Financial Wellness in the Workplace

What’s in it for you?

Today’s Discussion and Presenters

• Financial Wellness: What it

Lori Block
is and Why it Matters Principal — Engagement
Total Wellbeing Strategies

• Engaging Employees in their Amy Finsand

Financial Well-being Principal — Engagement
Communication Strategies

Patrick Coughlin
• Building the Business Case Principal — Wealth
Retirement Strategies

2 March-25-15
Which of the following would you choose?

A. An annual income of $50,000, while the people

around you earn $25,000 a year.

B. An annual income of $100,000, while the people

around you earn $200,000 a year.
While the obvious “answer” seems to be B…

Nearly half the people presented with these options pick the lower salary
of $50,000 a year.

When it comes to money and material possessions, the amount

(in the case of cash) is less relevant than how it compares to others’
income and possessions.

Source: Rath, Tom; Harter, Jim (2010-06-17). Wellbeing: The Five Essential Elements (Kindle Locations 560-563). Gallup Press. Kindle Edition.

4 March 25, 2015

Financial Wellness: What it is

Financial well-being can be defined as

a state of being wherein the individual:

• Has control over day-to-day,

month-to-month finances
• Has the capacity to absorb a
financial shock
• Is on track to meet financial goals
• Has the financial freedom to make
the choices that allow the individual
to enjoy life

Source: Consumer Financial Protection Bureau

5 March 25, 2015

Why it Matters
29% of employees said that personal financial
80 percent of employees report spending
issues have been a distraction at work.1
between 12–20 hours of work time per
month dealing with personal financial
issues.1

Two out of five workers (38%) are facing more personal financial
61% of employees said that they find
challenges now compared with the onset of the Recession in late
dealing with their personal financial
2007; less than one-quarter (23%) of respondents indicated
situation to be very stressful. 3
employees are experiencing more personal financial challenges now
compared with 12 months ago.2

Of those who reported a financial impact as major or devastating:

63% described themselves as now living paycheck-to-paycheck;
42% reported running higher credit card balances; 43% said they had missed
bill payments, mortgages and loan payments and admitted
borrowing from friends and family.4

1. PricewaterhouseCoopers, “2013 Employee Financial Wellness Survey” 3. SHRM, Financial Wellness in the Workplace
2. American Psychological Association’s benchmark “Stress in America” Survey, 2014 4. MetLife Accident and Critical Illness IQ Study, October 2013”

6 March 25, 2015

Addressing Physical and Financial Well-being:
A Tale of Two Workplace Journeys
Physical Health
Increased cost sharing, but also…
• Maintained base level of
protection; employers (largely)
kept risk responsibility
• Introduced health improvement
programs to encourage healthy
behaviors
• Invested in tools, technology, and
communications to drive behavior
7 March 25, 2015
Financial Health
Increased cost sharing, but also…
• Largely eliminated basic safety
net (DB plans); transferred risk to
employees
• Introduced 401(k)s with few
incentives to participate beyond
tax advantages and a match
• Abdicated engagement to third-
party vendors; offering tools
primarily (often solely) focused on
increasing DC Plan contributions
Today, employers are starting to take a
“cross-fit” approach to wellness…

Employers recognize the value of

physically healthy, productive workers.

And, increasingly, employers are

recognizing the impact of a financially
unhealthy population…

8 March 25, 2015

… that supports the entire individual.

Purpose

Physical

Financial

Social

Community

Source: Gallup – Healthways Well-Being Index®

9 March-25-15
Which is a better predictor of financial
well-being?

A. Actual income level

B. Perceived level of security and control

It’s About Control

The perception that you have more than enough

money to do what you want to do — has three
times the impact of your income alone on overall
well-being.

Further, a lack of worry about money has

more than doubled the impact of overall well-being
than income alone.

- Rath, Tom; Harter, Jim (2010-06-17). Wellbeing: The Five Essential Elements
(Kindle Locations 560-563). Gallup Press. Kindle Edition.

11 March 25, 2015

Ways to Engage
Employees
The Path to Financial Well-being and
Retirement Readiness
It Takes More Than Education to Affect Change

• Understand your audience

• Obtain leadership endorsement
Information • Promote, edutain and engage each individual

• Create and support intrinsic and extrinsic motivators

• Offer plans and programs that support the right behaviors
Incentives

• Make it easy
• Track activities and progress—individual and aggregate
Infrastructure • Offer tools that support both the DIYers and the “Do it For Me’s”

13 March-25-15
It Takes More Than Education to Affect Change

• Understand your audience

• Obtain leadership endorsement
Information • Promote, edutain and engage each individual

• Create and support intrinsic and extrinsic motivators

• Offer plans and programs that support the right behaviors
Incentives

• Make it easy
• Track activities and progress—individual and aggregate
Infrastructure • Offer tools that support both the DIYers and the “Do it For Me’s”

14 March-25-15
Start by knowing what keeps your
employees up at night…
Information

Causes of Financial Stress

29% Debt/credit card debt 48%
36% Expenses 35%
34% Emergency/unexpected expenses 33%
21% Cash flow/lack of funds 32%
13% Budgeting 28%
12% Mortgage/foreclosure 28%
Medical
25% 25%
Retirement
37% 18%
Unemployment
6% 12%
Education
12% 9%
Taxes
18% 7%
Aging parents
7% 7%
Rent payments
7% 5%
3% Employee Bankruptcy Employer 2%

Source: SourceMedia Research, 2013

15 March 25, 2015

…and recognize that one size does Information

not fit all.

