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sQ1=new Array();sQ1[1]=new Array("http://www.personalfinancefoundation.org/","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact "Sharing research, resources, and best practices demonstrating that profits increase by providing employees access to resources to reduce personal finance distress and improve financial well-being." What's Your "Personal Financial Well-Being" Score? Answer these eight questions to find out. USA Today says... Money Worries Hinder Job Performance Read more... Workers' Financial Stress May Hurt Productivity Read more... Employee Benefit News says... Employers Raising the Bar on Financial Education Read more... Worker Financial Distress Financial Distress Among American Workers Final Report: 30 Million Workers in America—One in Four—Are Seriously Financially Distressed and Dissatisfied Causing Negative Impacts on Individuals, Families, and Employers Read more...   Read full report ... How Employers Profit Click here to view the video. "Hello. I'm Dr. E. Thomas Garman, Professor Emeritus and Fellow, Virginia Tech University." Read Transcript... Click here to download this video. Size - 55 MB Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information PowerPoint Presentation for Employers Click here to view the presentation (PowerPoint). What is PFEEF All About? Read more...   Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[2]=new Array("http://www.personalfinancefoundation.org/about-us.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact About Us Board of Directors Director of Research Mouseover the images for more information. Board of Trustees Click here for more information. National Research Team Click here for more information. Director of Learning Approved List of PFW Scale Users Read more (PDF)... General Counsel Administrative Manager Web Master Donor List Click here for more information. About PFEEF The Personal Finance Employee Education Foundation, Inc. (PFEEF), a not-for-profit organization, is a private foundation established for the scientific purposes of serving the public interest for non-commercial purposes by educating employers on the bottom-line benefits of workplace financial education that improves financial literacy and personal financial behaviors ( Click here for press release). The Personal Finance Employee Education Foundation was established in 2006 as a logical extension of important research conducted over the previous two decades. Research conducted during the 1990s at the National Institute for Personal Finance Employee Education at Virginia Tech demonstrated the employer's return on investment for providing workplace financial education to employees. Additional research in the 2000s by the InCharge Education Foundation and academic scholars around the country further established the business case for workplace education that reduces employee financial distress and improves their financial well-being. Personal Financial Well-Being (PFW) Scale A major breakthrough occurred in 2006 with the long-awaited publication and public availability of the Personal Financial Well-Being (PFW) scale. (The PFW scale is also known as the InCharge Financial Distress/Financial Well-Being scale.) The PFW scale is a concise 8-question survey that can be used by human resources professionals and financial education providers (for free) to do the research in one day to make the business case for more financial literacy to improve the bottom line. No academic researcher is needed to help in such an effort. The human resources director and/or financial education provider already has access to the data, and he or she only needs to put it together with results of PFW employee survey data. The human resources director and/or financial education provider then can take the findings that prove the business case to the employer's Chief Financial Officer and to top management. What PFEEF Research and Knowledge Tells Us (1) The lack of financial literacy--spending plans, credit management, and savings--is the major reason why employees do not save for retirement; (2) Money worries hinder employee job performance; and (3) Providing employees easy access to basic financial literacy education programs improves their personal financial behaviors and job performance as well as the employer's bottom line. What the PFEEF Does PFEEF advocates best practices in workplace financial programs that increase employee well-being and employer profits. PFEEF provides limited financial support to employers and those in business, government and academia those who educate employers about the benefits of quality workplace financial education. Support is provided to human resources professionals, financial education providers, academic researchers, and others involved in workplace financial education. We give employers no-cost-to-use tools and expertise to detail the bottom-line ROI of quality workplace financial programs. PFEEF does not provide financial programs; instead we recommend the best. PFEEF Helps Employers We identify the best providers of workplace financial programs and for no cost project their value to the employer's bottom line. PFEEF helps top management--one employer at a time--use company data to prove the bottom-line wisdom of providing employees easy access to quality programs that improve personal financial behaviors. PFEEF Helps Workplace Financial Education Program Providers We help workplace financial providers demonstrate the value of their workplace financial program to employers. We help quality providers build market share in workplace financial education. Why PFEEF Does What It Does? Harvard University's Lawrence Henry ("Larry") Summers provides this insight: "I think one has to be prepared to accept long casual chains. That is, if you're trying to think about a problem and propose a solution, it does not happen the next day. But it affects the climate of opinion, and things go from being inconceivable to being inevitable." The PFEEF message that employers can increase profits by improving employees' personal finances used to sound too good to be true. All of a sudden more and more employers and financial program providers are telling the same story. Today employers are saying "Doing these things makes perfect sense!" and "Which financial program providers are the best?" Address: Personal Finance Employee Education Foundation 9402 SE 174th Loop Summerfield, FL 34491 Email: info@pfeef.org PFEEF Accountants: Crippen, Trice & Hornby, LLP Ocala and Summerfield, Florida  Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[3]=new Array("http://www.personalfinancefoundation.org/roi/roi-model.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact ROI Model Return on Investment Model (ROI) Click here to view ROI model (PDF). ROI "Prove it Yourself" “Employers, is poor employee financial literacy costing you money?” You betcha, says PFEEF. And YOU can prove it…with one easy-to-take snapshot of your employees. The PFEEF has the “no-cost-to-use” camera (the PFW scale) and you have the employee records. Read more (Word)... Essay on Personal Financial Literacy and Happiness Click here to read the full essay. Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[4]=new Array("http://www.personalfinancefoundation.org/research/research.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Research "Sharing research, resources, and best practices demonstrating that profits increase by providing employees access to resources to reduce personal finance distress and improve financial well-being." Employee Financial Distress Director of Research Click here for more information. Health and Personal Finances Click here for more information. Value to Employers Click here for more information. Retirement Preparation Click here for more information. Credit Counseling Helps Click here for more information. Financial Literacy Education Click here for more information. National Research Team Click here for more information. Data Collection Procedures Click here for more information. Approved List of PFW Scale Users Read more (PDF)...  Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[5]=new Array("http://www.personalfinancefoundation.org/press/press.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Press Press Releases Click here for more information. Media Citations Click here for more information.          Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[6]=new Array("http://www.personalfinancefoundation.org/contact.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Contact Information Please fill in your contact information. First Name: Address: Personal Finance Employee Education Foundation 9402 SE 174th Loop Summerfield, FL 34491 Other Email : info@pfeef.org Last Name: Email: Phone: Comments: Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[7]=new Array("http://www.personalfinancefoundation.org/features/feature-1.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact USA Today Money Worries Hinder Job Performance: By Stephanie Armour With gas prices rising, health costs soaring and consumer confidence taking a dive, many employees are struggling with financial woes that threaten job productivity. Workers with money woes have worse health, spend more time at work on the issue and also are absent more frequently, research shows. One in four American workers are seriously distressed about their personal financial situation, according to a 2005 review of surveys and published research studies by E. Thomas Garman, professor emeritus at Virginia Tech University, and other researchers. The report, Financial Distress Among American Workers, found up to 80% of financially stressed workers spend time at their jobs dealing with or worrying about money issues, with workers in lower-paying jobs experiencing higher stress. Researchers also noted financial stress affects all income levels. "I'd gotten myself into a real mess. I'd run up 12 charge cards," says Mary Sousa, 61, of Indian Harbor Beach, Fla., a tour guide who went through a credit-counseling program when she was $25,000 in debt. She'll be debt-free in March. "It was awful, creditors calling me at work. It's amazing I didn't lose my job." How worry affects job performance: Lower productivity. Money worries are linked to more absenteeism and productivity woes, as employees dodge bill-collector calls at work, use faxes for personal business and make more personal calls. It can also spur turnover, as employees in need of more money look for new jobs. "What we're seeing right now is a dangerous combination of higher costs, lower confidence and a still shaky employment outlook," Jennifer Openshaw, CEO of Los Angeles-based Openshaw's Family Financial Network, a provider of financial services and self-help products, says in an e-mail. Health problems. People who contacted a credit-counseling agency who were in poor health had the highest financial stress levels, according to a 2005 survey of more than 3,000 debtors. The study was done by Garman and three other researchers. High blood pressure, weight gain and insomnia were some of the examples. "It can lead to substance abuse, alcohol abuse," says David Jones, president of the Fairfax, Va.-based Association of Independent Consumer Credit Counseling Agencies. Some employers are rolling out programs to assist employees with their finances, including seminars, brown-bag lunches on such topics as debt management and handing out financial-planning materials. But many firms do very little, Garman says. USA TODAY, October 5, 2005, B1 Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[8]=new Array("http://www.personalfinancefoundation.org/features/feature-2.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact USA Today Workers' financial stress may hurt productivity: By Stephanie Armour The financial stress piling up on employees due to an increase in home foreclosures and defaults on credit cards is having an impact on the workplace, potentially draining productivity and increasing emotional stress on the job. Major employee-assistance counselors serving Fortune 500 companies are reporting a surge in calls from employees worried about mortgages and finances. Ceridian, a Minneapolis-based provider of employee counseling services, typically gets several hundred calls a month from employees seeking financial counseling. From June to July, it saw a 50% increase in calls for financial advice. And ComPsych, a Chicago-based employee assistance provider, reports a similar surge in finance-related calls. "Our calls in general for mortgage-related issues are up over three times compared to last year," says Richard Chaifetz, CEO of ComPsych. "(Employees) become preoccupied with financial issues at work. You see absenteeism, lack of performance and turnover as people look for jobs that may pay more." Financial worries can manifest themselves in the workplace as employees moonlight to pick up extra money, or can cause anxiety, depression, absenteeism and productivity problems that affect the bottom line, says Jonathan Hefner, manager of legal and financial counseling services for Ceridian. FIND MORE STORIES IN: July | Compsych | ING Direct | Principal Financial Group "There is a connection between emotions and finances," Hefner says. "Employees are calling about the mortgage crisis and financial squeeze. They're very anxious. We're hearing a lot more concern about foreclosure. It can have a real significant (impact) at work." The number of foreclosure filings reported in July, according to an August report from RealtyTrac, jumped 93% from July of 2006 and rose 9% from June, the latest sign that homeowners are having trouble making payments and finding buyers during the national housing slump. There were 179,599 foreclosure filings reported during July, up from 92,845 during the same period a year earlier. Nearly three out of five employees say they're worse off financially this year, according to an August survey by ComPsych. Just 16% said they are better off, with more savings and less debt. Money woes can take a severe toll on employees. When asked what kept them awake at night, 38% of employees said they are concerned about being able to pay for basic necessities in retirement, according to a survey by The Principal Financial Group. Nearly half are anxious about enjoying the same quality of life they now have. "Financial stress is probably the No. 1 stress that gets people to fail," says Arkadi Kuhlmann, CEO of online bank ING Direct. "People are preoccupied and not being as productive." USA TODAY, September 5, 2007, B1 Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[9]=new Array("http://www.personalfinancefoundation.org/employee-benefit-news.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Employee Benefit News says... Employers Raising the Bar on Financial Education By Leah Carlson Shepherd May 2, 2007 Worried that unenlightened employees are harming their financial lives and not making the most of their benefits, some employers are taking bold new strides to educate their workers about retirement planning and personal finance, introducing new programs that they hope will be enough to inform and motivate their workforce. Time will tell how well the new programs work. IBM's initiative Keeping a pledge to help employees transition from traditional pensions to self-directed 401(k)s, IBM recently unveiled a multimillion dollar personal finance education and counseling program for its 127,000 U.S. workers. IBM will invest up to $50 million over the next two years in the financial planning benefit, which is provided by Fidelity Investments and The Ayco Company, a Goldman Sachs firm and provider of financial counseling. Randy MacDonald, IBM's senior vice president of human resources, believes the scope and depth of the new program, called MoneySmart, is unmatched in this country. "This sets a new benchmark for defined contribution plans going forward," he says. MoneySmart kicked off in March with group educational seminars held during working