Financial Wellness: The Future of Work
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This document summarizes a webinar on financial wellness and the future of work. The webinar will have three parts: defining financial wellness, explaining why it matters for employees and employers, and reviewing evidence on whether financial wellness programs are having an impact. Attendees will learn about tools for participating in the webinar like asking questions and using social media. The presentation will feature speakers from HelloWallet and Morningstar and be moderated by an editor from Workforce magazine.
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Financial Wellness: The Future of Work
- 1. #WFwebinar The presentation will begin at the top of the hour. A dial in number will not be provided. Listen to today’s webinar using your computer’s speakers or headphones. Financial Wellness: The Future of Work
- 2. #WFwebinar Speaker: Jake Spiegel Senior Research Analyst HelloWallet Lee Eliav Digital Marketing Manager Morningstar Moderator: Sarah Sipek Associate Editor Workforce magazine Financial Wellness: The Future of Work
- 3. #WFwebinar Tools You Can Use Audio Control – A dial in number will not be provided. – Adjust the volume by sliding the indicator in the Media Player box to the left. – Also check your computer’s volume for external speakers or headsets.
- 4. #WFwebinar Tools You Can Use Speaker Bios Resources Media Player Q&A Slides Twitter Help Post Event EvaluationShare This Group Chat HRCI WF Webinars
- 5. #WFwebinar Tools You Can Use Q&A and Live Group Chat – Enter your first name and initial and join the live discussion with other webinar attendees – Enter technical or content- related questions into the Q&A box – Type your question in the space at the bottom. – Click “Submit.” Q&A Group Chat
- 6. #WFwebinar Tools You Can Use Twitter - Click “Post” in the Twitter widget. #WFwebinar @WorkforceNews
- 7. #WFwebinar 1. May I receive a copy of the slides? YES! Click on the resource list located on the top left portion of your screen. 2. May I review the webinar recording at a later date? YES! You may log in again using today’s link to review the presentation on-demand. 3. Is this webinar HRCI certified? YES! The HRCI certification code will appear in the box to the right of the slides after the required watch-time has elapsed. Frequently Asked Ques6ons
- 8. #WFwebinar Sarah Sipek Associate Editor Workforce magazine Financial Wellness: The Future of Work
- 9. #WFwebinar Jake Spiegel Senior Research Analyst HelloWallet Financial Wellness: The Future of Work Lee Eliav Digital Marke=ng Manager Morningstar
- 10. Financial Wellness The Future of Work September 2015
- 11. What to Expect 1 2 3 What What is financial wellness? Why Why does it matter for employees & employers? Does It Work Are financial wellness programs having impact?
- 12. 1 What
- 13. What is Financial Wellness? For employers, a basic definition: o Financial wellness is a program or set of programs designed to improve employees’ financial behavior and outcomes while also driving business impact
- 14. What is Financial Wellness? For employees, financial wellness is defined by health, not wealth It includes the following elements across an individual’s financial life: ü Spending ü Emergencies ü Guidance ü Benefits ü Investments
- 15. We look at these elements as rungs on a ladder Investments Benefits Guidance Emergencies Spending PRIMARY NEEDS SECONDARY NEEDS
- 16. What is Financial Wellness? o Specific rung elements to consider include: • Spending less than you earn • Having sufficient emergency savings • Holding enough in a checking account for credit card bills • Having enough savings for out-of-pocket health expenses • Carrying loan balances appropriate for your income • Holding sufficient insurance coverage • Saving enough to have sufficient income in retirement
- 17. 2 The Why
- 18. The Roots of Financial Wellness
- 19. By addressing the anxieties workers had about their future economic security, the hope among policymakers was that workers would feel more comfortable spending their paychecks instead of saving. It worked. EXAMPLE 1 1935 Social Security Act 1950 11 % 2015 5% PERSONAL SAVINGS RATE ONLY 15 % of workers list retirement as their top financial priority FOR EVERY $1Contributed to Social Security THERE IS A DECREASE OF $.50 In Private Wealth FINANCIAL PRIORITIES
- 20. EXAMPLE 2 The National Housing Act of 1934 By subsidizing the housing market, the hope among policymakers was that workers would feel more comfortable buying homes. It worked. HOME OWNERSHIP RATES SHARE OF GDP GOING TO HOUSING SHARE OF INCOME GOING TO HOUSING 59 60 61 62 63 64 65 66 67 68 69 70 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 24% 25% 25% 26% 26% 27% 27% 28% 28% 29% 29% 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 0% 1% 2% 3% 4% 5% 6% 7% 8% 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012
- 21. EXAMPLE 3 Agricultural Adjustment Act of 1933 By subsidizing corn, soybeans, and cattle feed, the hope among policy- makers was that demand for these products would increase. It worked. 2X The Average American Consumed Nearly MORE CORN In 2000 than in 1950 7X MORE CORN SWEETENER S Are consumed per capita each year in the US 85 LBS OF CORN SWEETENERS AND
- 22. Unfortunately, this helped to also make workers much less healthy and much more expensive to insure. Than they were in 1950 30 POUNDS HEAVIER The Average U.S. Worker in 2000 was From what it was in 1950 TRIPLE D The American Adult Obesity Rate in 2000 2 3OUT OF American Adults are now Obese EXAMPLE 3 Agricultural Adjustment Act of 1933
- 23. Bottom Line The Financial Wellness Market is decades in the making. It grew out of deliberate policy decisions that had unintended consequences.
