20160708 helen white fin cap slides for protect
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The UK Financial Capability Strategy aims to empower UK residents to better manage their finances through life events. It identifies several challenges based on a national survey: 8.2 million are over-indebted; 10 million can't read bank statements; 20 million can't pay unexpected bills of £300. The strategy segments the population into "Cushioned", "Squeezed", and "Struggling" groups. It establishes principles of collective impact and evidence-based approaches. A key focus is evaluating financial programs to identify most effective methods to improve capabilities, using an evaluation toolkit and evidence hub to share results.
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20160708 helen white fin cap slides for protect
- 1. The UK Financial Capability Strategy PROTECT Friday 8 July 2016 Helen White Head of Financial Capability The Money Advice Service (UK) www.fincap.org.uk / Enquiries@fincap.org.uk
- 2. How we define financial capability 2
- 3. 3 8.2m are over- indebted 10 million can’t read their bank balance from a bank statement 20 million adults could not pay an unexpected bill of £300 from spare cash or savings 20 million adults don’t have an approach to keeping track of their finances that they feel works 16 million adults can’t work out a calculation to add interest earned to a savings balance 25 million adults have no financial goals 35 million adults don’t have a savings buffer equal to three months’ salary 35 million adults have no plan for achieving their financial goals Scale of the challenge in the UK Engagement is biggest challenge
- 4. Aim of UK Financial Capability Strategy People: • Empower people to make the most of their money • & navigate financial consequences of significant changes & events through life – both planned & unplanned The Financial Capability Sector: • Evaluate the impact of activities on financial capability & behaviour • Share findings, contribute to building evidence • Direct funding & resources to activities & methods that evidence shows work well in improving peoples’ financial capability Maximising COLLECTIVE IMPACT 4 (October) 2015 - 2025
- 5. COLLECTIVE IMPACT is more effective in overcoming the challenges & achieving change than isolated, uncoordinated impact.
- 6. DATA & EVIDENCE: The UK Framework Data & Evidence Framework National FinCap Surveys Composite Measures of FinCap Theories of Change Outcome Frameworks Evaluation Toolkit IMPACT Principles Research Evidence Hub 6
- 7. National Survey of financial capability • 2015 Survey = baseline measure of UK financial capability • Large dataset • Nationally representative sample of 5,600 adults 18+ • 130 questions to measure self-reported feelings, beliefs, attitudes, behaviours • Survey to be run every other year • Also plan a survey of children, young people, parents & teachers • Considering a survey of older people in retirement
- 8. General Insights from 2015 Survey • Most people managing relatively well day to day • But far fewer preparing well for future life events • Skills & knowledge are less of a barrier than motivation for most, but pockets of low skill • Helping people keep track of money day-to-day = building block for saving & preparing for future • Focusing people on goals for future motivates saving • Having a future focus is important – we need to understand how to encourage this 8
- 10. CUSHIONEDSQUEEZEDSTRUGGLING “Young Adults in Affluent Homes” “Affluent Couples & Families” “Comfortable Younger Adults” “Affluent Pre- Retired” “Comfortable Pre- Retired” “Comfortable Retired” “Squeezed - Younger Adults” “Squeezed - Younger families & couples” “Older squeezed” “Over-Burdened” “Struggling - Younger Adults” “Struggling - Pre- Retired” “Struggling - Retired” Young Adults Couples & families Pre-retired Retired “Affluent Retired” … and 15 sub-segments “Over-Burdened” “Struggling - Younger Adults” “Struggling - Working Families” “Struggling - Pre- Retired”
- 11. Sub-Segments Age Financial Resilience Financial resilience is a scale based on credit, savings and insurance Struggling Cushioned Squeezed 11
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- 16. 16 Evidence Hub Evidence Hub brings the evidence on what works together in one place Translates it for non- researchers Features an easy to understand ratings system Quality assured by the Personal Finance Research Centre
- 17. MAS ‘What works’ grant fund • £7 million fund to be awarded as grants to build evidence on what works in improving financial capability • All projects must robustly evaluate impact using approach & tools created by Money Advice Service • All funded projects must share results publicly via MAS Evidence Hub 17 3 types of projects to be funded: 1. Existing financial capability interventions: Evaluate impact on users, effectiveness in improving financial capability 2. Potential to Scale up: Evaluate extension of existing interventions - already proven to be effective, - to different target group or wider geographical area 3. New approaches: Develop, pilot & evaluate impact of new ideas • Will tell us what impact different types of activities & methods financial capability & behavior, & how big the impact on individuals • But more work needed to measure the value of the impact, relative to costs, to determine return on investment
- 18. ‘The Small BIG’ - Steve J Martin, Noah J Goldstein, Robert B Cialdini “It is not information per se that leads people to make decisions, but the CONTEXT in which that information is presented.” “A small change in the setting, framing, timing or context of HOW information is conveyed can dramatically alter how it is RECEIVED and ACTED UPON”. 18
Editor's Notes
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- Regular national FinCap Survey - to measure & monitor financial capability & changes over time Composite measures of financial capability - robust & credible set of success measures for the strategy Robust Theories of Change – what change wanted, why & how Outcomes Frameworks - Identifying behaviours & outcomes that illustrate what good financial capability looks like, to help organisations design & evaluate effectiveness of interventions Evaluation Toolkit – to help organisations robustly evaluate impact of their interventions IMPACT Principles – encouraging originations to commit to applying robust evaluation, & sharing results Evidence Hub - to collate, assess & share evidence, inform organisations’ use of resources to maximise impact & RoI PLUS Building a national centre of knowledge, evidence, expertise in the Money Advice Service
- When pulling out differences within macro segment, we found that there were 15 sub-groups who – whilst they are similar enough to their segment counterparts to be in the same macro segment – there were specific differences that pulled them apart from each other. Broadly, most pull apart from by lifestage – unsurprising given that the pressures of a 20 year old are likely to be different to those who are nearer retirement age. The key lifestage differentials are Young adults (AKA Starting Out in many other segmentations), Couples and families, Pre-retired and retired. Struggling – 4 groups by lifestage. Over Burdened group is the only one not lifestage driven. This is a group that are similar in every respect to their age counterparts in Struggling, its just their situation is worse – heavily benefit dependent, more over-indebted and very stretched financially Squeezed – all working age, under 55 and split out into 3 broad groups Cushioned – Given this large group of half the population, these split out broadly into those with higher than average financial resilience (but not ‘rich’). These are the comfortable. Then those with a lot of cushioning and resilience who we have called affluent.
- The other important resource we launched last week is an Evaluation Toolkit. The Toolkit is a set of resources to help organisations measure and understand the impact of their programmes on people’s financial capability. It will be hosted on the Fincap website, and includes Guidance – on how to measure and understand changes in people’s financial capability Templates – to support the Guidance and Tools (including a set of Outcome Frameworks) I’m going to give you a very brief preview of what the Toolkit contains – and afterwards you can enjoy exploring it yourselves.
- Finally, I can’t talk about the IMPACT Principles and the Evaluation Toolkit without also mentioning the Financial Capability Evidence Hub, which remains an important part of what we do. Also available on the fin cap website, it is a focal point for bringing together evidence from financial capability interventions and is essential to the way we organise and share learning from our evaluations. Recently we have been speaking to some of our stakeholders about ways in which we can expand its scope to encompass a wider range of evidence and insight about financial capability, and over the Summer we will be giving it a thorough spring clean, updating its content, and exploring different options for building a newer, bigger model.