hours and open to spouses and domestic partners. IBM employees now have unlimited access to confidential, one-on-one personal financial planning sessions by phone with specially trained Ayco financial planners and Fidelity financial representatives. Online planning tools and downloadable information also will be available through a firewalled, protected Web portal hosted by Ayco. Interested workers can read up on a broad range of personal finance issues, including investment choices, retirement income, college savings and debt management. Remarkably, employees who call for advice get to speak with the same person each time. "Including that [feature] was no small feat, but we managed to do it," notes MacDonald. "It's one of the differentiators." IBM will absorb the fees associated with MoneySmart for at least the first two years. At the end of the two years, costs will be evaluated again based on business affordability, employee satisfaction and program utilization, company officials state. "We believe this will be the new gold standard for employee retirement and financial planning," says IBM spokesman Clint Roswell. Employers are becoming more aware of the need for financial education and the negative impact financial stress has on the employee and the business, says Brad Barron, CEO at CLC, a legal and financial benefit provider based in Granite Bay, Calif. "There is an absolute shift," he observes. CLC offers financial education classes, paired with one-on-one coaching, through employee assistance programs (EAPs). "We've been doing more and more classes. The number of employers coming on board is exploding," Barron remarks. Revamping enrollment materials Seeking to nudge the one-third of employees who fail to enroll in its 401(k) plan, Wells Fargo Institutional Trust Services recently introduced some redesigned enrollment materials for the employer-sponsored retirement plans it manages. The new materials feature simple, action-oriented messages designed to educate employees and get more of them to save money in 401(k)s. The new enrollment materials incorporate findings from industry research and focus groups held with Wells Fargo clients and employees. The information includes streamlined messages and focuses on a simplified, three-step enrollment process: decide how much to contribute, choose an investment and enroll today. The emphasis on a three-step enrollment process is consistent with the adult learning principles that Wells Fargo often uses in its employee education meetings. One of these principles is that adults learn and remember best when information is grouped in threes. In Wells Fargo's new enrollment materials, the first set of investments is asset allocation options, where an employee can make one simple investment choice. The second set consists of individual mutual funds from which an employee can create their own portfolio. The third option is to have investments done for workers through an advice program. "Choosing investments for their 401(k) plan is often one of the most daunting decisions for employees," says Jennifer Plese, director of participant products and services for Wells Fargo Institutional Trust Services. "By presenting asset allocation options first, it provides a simple solution that many workers want." The redesign of Wells Fargo's enrollment materials is one component of the overall improvements and additions it is making to its enrollment strategies for clients. "We are simplifying all of our tools to be more action-oriented and developing new ways to get people into the plan," says Plese. "Research has shown that when employees are overwhelmed by choice, they will just avoid making a decision. Choosing not to save is not a good choice. We are trying to simplify the process." Best practices In their education programs, employers should emphasize basic personal finance issues, like budgeting and debt management. Don't talk just about retirement, advises Thomas Garman, a Virginia Tech personal finance professor and president of the Personal Finance Employee Education Foundation. In addition, employers should encourage workers to bring their spouses, or other people closely involved with the household finances, to all of the financial education meetings because that will improve their motivation to save, he asserts. "It's not rocket science, but it is hard decisionmaking," Garman says. "Employees are scared. They really need their hand held in a way, where the employer is saying We genuinely care about you.'" - L.C.S. Senior Editor Lynn Gresham contributed to this report. Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[10]=new Array("http://www.personalfinancefoundation.org/features/feature-3.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Worker Financial Distress Financial Distress Among American Workers Final Report: 30 Million Workers in America—One in Four—Are Seriously Financially Distressed and Dissatisfied Causing Negative Impacts on Individuals, Families, and Employers, March 23, 2005 Click here to download this press release (PDF). "Thirty million workers in America-one in four-are seriously financially distressed and dissatisfied with their personal financial situations." Leading academic scholars from 10 universities and five business experts in personal finance have issued this unprecedented and definitive joint report of new findings on the levels of financial distress and dissatisfaction among workers in America. Sixteen additional experts from the business world joined to give support to the findings. "It's an ugly situation for employers when more and more of their workers are distressed about their personal finances and running hard just to keep their heads above water financially," says Garman, professor emeritus, Virginia Tech University. Why? The reason is that many workers who struggle with money matters are less productive at their place of employment because of their financial distress. Depending upon their place of employment, 30% to 80% of financially distressed workers spend time at work worrying about personal finances and dealing with financial issues instead of working. Although most working adults are satisfied with their personal finances and are not financially distressed, a substantial minority is having considerable trouble. They are experiencing more than moderate degrees of distress about their personal finances; instead they report "high" to "overwhelming" levels of financial distress. They are dissatisfied with their financial situation and worry about money, debt and bills. They usually are insecure about their personal finances for retirement. They worry about having enough money to live on once they retire. Often, they lack confidence about their abilities to manage personal finances. Many do not even have hope that they might one day be able to catch up financially. People at all income levels in society experience distress about financial matters. A large proportion of those who are financially distressed, 40% to 50%, report that their health is directly impacted negatively by their financial worries and problems. "Health problems caused by financial distress cost employers big money," says Garman. Further, "These findings should motivate employers to offer employees access to resources, counseling and advice to decrease their stress about money matters and improve their financial lives." The authors of this report make note of Federal Reserve Chairman Alan Greenspan's observation in February 2004 that "much of the apparent increase in the household sector's debt ratios over the past decade reflects factors that do not suggest increasing household financial stress" (Source at http://www.federalreserve.gov/boarddocs/ speeches/2004/20040223/default.htm). While the increase in household debt ratios may or may not suggest increasing financial distress, this report does note that financial distress comes from overuse of credit as well as money and spending problems. Furthermore, today there are 30 million workers seriously distressed