that’s not something they could tell me about.”

Limitations of an Inexperienced Social Network Wanda’s Story*

*To protect the identity of interviewees, name and picture do not correspond with story.

What can employers do to help young LMI workers thrive?

▪Offer more hours at work or higher wages ▪Provide benefits that subsidize or reduce typical expenses for employees ▪Connect employees to financial information and advice ▪Help them to save ▪Help them understand how they can best maximize income ▪Offer transitional support when there is an impending job loss

From the Young Workers Interviewed

▪Offer more hours at work or higher wages ▪Provide benefits that subsidize or reduce typical expenses for employees ▪Connect employees to financial information and advice ▪Help them to save ▪Help them understand how they can best maximize income ▪Offer transitional support when there is an impending job loss

From the Young Workers Interviewed

Yeah, [my employer

• ffering services to help

with finances] that would

ld be a ble lessin ing. . Because there’s not enough help lpin ing goin ing around.

Everybody’s really struggling…people [with] job still say they’re broke. Something is not right.”

• -Chicago Respondent

“[T]he whole corporation thing…it’s looked upon like it’s out of touch…But you know, [offering financial wellness services] would

show th they defi finitely care…They worry about

their employees’ well- being.”

• -Philadelphia Respondent

Young workers are interested in seeing financial wellness services at work.

How do young workers feel about workplace financial wellness services?

▪Financial advising ▪Retirement plans ▪Financial classes/seminars ▪Online financial tools ▪Payroll advance ▪Short term loans ▪Split deposit ▪Bank at work ▪Direct deposit

Services Discussed

Advice from Young Workers: ▪ Have a credible third-party advisor ▪ Include an in-depth initial session with the option to have shorter, flexible,

• ngoing sessions

▪ Allow employees to target sessions around troubleshooting specific issues ▪ Time sessions (or information and reminders about the service) with paydays and key times when people are thinking about money

“I didn’t have any parents. My grandmother raised

• me. She worked a lot.

People lik like me, th they didn’t get coached on

how to take care of their financial expenses.”

• -Chicago Respondent

Financial Advising

Advice from young workers: ▪ Include content that can be immediately applied (e.g., to track finances, make decisions, find lower cost products). ▪ Make the experience individualized ▪ Verify the tool’s legitimacy and communicate that it is a legitimate tool for them to use. ▪ Make sure the platform is convenient and user-friendly.

“I can actually sit down and take a look at it instead of looking at money, counting the money.”

• -Philadelphia

Respondent

Online Financial Tools

Retirement

▪ Mixed expectations about savings for retirements or for shorter term ▪ Features that make saving easy like auto contributions and employer matches seen as beneficial ▪ Concerns about more immediate need vs long-term benefit Focus more saving without sacrificing short term needs and flexibility for emergency purposes

Financial Classes

• Value is to gain financial

knowledge

• Descriptions of how it should work

are more like one-on-one financial advising, but with a peer element  Consider financial classes that function more like support groups rather than knowledge building lectures.

Retirement savings and financial classes/seminars are desirable, but maybe not as currently offered.

Payroll Advance

▪ Ideally, offer without interest or fees,

• r at least make it less than other

credit products in the market. ▪ Make terms and fees (if levied) clear and clarify that advances aren’t loans. ▪ ·Keep the application for an advance simple. ▪ Allow flexibility for small advances (e.g., $30) up to the whole paycheck.

Short-Term Loans

• Make the loan terms clear and less

costly than alternatives in the market.

• Offer loans in very small amounts

(e.g., $50-100).

• Offer negotiable payment terms for

borrowers to set.

Payroll advances and short-term loans are controversial.

▪Cost to employees ▪Concerns that the services will not be valuable in practice ▪Lack of awareness of confusion about services ▪Inconvenience and hassle factors associate with usage

Points of Caution from Young Workers

Available at: https://prosperitynow.org/resour ces/beyond-next-paycheck- creating-opportunities-young- workers-thrive

Study Report

Workplace Financial Wellness Resources

Santiago Sueiro

Program Associate Savings & Financial Capability Prosperity Now

Audience Q & A

What questions do you have?

Share them in the Questions box!

Mathieu Despard

Faculty Associate Center for Social Development / Executive Director UNC Center for Community Capital

Joanna Ain

• Sr. Policy Manager,

Government Affairs Prosperity Now

Pamela Chan

Project Director, Human Insights Prosperity Now

Santiago Sueiro

Program Associate, Savings & Financial Capability Prosperity Now

Today’s Speakers

Next Steps

▪Please complete the survey! ▪Visit Prosperity Now’s Workplace Financial Wellness Services Directory at https://prosperitynow.org/workplace- financial-wellness-services-directory. ▪Stay tuned for future learning opportunities: join the Prosperity Now Community at https://prosperitynow.org/get- involved/community!

Want to dig deeper?

 Adult Matched Savings Network  Financial Coaching Network  Taxpayer Opportunity Network  Campaign for Every Kids Future — Children’s Savings Accounts  Affordable Housing Network  Racial Wealth Equity Network  Innovations in Manufactured Housing (I’M HOME) Network

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