Introducing the To Do Dashboard

We’ve just launched the latest enhancement to the Moneymap platform with our new employee To Do Dashboard. We developed the Dashboard with our partners at Duke’s Common Cents Lab in order to take the complexity out of financial decision-making and help people make real progress on their money.

In fact, we created a whole page explaining how it works, so rather than replicating that in this post, you can read all about it here.

"What’s the Goal of Your Financial Wellness Program?"

If the goal of your financial wellness program is to get employees to take action and achieve their financial goals, then it’s critical to have a financial coach that helps keep employees accountable and feeling confident about their finances.

By incorporating real people into a financial wellness program, you’re able to achieve a much greater impact. Any financial wellness service that does not directly incorporate a coach or advisor into the employee financial wellness program is missing out on what is potentially the biggest driver of behavior change, namely a financial expert to keep employees accountable to their goals.

Since, we recognize that accountability is a key missing ingredient in financial wellness programs, we also believe that when employees do not feel a sense of accountability towards their stated financial goals, they are significantly less likely to achieve them. People work with personal trainers to ensure they exercise regularly and make progress on their fitness goals. Similarly, employees need a financial coach to keep them on track, and ensure that they are making progress on their financial goals. As we all know too well, personal finances can be confusing and that confusion leads us to procrastinate. When an employee is matched with a financial coach, they have an “accountability partner” that helps to keep them engaged and provides them with actionable steps, while coaching them one step at a time.

Additionally, by designing a program that is finite and time-bound, it creates in employees a sense of urgency to complete the program. By setting up the first part of the financial wellness program as a “sprint” when the employee’s motivation is near its highest point, you’re able to get the most action from employees.

Moreover, we believe that the financial education model that nearly all financial wellness programs employ is an ineffective approach. Research has proven that financial education and literacy programs are completely ineffective in getting employees to take action. A meta-­analysis of 188 financial literacy and education programs conducted in 2013 and published in “The Effect of Financial Literacy and Financial Education on Downstream Financial Behaviors” by Fernandes, Lynch and Netemeyer found the following:

 

“Content­-based, financial education interventions explain only 0.1% of the variance in financial behaviors.”

 

In contrast, a World Bank study entitled “The ABCs of Financial Education : Experimental Evidence on Attitudes, Behavior, and Cognitive Biases” found that coaching was dramatically more effective than education.

Nearly all financial wellness providers tout content-based solutions, such as videos, articles and resources centers, when point-­of­-fact, this approach provides literally zero impact when it comes to behavior change.

AtMoneymap, we believe in what behavioral research has shown to work: personalized coaching, multi­channel messaging and just­-in-­time delivery.

That’s not to say that we don’t provide content to help keep employees engaged, because Moneymap does send employees personalized “I saw this article and thought of you…” messages. However, we do not rely on content to change employee behavior, because that flawed approach does not work.

Why Duke Researchers Say Education Doesn’t Work With Employees

InvestmentNews recently ran an article written by our partners at Duke University, on why education doesn’t doesn’t work and lasting ways to change employees’ unhealthy financial behaviors.

Check out the article here:
http://www.investmentnews.com/article/20170521/FREE/170529991/how-401-k-advisers-can-create-effective-financial-wellness-programs

3 Key Concepts Missing from Financial Wellness Programs

You already know that there’s a ton of buzz around financial wellness.

But what you might not know is that there are three key concepts that are completely missing from financial wellness programs. By not including these key behavioral economics concepts, advisors, providers and employers are losing out on their opportunity to have a big impact.

Don’t just take my word for it. These key concepts are the result of 10 months of product development between Moneymap and Duke University’s Common Cents Labs, headed by the renowned behavioral economist, NY Times bestselling author and WSJ columnist, Dan Ariely.

I want to talk briefly about three missing concepts and how they’ll shape the future of financial wellness. They’re not what you expect.

MISSING CONCEPT #1: Start with goal-setting

If we focus on explaining more of the fundamentals of personal finance, will employees change their under-saving behavior? No way. People care about themselves, their goals, their future. Start every engagement with a detailed discussion about which financial goals they want to accomplish, in order to motivate behavior change.

MISSING CONCEPT #2: Focus on pre-commitment

How can we ever get employees to change their behavior if we don’t ask for a specific commitment? We need to engage them around their goals and then get them to commit (multiple times, in different ways) to follow through. The use of positive social proof (i.e. 78% of people aged 34-45 selected this option) is also key.