about their personal financial problems. One co-author from business observes "How can we help this situation if society has not acknowledged there's a problem?" Governments and employers need to recognize, understand and internalize the sizeable nature of the financial distress problem among workers as well as its ramifications, and take appropriate actions. The broader question is what can be done to address the situation? The 4 ½ page summary report is supplemented with an additional 28 pages of key findings and cogent quotes from dozens of studies in Summary of Research Findings on Financial Distress and Dissatisfaction: Dissatisfaction with Financial Situation, Stress about Personal Finances, Living Paycheck-to-Paycheck, Stress about Retirement, Lack of Confidence about Ability to Manage Personal Finances, Health and Stress about Personal Finances are Related, and Distress about Health Care Costs and Bills. The list of references contains 170 research studies, reports, and media stories, many of which are available on the Internet. The statistical data in this report are uncomplicated and easy to read. Click here to access the full report (PDF). Four recommendations are provided and elaborated upon for those who are financially distressed: (1) Follow the wise old saying to "spend less than you earn"; (2) Make and implement plans to prevent poor money management and reduce financial distress; (3) Determine the best options to relieve financial distress; and (4) Get help through the workplace. Another appendix provides a list of federal government and non-profit organization online resources that can help users build wealth. Contact information for the 15 authoritative co-authors and 15 other personal finance experts is provided in the report. Click here to access the full report (PDF). Click here to download this article (PDF). Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[11]=new Array("http://www.personalfinancefoundation.org/features/feature-3full.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Worker Financial Distress Financial Distress Among American Workers Final Report: 30 Million Workers in America—One in Four—Are Seriously Financially Distressed and Dissatisfied Causing Negative Impacts on Individuals, Families, and Employers, March 23, 2005 Click here to download this article (PDF). With contributions from other personal finance experts (also available as press spokespersons), including:b Michael McAuliffe, David C. Jones, Ray E. Noftsinger, Michael Schiano, David A. Lander, Bernice B. Wilson, Dennis Ackley, Steven S. Shagrin, Al Otto, Thomas R. Watson, Bill Keenan, Brooks Hamilton, David L. Ireland, Kelly L. Reese, and Blanchard D. Warren. March 23, 2005 "More and more families are running harder and harder to stay in the same place or to reduce the amount that they are falling behind."1 In survey after survey, people say that they are financially distressed and dissatisfied with their personal finances. In this report, a national team of academic scholars and other experts conclude that 30 million workers in America-one in four-are seriously distressed and dissatisfied with their personal financial situations. Not only does this have negative consequences for the workers, their families and co-workers, and their employers, it also constitutes a serious social problem. The public and government need to recognize and internalize the sizeable nature of the financial distress problem as well as its ramifications, and take appropriate actions. This report pops the mythical bubble that urges people to ignore these problems or worse denies their existence for some perception of the "greater good." This definitive report is based on decades of research and it reports on reviews of over a dozen new research studies. This report takes data from 11 major business sponsored surveys, 10 of which were conducted 2004 by nationally known companies, such as MetLife, Principal Financial, American Express, Cigna, AARP, Caravan, Roper, and Gallup, as well as 10 recent published academic research studies and new not-yet-released national research findings to be presented on April 9, 2005 in Columbus, Ohio at the national conference of the American Council on Consumer Interests (ConsumerInterests.org). Purposes of the Research This research was undertaken: (1) to identify the scope and severity of the problem of worker financial distress; (2) to seek a developing consensus on the findings, and (3) to present the growing amount of evidence to motivate employers to help employees reduce financial distress. This report serves as the basis of a journal article that is in preparation. Wide Consensus on Conclusions and Recommendations The statistical data in this report are uncomplicated and easy to read. No one disputes the basic statistical facts offered in this report, although some may disagree with their interpretation. The five conclusions and four recommendations offered in this report are widely agreed upon. Media Contact Information for Authors and Other Experts in Personal Finance A number of leading academic scholars and businesspersons who are experts in personal finance have issued this unprecedented joint report on the levels of financial distress and dissatisfaction among workers in America. A number of other experts in personal finance have also agreed to serve as authoritative sources for the media, and their contact information follows as well as contact information for the co-authors. One Appendix Summarizes Research And Another Lists Online Resources There is general agreement on the conclusions described below and summarized in the Appendix of this report. The contents of the Appendix, Summary of Research Findings on Financial Distress and Dissatisfaction, are arranged as follows: Dissatisfaction with Financial Situation, Stress About Personal Finances, Living Paycheck-to-Paycheck, Stress About Retirement, Lack of Confidence About Ability to Manage Personal Finances, Health and Stress About Personal Finances are Related, and Distress About Health Care Costs and Bills. Another Appendix lists a list of federal government and non-profit organization online resources that can help users build wealth. References This report provides a listing of References that includes 170 research studies, reports and media stories, many of which are readily available on the Internet. Conclusions Although most working adults are satisfied with their personal finances and are not financially distressed, a substantial minority is having considerable trouble. Thirty million workers-one in four-are suffering serious financial distress. This report takes data from 11 major business sponsored surveys conducted by nationally known companies, such as MetLife, Principal Financial, American Express, Cigna, AARP, Caravan, Roper, and Gallup, as well as 10 published academic research studies. Most of the research findings were reported within the past 12 months. A review of these studies concludes that 25% of working adults-that's one in four-are seriously financially distressed. This amounts to 30 million workers in America. They are experiencing more than moderate degrees of distress about their personal finances; rather they report high to overwhelming levels of financial distress. Furthermore, they report they are dissatisfied with their personal financial situations. Finally, research reveals that there are many negative consequences of financial distress upon individuals, their families and co-workers, and their employers. People who are financially distressed are often living paycheck-by-paycheck with no money for extras. They are dissatisfied with their financial situation and struggle with money and debt and worry over bills. They usually are insecure about their personal finances for retirement. They worry they will not have enough money to live on once they retire. They often lack confidence about their ability to manage personal finances. Many do not even have hope that they might one day be able to catch up