Differences by Generation
Traditionalists Baby Boomers Generation X Generation Y Generation Z
Born 1900-1945 Born 1946-1964 Born 1965-1976 Born 1977-1997 After 1997
Financial Proper Losing their Raising children, More worried Affording college
Stressors distribution pension, savings preparing to care about debt than and student
strategies or job and being for aging parents their day-to-day loans; having
unable to retire and saving for expenses their identity
their own future stolen
Communication Formal style; Semi-formal style; Not so serious, Eye-catching, fun; Images, icons
Approach print; print; irreverent; online; online; wired; and symbols;
conventional mail; conventional mail; some face-to-face seamlessly attention span of
face-to-face or face-to-face; meetings (if really connected 8 seconds; prefer
phone; some online tools and needed); games, through face-to-face in the
online resources technological technology workplace
interaction

Differences based on life stage

new hire | moving | marriage | mortgage | children | college | general saving | wellness | estate planning | retirement

16 March 25, 2015

Entertain to Get Attention and Educate
= “Edutainment”
Information

Savings Whiteboard Online games

“401K-mercial”

17 March 25, 2015

 18

Put Information in Their Hands Information

Through Mobile Tools

Texting for just-in-time messaging
Have you updated your 401(k) beneficiary online? Web App for easy access to resources when/where
Go to www.principal.com. It’s fast and easy! employees need it

18 March 25, 2015

Target messaging based on age Information

and plan data

Who: Eligible for catch-up AND saving at least $10,000

Postcard

19 March 25, 2015

It Takes More Than Education to Affect Change

• Understand your audience

• Obtain leadership endorsement
Information • Promote, edutain and engage each individual

• Create and support intrinsic and extrinsic motivators

• Offer plans and programs that support the right behaviors
Incentives

• Make it easy
• Track activities and progress—individual and aggregate
Infrastructure • Offer tools that support both the DIYers and the “Do it For Me’s”

20 March-25-15
Provide Tools to “Self Diagnose” Incentives

Financial Health

21 March 25, 2015

Create the Right Motivators Incentives

Employees Increased financial literacy

participate in
activities
Greater employee savings

Activities
tracked and Enhanced investment experience
reported

Improved financial confidence

Employer
makes
DC Plan
contributions Ability to retire when appropriate
SavIncent™

22 March 25, 2015

Create a Path and Let Them Track Incentives

Their Progress

23 March-25-15
It Takes More Than Education to Affect Change

• Understand your audience

• Obtain leadership endorsement
Information • Promote, edutain and engage each individual

• Create and support intrinsic and extrinsic motivators

• Offer plans and programs that support the right behaviors
Incentives

• Make it easy
• Track activities and progress—individual and aggregate
Infrastructure • Offer tools that support both the DIYers and the “Do it For Me’s”

24 March-25-15
Take Auto-enroll to the Next Level. Infrastructure

The Personalized Level.

- Personalized savings rate
and adjustment
- Drawdown strategy

Savings InSight™
2014 Pension &
Investments
Innovation award
winner!

25 March 25, 2015

Put Soon-to-be Retirees on the Right Path Infrastructure

RetireeZone™

Wealth Lifestyle

Benefits Admin

26 March 25, 2015

Building the Financial
Wellness Business Case
While difficult to describe in the abstract,
engagement appears to be the difference between
satisfying people at work and inspiring them to do
their best work. 1

1 CFPB, Financial Literacy Annual Report 3 (July 2014)

Are you considering implementing a financial wellness
program?

A. Yes, and we’re working on it now.

B. Yes, it’s on our 1 – 3 year roadmap!

C. I’d like to but I don’t know how to “sell it” to senior

leadership.

D. I hadn’t given it any thought until now.

Financial Stress = Time =
Declining Productivity

Source: Legg Mason Global Asset Management

29 March 25, 2015

Quantifying what we know…
Financial unhealthy Employers experience
Employees are
workforces create lost increased wage and
not on track for a
productivity through benefit costs due to
financially
increases in absenteeism and employees being
healthy future.
lack of focus on work. unable to retire.

An aging workforce Financial wellness programs boost

creates talent employees perceptions of the value of
management challenges. their employers’ total rewards offerings.

30 March-25-15
… and tracking company-specific results
Attitudes Engagement Outcomes Performance
Did we: Did we: Did we: Did we:
 Increase awareness of  Boost plan/program  Improve investment  Reduce absenteeism/
our programs ________ participation________ allocations__________ improve productive___
 Enhance benefit  Increase use of tools and  Increase  Reduce stress
satisfaction levels____ information resources _ contributions_________
 Achieve greater rates of
 Enhance understanding retirement readiness___
and appreciation ______

Measurement: Measurement: Measurement: Measurement:

 Website page hits____  Enrollment rates______  Plan data___________  Productivity reports_
 Survey results______  Access rates_________  Survey results_______  Health & disability claims
costs_______________
 Service center data __
31  Plan projections______

… will enable measurement of the program’s

effectiveness and ROI

31 March-25-15
What’s in it for you?

By expanding your
Questions?
offerings to include
Lori Block
financial wellness, lori.block@xerox.com | 415.617.3891
you can create a
stronger culture of Amy Finsand
health and enhance Amy.finsand@xerox.com | 952.806.6113
their EVP while
dealing with issues Patrick Coughlin
affecting your bottom patrick.coughlin@xerox.com | 617.275.8030
line.

32 March-25-15
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