- 24. Why Now? We’re Approaching a Perfect Storm Benefits • Increasing Costs • Consumerization Wages • Remain Flat • Not Optimized Behavior • Spend Economy • No DB Security
- 25. Benefit Costs are Skyrocketing 0% 20% 40% 60% 80% 100% 120% 140% 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Retirement Spending Health Spending Percent Change in Spending Since 1988
- 26. Efficacy Increasingly in Doubt 23 24 25 26 27 28 29 Avg Male BMI Avg Female BMI 0 5 10 15 20 25 1992 1995 1998 2001 2004 2007 2010 Average BMI Median Months of Annual Income Saved
- 27. 2%2002 54%2010 73%2014 In Response to These Trends: Employers Are Consumerizing Benefits Share of Large Employers Who Offer Consumer Driven Health Care Plans
- 28. Employees Lack the Foundation Investments Benefits Guidance Emergencies Spending SHORT-TERM NEEDS LONG-TERM NEEDS & CORPORATE SPENDING
- 29. State of Consumer Finances 15%HAVE A BUDGET Workers can’t know how much to save for healthcare and retirement, if they don’t even know how much they spend on groceries 55%SPEND MORE THAN EARN Workers don’t feel like they can afford savings increases or manage this financial responsibility if they spend more than they make 60%GROW DEBT FASTER THAN SAVINGS Workers cannot hold onto accumulated savings if they are accumulating more debt than savings every month
- 30. Financial Wellness Has Come Out of Nowhere 0 20 40 60 80 100 120 140 160 180 200 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Number of Media Stories About Financial Wellness
- 31. And It’s Gaining Momentum 2014 Aon-Hewitt Survey 2015 Aon-Hewitt Survey 76% FINANCIAL WELLNESS OF COMPANIES ARE PLANNING TO FOCUS ON EMPLOYEE
- 32. Why Think About a Program? A thoughtful financial wellness program: o Is a “win-win” for both employees and employers For Employees: • Reduces financial stress • Reduces time spent on financial matters • Improves retirement readiness • Improves benefit optimization • Improves financial confidence • Increases job satisfaction For Employers: • Reduces absenteeism • Increases employee engagement • Reduces compensation and healthcare costs • Reduces payroll taxes • Increases job tenure
- 33. What to Consider 5 Important Components: ü Behavior Change ü Holistic Consideration ü Personalization ü Independence ü Data
- 34. Areas of Caution Top 3: ü Standalone Education ü Free! ü One Size Fits All
- 35. How Programs Differ There are many different types of “financial wellness” offerings: o Think of these in terms of focal area and delivery method Focal Area (Ladder): • Spending • Emergencies • Guidance • Benefits • Investments Delivery Method: • Software • Advisors • Content • Consulting Services
- 36. 3 Does It Work
- 40. Overall Financial Well-Being Influences Tenure Rates Emergency Savings Insufficient >> Sufficient Credit Card Debt Revolving >> Not Revolving Increase in Job Tenure 28% 10%Increase in Job Tenure Leads to a Leads to a
- 42. Increasing Retirement Readiness Has Implications on Long Term Compensation Spend Younger Workers Replace Them Reduction in Compensation Spend Older Workers Retire ROI Insurance Industry* Average compensation for employees aged 60-65 Average compensation for employees aged 22-30 Net replacement impact *Source: Federal Reserve $30,906 $70,436 $39,530
- 44. #WFwebinar Please complete the webinar evaluation.
- 45. #WFwebinar Join our next Webinar! “Maximize Business Results by Preparing Your Headcount Plan Within Budget” Wednesday, October 7, 2015 Webinars start at 2 p.m. Eastern / 11 a.m. Pacific Register for all upcoming Workforce Webinars at www.workforce.com/webinars OR click the icon on the widget bar!