financially. Poor health and financial distress are related. A large proportion of those who are financially distressed, 40% to 50%, report that their health is negatively impacted by their financial worries and problems. Those who are financially distressed often report they are experiencing a variety of unpleasant consequences of mental stress: poor health. They report disagreements with friends, family members and co-workers; restricted social life; and reduced job productivity. Also, they often report they are distressed about health care costs and medical bills. This distress can further unveil or aggravate a depressive or anxiety disorder. Such impairments can affect an employee's coping skills, attention and concentration ability to the point of decreased job attendance, reduced workplace performance and hamper job retention for employers. The relationship between poor health and serious financial distress suggests provocative clues that should be further investigated, particularly by the health care industry, employers, governments, and others involved in paying the costs for medical care. Personal financial problems hurt workers' productivity. Thirty to 80% of financially distressed workers spend time at their place of employment worrying about personal finances and dealing with financial issues instead of working. These people often admit that their concerns about personal finances interfere with their work. They may take time from work to talk with co-workers about personal financial problems, communicate with creditors about past due payments, pay personal bills, balance a checkbook, or talk to a lender about a debt consolidation loan. They may pay bills while at work. Because of their financial distractions, they often report they are unable to carry out their normal responsibilities, have to cut down their workload, and are not able to accomplish as much as usual. This cycle further interrupts employee performance, workplace attendance and poses greater financial burdens compiling stress and financial pressures. Personal financial distress, therefore, negatively impacts employers. Financial problems are not confined to lower income levels. Distress about financial matters is experienced at all income levels in society. It is partly a function of income, particularly among those earning less than an average income. While there is an inverse relationship between income and financial distress, other factors provide a more accurate explanation. The amount of consumer debt is a factor, especially among those with high debt-to-income ratios. Financial distress also is very much a function of lifestyle, predominantly among people who spend almost every dollar they earn or use credit so they can live beyond their means. Varying Degrees of Financial Distress "How much financial distress are we talking about?" A normative perspective on the varying degrees of financial distress can be illustrated with a 10-point scale with the higher numbers indicating increasing distress. See Table 1. Table 1 - Normative Labels for Levels of Financial Distress Zero financial distress Very low financial distress Low or little financial distress Minimal financial distress Average financial distress Moderate financial distress High financial distress Very high financial distress Extremely high financial distress Overwhelming financial distress This report on financial distress is about adults experiencing "serious financial distress" in the 7-to-10-range as shown on the scale in Table 1. Financial Distress Levels by Household Income This report takes data from a variety of secondary and primary sources of data and uses deductive logic to determine that 25% of working adults are experiencing serious financial distress. Some studies (see appendix) have found that 60%, or more, adults are financially distressed. Reports of these higher levels may occur since when one working adult is financially distressed, it may well affect the heads of households, the spouses or unmarried partners, and other adults and children living at home although the latter are usually not surveyed. Table 2 summarizes the research findings of financial distress experienced by different income groups. It shows the authors' estimates of the ranges of percentages of financial distress among the population according to level of household income. These conclusions are based upon a review of more than two-dozen studies cited in the appendix. Note in the table that for all income groups the estimated range of financially distressed employees is 25% to 60%. The highest percentages of financially distressed adults are more frequently found among those with lower household incomes. However, people in all income groups experience serious financial distress because income alone is not the single determinant that influences whether or not people experience financial distress. According to the Current Population Survey of the Bureau of Labor Statistics and U.S. Census Bureau data, it is estimated that there are 120 to 137 million adults in the workforce (full and part-time) in the United States. The 25% means 30 million people are seriously financially distressed. (This calculation uses the conservative workforce estimate [0.25 X 120M], otherwise the number is 34 million [0.25 X 137M].) This is a considerable portion of the U.S. adult population, comprising one in four working adults. Table 2 - Financial Distress Levels by Household Income Household Income Range of Levels of Financial Distress Less than $14,999 80% to 90% $15,000 - $24,999 70% to 80% $25,000 - $34,999 50% to 60% $35,000 - $49,999 30% to 60% $50,000 - $74,999 30% to 50% $75,000 - $99,000 20% to 30% $100,000+ 9% to 25% All income groups combined 25% to 60% The authors of this report make note of Federal Reserve Chairman Alan Greenspan's observation in February 2004 that "much of the apparent increase in the household sector's debt ratios over the past decade reflects factors that do not suggest increasing household financial stress" (Source at http://www.federalreserve.gov/boarddocs/ speeches/2004/20040223/default.htm). This report comments that financial distress comes from overuse of credit as well as money and spending problems. Furthermore, 30 million workers are seriously distressed about their personal financial problems. How can we help this situation if society has not acknowledged there's a problem? Governments and employers need to recognize, understand and internalize the sizeable nature of the financial distress problem among workers as well as its ramifications, and take appropriate actions. The broader question is what can be done to address the situation? Recommendations for the Financially Distressed This report offers four recommendations. Follow the wise saying to "spend less than you earn." Those who succeed financially set goals, live below their means, take on new borrowing cautiously, pay off credit card debts monthly, and save and invest for the future.2 Choosing to live below one's means and saving and investing the difference, particularly when compared to those who spend all and often more than they earn, is a key to how people succeed financially. Make and implement plans to prevent poor money management and reduce financial distress. Consumers need to plan ahead, spend less than they earn, distinguish between needs and wants, be more practical and realistic in making purchases, and comparison-shop. Tracking one's expenses for a month by writing them down will reveal that some extra money would be available if it were not spent on non-essential wants, in contrast to needs. Consumers need to make more smart financial decisions by paying down debt, building a cash reserve, increasing savings, investing for retirement, and reordering their expectations and financial priorities where appropriate. This is accomplished by consciously making tradeoffs between spending on today's wants for a more financially secure future. Determine the best options to relieve financial distress. Eight options