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Financial Wellness: From Defining and Measuring Success to Strategy and Implementation

June 2019

Arizona Total Rewards Association Program

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Overview & Context


2


What is well-being?

© 2019 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.3

Focus has expanded past the physical

Strengthen, cultivate my network

Develop, maintain my network Resolve conflicts and issues

Self aware and maintaining mental health

Improve my emotional health, managing stress

Handle life crises

Assess, manage my financial commitments

Meet my goals and choices

Absorb a financial shock

Understand, manage my health

Improve my health and maintain a healthy lifestyle

Tackle acute and unexpected illnesses and injuries

Physical Financial

SocialEmotional


Employee finances, health and stress are connected

4

Gaps in well-being are impacting work and personal life


3xMore likely to suffer

from high stress

2xMore likely to be

disengaged

2 daysAverage of additional missed days per year

47%Less likely to be satisfied with their financial situation

8 in 10 employees report financial or stress issues

66%Live paycheck to paycheck

2.5xMore likely to work past age 70

Source: Willis Towers Watson 2017/2018 Global Benefits Attitudes Survey

FINANCES HEALTH STRESS


Current state of the market

High variation in approach, style, operational rigor and maturity

Rapidly evolving vendor space Many startups with little track-record High due diligence requirements

Financial health of workforce has not been observable Few employers see usage over 10% per annum (of any

single financial wellbeing service) Unclear which solutions will deliver the most value for

employees Unclear which solutions will see high usage by those at-risk, at the right moment Business case for support is anecdotal Ability to evaluate effectiveness is very low Challenging for local management to operationalize

5© 2019 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

Budgeting/ Cash Management

Technology Vendor

Financial Education Video

Promotion

Debt Consolidation

Vendor

401(k) Vendor

InvestmentAdvisor & Managed

Account Vendor

Personal Financial Counselor

Financial Health Risk

Assessment

Employee Discount Vendor

$

$~300 point-solution vendors

Employer objectives and metrics are not well defined


Plan sponsors use a variety of tactics


Source: 2017 Willis Towers Watson Best Practices in Health Care Employer Survey.Sample: Companies with at least 1,000 employees. Note: * Including ‘In place in 2017’, ‘Planned for 2018’ and ‘Considering for 2019.

Decision support Personalization

Debt management Analytics

Offer financial planning technologies that address short-term and long-term financial needs

Offer student loan education or decision support

52%

47%

30%

20%

Use consumer marketing techniques to develop a financial well-being strategy tailored to workforce segments

Offer assessment tools to identify the most important financial issues to address

27%

58%

6%

32%

Offer student loan support for preferred vendors and negotiated refinancing rates

Offer debt management services other than student loans (consolidation, refinancing)

38%

26%

12%

6%

Set specific metrics and objectives for your companywide financial well-being strategy focused on short- and long-term financial needs

Use HR data to evaluate the link between financial stress and employee health and performance

49%

26%

14%

3%

Today By 2019*


Designing a Financial Wellbeing Program



Effective financial well-being programs – emerging best practices


Take the pulse: Measure the financial well-being, understand key drivers of financial insecurity and culture of those at-risk within your population

Inventory: Identify what financial well-being programs and support you offer now and where key gaps exist (by segment)

Start small: Prioritize, gradually build employee permission and trust with “low-hurdle” services and an integrated approach

Personalize, make it compelling & easy: Services and vendors that fit your employees’ needs and culture… personal stories…compelling metrics

Establish social and emotional connections: Peers and champions, local managers, trusted colleagues…build trust using shared stories

Keep it fresh: Measure and monitor financial well-being metrics and reassess strategy as needed

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2

3

4

5

6


Financial well-being selection criteria & program assessment


Phase 1: Assess & Define

Employee Needs / Value Assessment

Inventory

Market Scan

Identify Gaps and Priorities for Implementation

Program Criteria & Vision

Vendor RFI

RFP Recommendations

Phase 2: Prioritize, Set Strategy, Implement Solutions

Set 1 & 2 Year Priorities

Possible decision on vendor solutions to implement


Assessing and Defining



How can we measure financial stress using HR data?


