© copyright 2004 invest in your debt, inc. the business case for financial education personal...

© Copyright 2004 Invest In Your Debt, Inc.

The Business Case for The Business Case for Financial EducationFinancial EducationPersonal Financial WellnessPersonal Financial Wellnessand Employee Productivityand Employee Productivity

Dr.Dr. Thomas Watson, Ph.D.Thomas Watson, Ph.D.

2© Copyright 2004 Invest In Your Debt, Inc.

Dr. Thomas WatsonDr. Thomas Watson

President of Watson Communications Int’l, Inc.—Corporate President of Watson Communications Int’l, Inc.—Corporate Training CompanyTraining Company

Company founded in 1990Company founded in 1990

Headquartered in Longview, Texas with offices in GuamHeadquartered in Longview, Texas with offices in Guam

Professor in Texas A&M University System for 10 years—Professor in Texas A&M University System for 10 years—behavioral sciencebehavioral science

Over 25 years experience in international training and researchOver 25 years experience in international training and research


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IntroductionIntroduction

The majority of financial education programs are narrowly The majority of financial education programs are narrowly focused on retirement education/planningfocused on retirement education/planning

Smart employers are broadening their perspective about Smart employers are broadening their perspective about financial education to include debt elimination, money financial education to include debt elimination, money management and financial coachingmanagement and financial coaching


The Rationale for Comprehensive The Rationale for Comprehensive Financial Education Is StrongFinancial Education Is Strong

What if someone promised, you the employer, a plan to achieve the What if someone promised, you the employer, a plan to achieve the following:following:

a positive return on every dollar invested in comprehensive financial educationa positive return on every dollar invested in comprehensive financial education

reduced pressure to increase salariesreduced pressure to increase salaries

reduced HR administrative costsreduced HR administrative costs

increased worker productivityincreased worker productivity

increased moral and loyaltyincreased moral and loyalty

reduced absenteeismreduced absenteeism

increased number of worker retirements on time rather than delayedincreased number of worker retirements on time rather than delayed

reduced exposure to litigation based on fiduciary liability as fewer retirees have reduced exposure to litigation based on fiduciary liability as fewer retirees have financial problemsfinancial problems

reduced stress over financial matters and stress-related illnessreduced stress over financial matters and stress-related illness

fewer accidents fewer accidents

reduced turnoverreduced turnover


Traditional Investment Focused Traditional Investment Focused Retirement Education Programs Have Retirement Education Programs Have Limited EffectivenessLimited Effectiveness

For many employers, retirement plan participation rates have For many employers, retirement plan participation rates have reached a plateau and in some cases are actually fallingreached a plateau and in some cases are actually falling

Many workers have money problems and cannot afford to save Many workers have money problems and cannot afford to save for retirementfor retirement

Some workers are not convinced that they should be saving for Some workers are not convinced that they should be saving for retirementretirement


Positive Results Positive Results

Research suggests that Research suggests that employees can benefit employees can benefit greatly from targeted greatly from targeted financial education offered financial education offered from their employersfrom their employers


Research by Virginia Tech University*Research by Virginia Tech University*

66% of employees are “very concerned” about making ends 66% of employees are “very concerned” about making ends meetmeet

54% of average income workers are dissatisfied with their 54% of average income workers are dissatisfied with their financial wellnessfinancial wellness

52% report they live from paycheck to paycheck52% report they live from paycheck to paycheck

30% feel they are always in financial trouble and 35% find it 30% feel they are always in financial trouble and 35% find it hard to pay billshard to pay bills

44% do not set aside money for retirement44% do not set aside money for retirement

60% do not have enough money set aside to live for longer than 60% do not have enough money set aside to live for longer than two months if they lost their jobstwo months if they lost their jobs

**Research byResearch by Dr. Thomas Garman, Virginia Tech University, 2001Dr. Thomas Garman, Virginia Tech University, 2001


Employee Financial Wellness and Employee Financial Wellness and Worker Productivity Are Positively Worker Productivity Are Positively Related*Related*Employees with poor financial wellness are more likely to:Employees with poor financial wellness are more likely to:

Be absent from work frequentlyBe absent from work frequently

Receive poor performance ratings Receive poor performance ratings

Spend excessive time at work dealing with personal financial Spend excessive time at work dealing with personal financial problems ---- approximately 20 hours a monthproblems ---- approximately 20 hours a month

Experience a decline in job productivity from one year to the Experience a decline in job productivity from one year to the nextnext

**Research byResearch by Dr. Thomas Garman, Virginia Tech University, 2001Dr. Thomas Garman, Virginia Tech University, 2001


Research Findings on Employee Wellness*Research Findings on Employee Wellness*

BestBest employees - those who have employees - those who have averageaverage or or above averageabove average financial financial well-beingwell-being