are available for people who are distressed about their personal finances: (1) evaluate your financial situation to identify where to cut back on expenses, (2) increase income, (3) target and pay down high-interest debt; (4) obtain a debt-consolidation or home-equity loan and use the proceeds to repay creditors only after learning to monitor expenses; (5) renegotiate credit repayment terms with creditors, (6) return secured assets to creditors; (7) seek budgeting and credit management assistance from a non-profit credit counseling agency, and (8) contact an attorney regarding the possibility of an unsecured debt settlement solution or declaring bankruptcy. Get help through the workplace. Seeking help from one's employer is an option for many financially distressed individuals. Federal Reserve Board Governor Edward M. Gramlich remarked that employers should make financial education for their employees a lifetime responsibility."3 Other experts observe that "Comprehensive financial education programs in the workplace provide a wide range of curricula that can better inform and prepare workers to handle their financial challenges, whatever they may be. These programs can go a long way toward helping allay financial stress and improving attitudes, morale and productivity.4" More than half of mid and large employers say they provide employee financial education because "it improves their productivity by reducing financial stress."5 Interested employees should ask their employer about financial education programs offered at the workplace, such as those provided by an independent financial education company, union, credit union, and/or a credit counseling agency. Endnotes 1Please reference this report in the following manner: Garman, E.T., Junk, V.W., Kim, J., O'Neill, B.J., Prochaska-Cue, K., Prawitz, A.D., Lawrence, F.C., Yao, R., Weagley, R.O., Weisman, R.L., Carnathan, G., Schaus, S., Hutcheson, M.D., McKinley, D.H., Brook, M.J. (2005, March 22). Financial Stress Among American Workers, Final report: 30 million workers in America-One in four-Are seriously financially distressed and dissatisfied causing negative impacts on individuals, families and employers. Independent report from the authors that is available at www.EthomasGarman.net. Media Contact Information for Report Co-Authors i E. Thomas Garman, Author, Researcher and Advisor; Fellow and Professor Emeritus, Virginia Tech University, 8044 Rural Retreat Court, Orlando, FL 32819, USA; Tele: 407-363-9048; E-mail: tgarman@bellsouth.net; Web: wwwEThomasGarman.net. Dr. Garman directed Virginia Tech's National Institute for Personal Finance Employee Education and directed several award-winning research studies. He has written many research articles and over 30 books, including Personal Finance and Consumer Economic Issues in America. ii Virginia W. Junk, Ph.D., Professor, University of Idaho, FCS 3183, Moscow, ID 83844-3183; Tele: 208-885-7264; E-mail: vjunk@uidaho.edu. Junk researches decision making in retirement financial planning and in housing of those age 40 and older, as well as "sandwich generation" issues relating to financial, time and stress management. She teaches personal finance, and is author of 40 publications, including textbook supplements. iii Jinhee Kim, Ph.D., Assistant Professor and Extension Specialist, University of Maryland, 1204 Mary Mount Hall, College Park, MD 20742-7515; Tele: 301-405-3500; Email: jinkim@umd.edu. Kim has conducted award-winning research on employee financial well-being. She researches financially distressed consumers, financial management behaviors, absenteeism, and job outcomes. iv Barbara O'Neill, Ph.D., CFP®, CRPC, AFC, CHC, CFCS, Extension Specialist in Financial Resource Management, Professor II, Rutgers Cooperative Extension, Cook College Office Building, Room 107, 55 Dudley Road, New Brunswick, NJ 08901, USA; Tele: 732-932-9155, X250; Cell: 973-903-7869; Fax: 732-932-8887; E-mail: oneill@aesop.rutgers.edu; Web: www.rce.rutgers.edu/money2000 and www.investing.rutgers.edu. O'Neill has taught personal finance topics to over 24,000 consumers and written over 1,500 newspaper articles. She is the author of Investing On A Shoestring and Saving On A Shoestring and co-author of Money Talk: A Financial Guide For Women. O'Neill researches relationships between financial well-being and health. v Kathy Prochaska-Cue, Associate Professor, University of Nebraska-Lincoln, 137 Mabel Lee Hall, Lincoln NE 68588; Tele: 402-472-5517; E-mail: kprochaska-cue1@unl.edu. An extension family economics educator, Prochaska-Cue has worked with thousands of families one-on-one as a financial counselor, and authored numerous research and financial education publications. vi Aimee D. Prawitz, Associate Professor, School of Family, Consumer, & Nutrition Sciences, Northern Illinois University, DeKalb, IL 60115; Tele; 815-753-6344; E-mail: aprawitz@niu.edu. Prawitz teaches graduate research methods courses, serves as a member of the editorial board of the Journal of Consumer Affairs, and she is the editor of the Journal of Consumer Education. Prawitz researches consumer satisfaction with elderly American's housing choices, attitudes toward credit cards, consumer complaint processes, and financial distress. vii Frances C. Lawrence, Williams Alumni Professor, Louisiana State University, School of Human Ecology, Baton Rouge, LA 70803; Tele: 225-578-1726; E-mail: flawrence@lsu.edu. Lawrence teaches university finance and consumer economics courses at Louisiana State University. Her research related to poverty and college students' money management is nationally recognized. viii Rui Yao, Ph.D., Assistant Professor, South Dakota State University, Box 2275A, Brookings, SD 57007; Tele: 605-688-5009.Yao teaches financial planning and consumer affairs and has conducted research on retirement adequacy. ix Robert O. Weagley, Chair of the Department of Consumer and Family Economics at the University of Missouri - Columbia., University of Missouri; Tele: 573.882-9651; E-mail: weagleyr@missouri.edu. Weagley is a registered investment advisor with Sundvold Capital Management, LLC (www.sundvold.com), an asset management and retirement plan specialty firm. He is Vice President of Marketing and Public Relations for the Academy of Financial Services. x Robert L. Weisman, D.O., Associate Professor, Department of Psychiatry, University of Rochester Medical Center; Strong Ties, 2613 West Henrietta Road, Rochester, NY 14623; Tele: 585-275-0300; E-mail: Robert_Weisman@urmc.rochester.edu. Dr. Weisman has written and lectured on the impact of personal financial stress, depression and workplace performance. xi Glenn Carnathan, Jr., Senior Vice President & Chief Human Resources Officer, Saint Thomas Health Services, 618 Church Street, Suite 520, Nashville, TN 37219; Phone: 615-284-6847; E-mail: gcarnath@stthomas.org; Web: www.sths.com. Carnathan is the national leader of a system-wide financial well-being initiative for Ascension Health, Saint Thomas' parent and the largest not-for-profit health system in the United States with over 100,000 employees. Recipient of 2004 HR Excellence Award (based on Malcolm Baldrige National Quality Award criteria) sponsored by the Nashville Area Chamber of Commerce. xii Stacy Schaus, CFP®, Founder, Hewitt Financial Services, Hewitt Associates LLC, Personal Finance Center, 100 Half Day Road, Lincolnshire, IL 60069; Tele: 847-442- 4698; E-mail: stacy.schaus@hewitt.com; Web: www.hewitt.com. Schaus developed the Defined Contribution AllianceT with investment managers across the country and also built the investment consulting team to support this program. She is an investment-issues committee member with the Profit Sharing Council of America. Schaus has written a number of articles on investing, defined contribution trends, and personal finance issues, has been quoted in major publications, and has appeared as a guest on financial shows aired by CNBC and CNNfn. xiii Matthew D. Hutcheson, M.S., CPC, AIFA®, CRC, MPF®, Owner/CEO, Matthew D. Hutcheson, LLC, 