Bringing Financial Wellness Services into the Workplace. December 14, 2017

Transcription

1 Bringing Financial Wellness Services into the Workplace December 14, 2017

2 Welcome Carmen Shorter Senior Manager for Learning Field Engagement Prosperity Now

3 Housekeeping This webinar is being recorded and will be available online within one week All webinar attendees are muted to ensure sound quality Ask a question any time by typing the question into the text box of the GoToWebinar Control Panel If you experience any technical issues, gotomeeting@prosperitynow.org

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

5 Our Unique Promise We open doors to opportunity for those who have been kept off 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.

6 Today s Speakers Joanna Ain Sr. Policy Manager, Federal Policy Prosperity Now Mathieu Despard Faculty Associate Center for Social Development / Executive Director UNC Center for Community Capital Pamela Chan Project Director, Human Insights Prosperity Now Santiago Sueiro Program Associate, Savings & Financial Capability Prosperity Now

7 Setting the Stage Joanna Ain Senior Policy Manager, Federal Policy Prosperity Now

8 Today s Agenda 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

9 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

10 Research Program Aim: to assess the potential for and effectiveness of workplace financial wellness programs (FWPs) among low- and moderateincome (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

11 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)

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13 Employer Survey Findings Companies offering FWPs motivated to help employees. Companies not offering FWPs unsure of FWP effectiveness

14 Employer Interview Findings 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

15 Case Study Findings Facilitative factors Management promotion, continuous communication Part of on-boarding, universal eligibility On-site services Bilingual services Administrative ease

16 Less than 10% said employers offered a financial wellness program (except split deposit) Survey of Lower- Income Employees Much higher utilization among employees w/financial difficulties Most interested in split direct deposit; also interested in payroll advance loans, financial coaching, online tools

17 Low-Income Employees 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.

18 Low-Income Employees 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

19 Do Financial Wellness 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)

20 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

21 Assessing Outcomes Credit outcomes: capture credit data for at least 3 time points interrupted time series design:

22 Assessing Outcomes Other Options 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 Coaching + credit Coaching + credit + savings Assess the difference in differences among the 3 groups

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

24 Creating Opportunities for Young Workers to Thrive Pamela Chan Project Director, Human Insights Prosperity Now

25 Financial Security at Work 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.

26 Why focus on young LMI workers?

27 Today s young adult less financially well off than their parents were at the same age. From Young Invincibles 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. 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.

28 Young adults often struggle more with finances than older adults. From FINRA Financial Capability Study 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 Gary R. Mottola, The Financial Capability of Young Adults A Generational View, FINRA Investor Education Foundation, March 2014,

29 Young workers are more likely than older workers to report that finances affect their work. From PwC Survey 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% Employee Financial Wellness Survey, PwC, April 2016,

30 Study Overview: Interviews with Young Workers 49 Young, LMI Workers Interviewed in 4 Cities

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

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

33 Making ends meet is a stressful struggle. 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 *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. 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 experience National Average: 55% experience Expense volatility Month to Month Change *** Median change for nondiscretionary expenses: $452 Median change for discretionary expenses: $410

34 Paying existing debt brings feelings of anxiety, sadness and regret. 36 respondents reported having debt Median: $4,300 Max: $93,000 Min: $ said debt worried them Most common debt held: Education debt Credit card Automobile debt. For some, monthly payment is challenges; others weight of total debt [My student loans] are high. I can manage them, but it keeps me from being able to go back [to school] until it s paid off It keeps me from being able to do stuff that I really want to do. --Houston Respondent

35 Not having savings is frustrating. From Federal Reserve Survey of Young Workers 55% of young workers cannot pay their living expenses if out of work for 4 weeks. 60% of young workers cannot pay living expense if out of work for 3 months. Well, basically, the money that you get for your paycheck, it goes to other 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 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;

36 Access to actionable and relevant help is limited. Sources of Help Used (# of Respondents) "Family" Member Online Friend Financial Institution Teacher/Mentor Other If [only] there could be an actual place that I could go to get more explanation. -Portland Interviewee

37 Limitations of an Inexperienced Social Network Wanda s Story* [My siblings], they mean well on 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. *To protect the identity of interviewees, name and picture do not correspond with story.

38 What can employers do to help young LMI workers thrive?

39 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

40 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

41 Young workers are interested in seeing financial wellness services at work. Yeah, [my employer offering services to help with finances] that would be a blessing. Because there s not enough helping going 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 they definitely care They worry about their employees wellbeing. --Philadelphia Respondent

42 How do young workers feel about workplace financial wellness services?

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

44 Financial Advising Advice from Young Workers: Have a credible third-party advisor Include an in-depth initial session with the option to have shorter, flexible, ongoing 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 like me, they didn t get coached on how to take care of their financial expenses. --Chicago Respondent

45 Online Financial Tools 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

46 Retirement savings and financial classes/seminars are desirable, but maybe not as currently offered. 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 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 Focus more saving without sacrificing short term needs and flexibility for emergency purposes Consider financial classes that function more like support groups rather than knowledge building lectures.

47 Payroll advances and short-term loans are controversial. Payroll Advance Ideally, offer without interest or fees, or 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.

48 Points of Caution from Young Workers 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

49 Study Report Available at: ces/beyond-next-paycheckcreating-opportunities-youngworkers-thrive

50 Workplace Financial Wellness Resources Santiago Sueiro Program Associate Savings & Financial Capability Prosperity Now

51 Audience Q & A What questions do you have? Share them in the Questions box!

52 Today s Speakers Joanna Ain Sr. Policy Manager, Government Affairs Prosperity Now Mathieu Despard Faculty Associate Center for Social Development / Executive Director UNC Center for Community Capital Pamela Chan Project Director, Human Insights Prosperity Now Santiago Sueiro Program Associate, Savings & Financial Capability Prosperity Now

53 Next Steps Please complete the survey! Visit Prosperity Now s Workplace Financial Wellness Services Directory at Stay tuned for future learning opportunities: join the Prosperity Now Community at

54 Want to dig deeper? Sign up for listservs and working groups, volunteer to facilitate peer discussions, serve in a leadership role and more! 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 Visit any of the networks above at prosperitynow.org/getinvolved to get started.

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