WorstWorst employees - those who are employees - those who are dissatisfied with their financial dissatisfied with their financial situationsituation

Financial well-being directly PredictsFinancial well-being directly Predicts employees’ performance ratings, employees’ performance ratings, pay satisfaction, absenteeism, and conflicts between work and money pay satisfaction, absenteeism, and conflicts between work and money mattersmatters

*Research study by Dr. S. Joo, Texas Tech University and Dr. J. Kim, University of Maryland, 2002


Military ResearchMilitary Research

Research by the Military Family Institute concludes that the Research by the Military Family Institute concludes that the direct and indirect costs to the Navy for poor personal financial direct and indirect costs to the Navy for poor personal financial behaviors of workers is between $208 and $294 million annuallybehaviors of workers is between $208 and $294 million annually

The cost to the Department of Defense, an employer of 1.4 The cost to the Department of Defense, an employer of 1.4 million people, is about $1 billion annuallymillion people, is about $1 billion annually


Negative Impact of Employee Debt on Negative Impact of Employee Debt on Employer ProfitabilityEmployer Profitability

Direct CostsDirect Costs – – Work time Work time wasted dealing with financial wasted dealing with financial concerns, more absenteeism concerns, more absenteeism and lower job productivityand lower job productivity

Indirect CostsIndirect Costs – – Stress, Stress, health care, turnover, health care, turnover, accidents, substance abuse accidents, substance abuse and theftand theft


Corporate Financial Education Corporate Financial Education

There is a growing national There is a growing national movement to offer financial movement to offer financial education in the workplace, education in the workplace, partially because so many partially because so many workers are going to have workers are going to have extreme difficulty finding extreme difficulty finding money for retirementmoney for retirement


Employers Profit When Helping Improve Employers Profit When Helping Improve Employee Financial Well-Being*Employee Financial Well-Being* Each employee who only slightly increases his or her financial Each employee who only slightly increases his or her financial

well-being will contribute an well-being will contribute an Extra $450Extra $450 to the employer’s to the employer’s Bottom Line of ProfitabilityBottom Line of Profitability

This is This is $160,000$160,000 to an employer with 1,000 employees where to an employer with 1,000 employees where only 30% of the workforce makes relatively minor but genuinely only 30% of the workforce makes relatively minor but genuinely positive changes in financial well-beingpositive changes in financial well-being

The return comes from reduced employee The return comes from reduced employee absenteeism and less absenteeism and less work time wastedwork time wasted dealing with financial problems dealing with financial problems

*Research study conducted by Dr. S. Joo, Texas Tech University, 2003


Employers Reap the BenefitsEmployers Reap the Benefits

Very high participation Very high participation rates in 401(k) plans 90+ rates in 401(k) plans 90+ percent rangepercent range

Reduced net operating costReduced net operating cost


The Value of Employee Financial The Value of Employee Financial Education—Model Created by Ernst & Education—Model Created by Ernst & YoungYoung


Smart Employers Offer Smart Employers Offer TargetedTargeted Financial Education That Helps Workers Financial Education That Helps Workers Make Informed Decisions About:Make Informed Decisions About:

Employer-sponsored retirement plans

Eliminating debt and money management

Financial coaching


Employees Benefit as WellEmployees Benefit as Well

Less stress on and increased financial wellness off the jobLess stress on and increased financial wellness off the job Feel less pressure to make more moneyFeel less pressure to make more money Increased capability to participate in and contribute to Increased capability to participate in and contribute to

retirement plansretirement plans Less “moonlighting” to make ends meetLess “moonlighting” to make ends meet Lower household debt-to-income ratioLower household debt-to-income ratio Increased self-esteem and improved attitude about workIncreased self-esteem and improved attitude about work Increased saving for retirementIncreased saving for retirement Increased overall financial wellnessIncreased overall financial wellness


Clients Who Have Offered the “Invest In Clients Who Have Offered the “Invest In Your Debt” Financial Education Seminar Your Debt” Financial Education Seminar to their Employeesto their Employees Eastman Chemical CompanyEastman Chemical Company

Neiman Marcus National Distribution CenterNeiman Marcus National Distribution Center

Exxon/Mobil Exxon/Mobil

Xerox CorporationXerox Corporation

City of HoustonCity of Houston

Harris County (Houston)Harris County (Houston)

CitibankCitibank

Methodist Healthcare SystemMethodist Healthcare System

Ernst & YoungErnst & Young

State of TexasState of Texas

NovationNovation


Relieve Employee Stress Relieve Employee Stress Through Financial EducationThrough Financial Education

Thank your for your time.Thank your for your time.

© copyright 2004 invest in your debt, inc. the business case for financial education personal...

Documents

financial matters

financial problems

financial coaching slide

reduced exposure

debt elimination

information page

research slide

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