MISSING CONCEPT #3: Accountability drives behavior change

We all know how easy it is to ignore an email from a personal finance app. But if that email, SMS or in-app message comes from someone that we’ve been matched with and we have committed to work with them on our goals, it’s a very different story. The trick is how to scale that accountability (more on that in another email).

Last week, we were discussing with our research partners at Duke how we could get the word out on these concepts so that your current and future financial wellness programs will achieve better results. We decided to put together a cheat sheet to show you what you need to know. Introducing, the first ever cheat sheet on the 3 Key Concepts Missing from Financial Wellness Programs:

The financial wellness cheat sheet contains all new material that:

  • Highlights each concept’s “Superpower”
  • Examples of the “Superpower In Action,” so that you can apply it to your programs

How to Talk to Employees about Financial Goals

It’s easy to feel overwhelmed by financial planning. According to a recent survey by T. Rowe Price, 18% of workers avoid dealing with their financial situation because it is out of control; among Millennials, the number bumps up to 25%. This alarming datapoint highlights the need for open and thoughtful discussions around employees’ personal finance challenges.

Moneymap believes that focusing on financial goals appeals to what employees really want to do with their money and motivates them to take meaningful action. Here are some tips for talking to employees about their top financial goals:

  1. Saving for Retirement
    • Remind employees about saving plans at work and outside of work
    • Discuss the basics: A) How to Save, B) How Much to Save,  C) When to Save, and D) How to Invest
    • Remind them to start saving for retirement now and to contribute as much as they can
  2. Eliminating Debt
    • Understand what kind of debt they are most concerned with, where they are in their lives, and their other financial goals
    • Help them understand the relative cost of debt and help them target accordingly
    • Acknowledge that some employees may not be able to pay
  3. Buying a Home
    • Remind them of key considerations, such as how long they will live there, school districts, and additional costs
    • Go over different property types and non-financial factors
  4. Investing Better
    • Go over common investing myths
    • Stick to common best practices depending on their needs, instead of getting bogged down by the details of their financial situation
  5. Creating an Emergency Fund
    • Remind them that an emergency fund is different from setting aside money for a major purchase
    • Encourage them to contribute money to an emergency fund regularly until they reach a sizable cushion

Employees in the most need of guidance are often the ones who push off thinking about their finances. Start the new year off right by helping them create a financial plan and achieve their goals.

Employees Want More Retirement Guidance

American workers are expecting more help from their employers in regards to retirement planning, according to a new study from American Century Investments. The survey, which included responses from over 2,000 defined contribution plan participants, found that retirement is top of mind for employees but they still need more help.

80% of participants believe that they would have saved more if their employer had given them more of a “nudge.” Participants were especially interested in investing help.

Employees are also open to more aggressive saving targets; 70% support automatic enrollment at 6% and nearly 80% support automatic contribution increases. 90% of participants had at least some regret about retirement savings.

Not saving enough for retirement was mentioned more frequently than not doing better in careers or personal relationships.

Other studies support Americans’ desires for more financial guidance and growing trust in financial professionals. The Allianz LoveFamilyMoney study found that 92% of respondents who have used financial professionals said they believe that the relationship is helping them achieve their financial goals, and 74% believe that the extra guidance is worth the cost.

Even respondents who have never used a financial professional believe that professionals are helpful in achieving financial goals.

The differences in behaviors and feelings of financial well-being between those who use financial professionals and those who do not are clear: 12% of those who have never worked with a financial professional are unsure of how to fund their retirement, compared to 3% of those who have worked with a financial professional.

60% of respondents who work with an advisor feel very secure about their retirement, as compared to 32% who do not, according to Deloitte.

Working with a financial professional also encouraged more savings, investing, and long-term goal-setting.

Deloitte also found that 78% of consumers surveyed in 2014 trusted their own financial professional, compared to 68% in 2012, indicating an ongoing upward trend. The positive sentiment towards financial professionals and openness towards receiving help should be good news to plan sponsors.

However, employers still have a lot of room to expand their engagement and guidance. Only 14% of respondents believed that their employers had done everything possible to help with retirement planning, and employers underestimate the amount of employees that want at least a “slight nudge,” according to American Century Investments.