15924 Quarry Road, Lake Oswego, Oregon 97035, USA; Tele: 503-968-9783; E-mail: matt@erisa-fiduciary.com. Hutcheson is an Independent Pension Fiduciary who serves as named fiduciary or committee member for corporations on the NYSE, NASDAQ and the Toronto Stock Exchanges. He also serves as fiduciary or consultant conducting fiduciary audits, reviews and fee studies for privately held employers. Hutcheson is co-founder and Secretary/Treasurer of the ERISA Fiduciary Guild. xiv David H. McKinley, Managing Director, McKinley Investment Group, 2000 Main Street, Wheeling, WV 26003, USA; Tele: 304-230-2400; E-mail: dmckinley@wachoviafinet.com; Web: www.mckinley.wbsec.com; Mr. McKinley has worked in the financial planning and investment management industry since 1990. Prior to forming the McKinley Investment Group, Mr. McKinley was vice president of investments at a national investment firm, an investment analyst with a regional bank and trust's investment department, and assisted in managing the brokerage division of the same firm. He is quite knowledgeable on the topic of financial distressed employees. xv Marvin J. Brook, Manager/Controller Finance, San Francisco Performance Cluster, Northern California Division, United States Postal Service, P.O box 884474, San Francisco, CA 94188-4474; Tele: 415-550-5439; E-mail: marvin.j.brook@usps.gov. Brook develops and delivers financial education programs, including newsletters, videos and workshop presentations. Brook has seen first hand the positive effects on employees when their financial situations improve. Media Contact Information for Other Personal Finance Experts Wanting to Comment on These Research Findings b Michael McAuliffe, President and CEO, Family Credit Counseling Service, 4306 Charles Street, Rockford, IL 61108; Tele: 800-994-3328, X-128; E-mail: michael.mcauliffe@familycredit.org; Web: www.familycredit.org/. Michael McAuliffe is a noted expert on personal financial planning and consumer debt and co-founder of Family Credit Counseling Service. He has assisted thousands of individuals and families with credit, debt, and money management problems. Dismayed that most credit counselors would remove the tithe from the budget of those in need, he formed a Non-Profit credit counseling agency based on Biblical teaching. He has contributed to numerous print publications and broadcast outlets. Family Credit Counseling sponsored a national poll on financial distress in December 2004. b David C. Jones, Ph.D., President, Association of Independent Consumer Credit Counseling Agencies, 11350 Random Hills Road, Suite 800, Fairfax, VA 22030; Tele: 703-934-6118; E-mail: assoc@aiccca.org; Web: aiccca.org. Jones recently retired as President and CEO of a major national credit counseling and consumer education agency. He concentrates his efforts in support of the credit counseling industry, especially consumer education initiatives, and actively assists in the development of effective state and federal consumer protection regulations for the credit counseling industry. b Liz Davidson, CEO and Founder, Financial Finesse, 111 N. Sepulveda Boulevard, Suite 305, Manhattan Beach, CA 90266; Tele: 310-802-6855 or 866-733-2677, x355; E-Mail: media@financialfinesse.com; Web: www.financialfinesse.com/ffinesse/jsp/home.jsp. Davidson founded Financial Finesse in 1999 to address the need for unbiased financial resources for investors to educate themselves on investing and financial planning. Today, Financial Finesse provides unbiased full service financial education for over 350 organizations and their employees. She is passionate about financial education and is a prolific public speaker, and she has been invited to speak at the leading Human Resources and Benefits conferences across the country. b Ray E. Noftsinger, Founder of Harbour Credit Counseling Services, Inc; Financial and Estate Planner, 101 N. Lynnhaven Road, #300, Virginia Beach, VA 23452; Tele: 757-340-2564, x302; E-mail: rayn@40debts.org; Web: www.40debts.org. Noftsinger has been involved in financial planning for all income levels in various specialties. He started Harbour in 1996 with one client and his organization currently assists 15,000 families in elimination of unsecured personal debt. Former President and Board Member Association of Independent Consumer Credit Counseling Agencies. Testified at Department of Justice hearing regarding credit counseling capacity for pre-bankruptcy certification and education. b Michael Schiano, Vice President of Outreach, InCharge Education Foundation, 2121 Park Center Drive, Orlando, FL 32835; Tele: 407-532-5640; E-mail: mschiano@incharge.org; Web: InChargeFoundation.org. Schiano is a Certified Credit Counselor and author of Spend Your Way to Wealth. He writes the "Ask The DebtBuster" column for Military Money and Young Money magazines. He hosts a nationally syndicated financial improvement radio show heard across the U.S. each day, and he hosts The Military Money Minute broadcast worldwide on the Armed Forces Radio Network. b David A. Lander, Attorney, Thomson Coburn LLP, One US Bank Plaza, St. Louis, MO 63101; Tele: 314-552-6067; E-mail: DLANDER@thompsoncoburn.com. Lander's practice includes representation of secured creditors, mortgagees, unsecured creditors, and debtors and unsecured creditors' committees. Lander is the historian of the credit counseling industry and a student and teacher of consumer credit issues. b Benice B. Wilson, Ph.D., CFCS. Extension Resource Management Specialist, Alabama Cooperative Extension System, P.O. Box 967, Normal, AL 35762; E-Mail: bbwilson@aces.edu; Tele: 256-372-4969. Wilson develops, implements and evaluates educational projects and programs relative to family and consumer economics, and resource management for families, individuals, youth, and the general public with a focus on urban and nontraditional audiences. b Dennis Ackley, President, Ackley Associates, 612 SE Cumberland Drive, Lees Summit, MO 64063; Tele: 816-695-4808; E-mail: dennisackley@hotmail.com; Web: DennisAckley.com. Ackley has been writing and speaking for more than a dozen years about how the current approach to retirement education does not and cannot work because it ignores essential elements needed to help adults become personally motivated to learn how to define, pursue, and achieve their personal retirement dream. In addition, until retirement education providers are required to have meaningful success measures that are tied directly to the individual's success, more Americans are doomed to fail to achieve their retirement income needs. b Steven S. Shagrin, JD, CFP®, CRPC®, CRC®, CELP, President, Planning For Life, 4657 Logangate Road, Youngstown, OH 44505-1713; Tele: 330-727-0444/888-456-4777; E-mail: Shags@PlanningForLife.info; Web: www.PlanningForLife.info. Shagrin is past president of the International Society for Retirement & Life Planning. Editor of Facts About Retiring in the United States (2001, HW Wilson Co.), and author of forthcoming Managing My Life: Managing My Money, (2005, Publications for Heart and Spirit Inc.) b Al Otto, AIF®, Co-Founder, White Horse Advisors, LLC, 6151 Powers Ferry Road, Suite 400, Atlanta, GA 30339; Tele: 678.322.3020; E-mail: al.otto@whitehorseadvisors.com; Web: www.whitehorseadvisors.com. Otto is a leader in the retirement planning industry and an expert on fees in retirement plans. He has contributed writings and been quoted in publications such as Plan Sponsor Magazine, Employee Benefit News and Employee Benefit Plan Review. Otto recently completed an audio CD entitled "Lost Money In Your Retirement Plan." b Thomas R. Watson, President/CEO, Watson Communications International, Inc., 1809 NW Loop 281, Suite 100-160, Longview, TX 75604, USA; Tele: 903-758-0855; E-mail: tom@watson-training.com; Web: www.watson-training.com. Dr. Watson is the author of the soon to be published, The Great American Debt Opportunity: Turning Debt into Wealth. b Bill Keenan, Author, Financial Coach and Radio Host, 1129 Emerson Court, Suite B, Burnsville, MN 