Diagnostics using actual HR data and proven indicators of financial stress

76% 74%

14% 19%

10% 8%

0%

20%

40%

60%

80%

100%

BenchmarkCompany XYZ

Low Moderate Severe

Focus initiatives to have the highest effect and value for these segments.

What family situations and stages have high concentrations of stress?

Which operations have the highest concentration of financial stress?

Financial Stress


How can we improve long-term outcomes?


Optimizing long-term outcomes by bringing together retirement resources

How do outcomes differ between groups?

How can employees use their benefit spend in the most efficient way?

Which behaviors would result in the largest improvement?


Prioritizing, Setting Strategy & Implementing



Levers to address financial wellbeing


Alternatives to enhance financial wellbeing

Plan Design

Level of contributions Participation & vesting Autoenrollment & autoescalation HSA & Roth features Streamlining investment menu & reducing investment

fees Student loan matching Rainy day funds

Wellness Vendor Point Solutions

Debt & Spending, Emergency Savings Financial Counseling & Education Investment Advice Income & Asset Protection

Communication Strategy

Total rewards philosophy and communication Linkage of multiple vendors Segmentation Nontraditional communication forms


Service provider landscape


Debt & Spending, Emergency

Savings

Financial Counseling &

Education

Investment Advice

Income & Asset ProtectionType of

Services

DetailsBorrow & spend wisely,

avoid high fees

Personal and group counseling on spending,

debt mgmt. & saving

Investment fund selection, managed account, personal

advisor and robo-advisor

Insuring meaningful risks at the best price

Sample Providers (some direct-to-consumer B2C)

Spending / cash management / emergency savings myFiTage Mint YNAB DoubleNet Pay SmartyPig Banks 401(k) vendors

Credit score / Loans / refinancing Credit Sesame Credit Karma Credit.com Quizzle TuitionIO SoFi Credible Student Loan Genius

Financial Finesse E&Y Ayco PwC LearnVest Aon Hewitt Financial Engines Boutiques

Supporting services 401(k) vendors myFiTage Alex Guidespark mymoney.gov NerdWallet Feedthepig.org 360financialliteracy.org

401(k) vendors Financial Engines Personal Capital Betterment Guided Choice FutureAdvisor Hedgeable Motif Wealthfront

Voluntary benefits providers

Affinity groups B2C insurance cos.

Retirement income solutions Hueler Financial Engines Some 401(k) vendors


Selection criteriaIllustrative examples

Selection Criteria ConsiderationsBusiness alignment What business characteristics does XYZ require of the financial wellbeing

providers? How should the provider culture and style align with specific segments of XYZ

Employees? To what degree should the provider integrate the Employee experience to

promote other XYZ services and avoid conflicting with current solutions?

Focus Purpose: Improve/reduce financial stress for significant segments of XYZ Employees Deliver higher value than direct-to-consumer and competitor employer options Provide higher quality consumer experience on financial issues including

convenience and confidence in decisions Amplify the integration and overall usage of XYZ benefits programs

Differentiation: Factors that will be unique about XYZ’s program versus competitor employers

and direct-to-consumer options

3-Year Target Minimum utilization by Employee segment Improvement in indicators of financial stress Net promoter score Survey feedback on value and experience in use of XYZ sponsored financial

wellbeing services



Case Studies



Case studies


Tele

com

mun

icat

ion

empl

oyer

Che

mic

al e

mpl

oyer 62% of all employees

and 54% of all hourly employees used selected tool in the first 24 months

In the first 18 months: 57% of the population

has increased HSA deferrals

The portion of the workforce on track to retire before age 65 increased from 56% to 73%

Average retirement age improved by 1.6 years

Util

ity e

mpl

oyer 36% of all employees

used selected tool in the first 12 months – large percentage of workforce are hourly and/or field employees

In the first 6 months: 21% of employees

increased 401(k) contribution

12% of employees increased HSA contribution with an average increase of $1,000

Engagement tactics include financial incentive for combined health assessment and tool use as well as periodic nudges

Engagement tactics include annual promotion of value to employees and quarterly nudges

Engagement tactics include semi-annual nudges

55% of all employees and 47% of all union employees used selected tool in the first 24 months

In the first 24 months: The portion of the

union workforce on track to retire before age 70 increased from 60% to 67%

Union hourly participants retirement age improved by 0.9 years in the last 12 months

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