55337; Tele: 952-200-9019; E-mail: billk@debtfreeroad.com; Web: www.debtfreeroad.com. As the author of Spend Smart, Creating Wealth with no Room in your Budget, the co-author of Invest in Your Debt and host of Financial Fitness he has helped thousands of families discover how to achieve financial freedom by first becoming debt free. b David L. Ireland, Author and Professional Speaker; Retired Eastman Kodak executive, founder and President of Invest In Your Debt, Inc., 8005 Evadean Circle, Austin, Texas 78745; Tele: 512- 447-1990; E-Mail: IYD@InvestinyourDebt.com; Web: www.InvestinyourDebt.com. Ireland's Invest in Your Debt book shows that the most effective way to achieve financial freedom is to invest in ones debt and receive a risk-free, tax-free, double-digit return on ones debt investment. He lectures to employees in corporations, students at colleges and people in churches on the perils of and solutions to personal debt. b Brooks Hamilton, JD, Attorney-at-Law and a Master Pension Fiduciary, Brooks Hamilton & Partners, 38 Vista Hermosa, Santa Fe, NM 87506; Tele: 972-839-5260; E-mail: bhamilton@brookshamilton.com; Web: www.brookshamilton.com. Hamilton is Co-founder The REVERE Coalition, and co-founder and President of the ERISA Fiduciary Guild. Hamilton continues to be appointed as Independent Fiduciary by federal courts to assume fiduciary responsibility for retirement plans whose fiduciaries have failed in their responsibilities. Has appeared on CBS Evening News, CNBC, and in many newspapers throughout the country. b Kelly L. Reese, ChFC®, President, Financial Freedom Society, Inc., 14906 Winding Creek Court, Building A, Tampa, FL 33613; Tele: 813-960-3131; E-mail: elder@ffsi.com. Reese is a Christian Stewardship Counselor and author of The Art of Achieving Financial Freedom. He serves as a member of the board of the Christian Counseling Foundation. b Blanchard D. Warren, Seminar Leader and owner of Debts To Wealth, 5A Johns Avenue, Medfield, MA 02052; Tele: 508-359-4769; E-mail: webmaster@debtstowealth.com; Web: www.debtstowealth.com. Warren teaches a three-hour seminar about a system to eliminate all debt. Appendix: Summary of Research Findings on Financial Distress and Dissatisfaction The contents of this Appendix are arranged as follows: Dissatisfaction with Financial Situation, Stress About Personal Finances, Living Paycheck-to-Paycheck, Stress About Retirement, Lack of Confidence About Ability to Manage Personal Finances, Health and Stress About Personal Finances are Related, and Distress About Health Care Costs and Bills. Dissatisfaction with Financial Situation Bankrate.com Study. Bankrate.com (2003) conducted a Financial Literacy Study and found that 28% of people reported a lack of satisfaction with their finances. Sixteen percent of those surveyed were "not satisfied at all" with their personal financial situation and 12% were "not too satisfied." Describing their feelings when dealing with their personal finances, 24% in the Bankrate.com study reported they were "frustrated" and 10% were "confused." Asked how regularly they keep an emergency fund of at least 3 months' living expenses, 29% said they rarely or never did. Thirty-seven percent agreed with the statement that they could not afford to put money away for an emergency, with 55% saying they were very or somewhat concerned about an emergency fund. A quarter (24%) agreed with the statement that they would not be able to stick to a budget if they had one. Thirty percent reported they were very concerned or somewhat concerned right now that they are not able to pay their mortgage or rent, 29% were similarly concerned about being able to pay their credit card bills, and 45% were concerned about being able to put away enough for their retirement. The semi-annual Principal Financial Well-Being Indexsm (The Principal, 2004; Principal Financial Well-Being, 2004) of American workers (at firms with 10-1,000 employees) reveals that, using a 5-point scale, 3 out of 4 employees (78%) are very concerned about their long-term financial future. Only 26% agreed with the statement "I am extremely happy about my current financial well-being;" 24% were neutral and 50% disagreed. A 2003 Principal study (Principal, 2003) found that half of those who expected a tax refund from the IRS planned to use the money to pay down short-term debt. In a study of over 16,000 employees who lived in eight geographic regions of the United States employed by a large insurance company (Hira & Itote, 2001), there were substantial numbers of people who were dissatisfied with various aspects of their personal finances. Those reporting being very dissatisfied or dissatisfied on the following satisfaction indicators: ability to get ahead - 25.6%; use of money - 22.3%; long-term financial goals - 29.7%; meeting unexpected expenses - 34.5%; and unpaid balances on credit cards - 41.3%. A number of studies that collected data from various segments of the population found that between 21.3 and 52.6% of respondents describe themselves as "dissatisfied" with their present financial situation. The respondents marked choices 1 through 4 on a 10-point stair-step scale of satisfaction with one's present financial situation. Those who are satisfied were instructed to mark the higher steps, choices 6 through 10. Those who marked choices 4 and 5 were in the middle range of satisfaction. Grable & Joo (2003) found 34.7% of faculty and staff working for two universities in two mid-western states were dissatisfied. Kim (2000) found that 41.5% of white-collar workers in three mid-western states were dissatisfied. Kratzer, Brunson, Kim, Garman, & Joo (1998) study of well-paid blue-collar manufacturing workers in the south found 21.3% were dissatisfied with their financial situation. Kim, Bagwell & Garman (1998) found white-collar workers in the corporate headquarters of a New York City advertising firm had a mean score of 5.7 on a 10-point scale where 10 is the highest level of financial satisfaction. Joo (1998) found 52.6% of clerical workers in an eastern state were dissatisfied. A 1990 study (Porter; Porter & Garman, 1993) of a random sample of taxpayers in an eastern state using a scale similar to Joo (1998) but with 11-points (highest score was best) found that 30.8% marked themselves as dissatisfied marking choices 1 through 5) with their personal financial situation. The mean was 6.5, showing a slight skewness toward positive perceived financial well-being, with a standard deviation of 2.2. A 2004 study by the InCharge Education Foundation (Sorhaindo & Garman, 2005) found that 28% of a nationally representative sample of working adults reported their overall financial distress/financial well-being was below average. This finding is consistent with other studies on financial satisfaction/dissatisfaction, financial distress and financial well-being. The general population typically reports a slight skewness towards positive scores, or above average, when asked about their financial condition. In other words, on a 10-point scale people typically report average scores of 5.7, 5.9, 6.2, or slightly higher where 10 is the highest or best score. Most working adults are satisfied with the personal finances and are not financially dissatisfied or distressed. Credit counseling clients are one of the most clear-cut populations of financially dissatisfied consumers. These are people who contact a non-profit credit counseling organization seeking assistance and advice in budgeting, credit and money management. Subjective measures, like a 10-point stair-step scale of satisfaction with one's present financial situation are often utilized in research (Festinger, 1957; Garman, 1999; Garman, Camp, Kim, Bagwell, Baffi, & Redican, 1999; Kim, 2000; Kim, Bagwell, & Garman, 1998; Kim, 2000; Kim, Garman & Sorhaindo, 2003; Porter, 1990; Winter & Morris, 1983). Self-reported numbers of these clients show that 75% to 90% expressed some high degree of financial dissatisfaction and distress owing to their personal financial affairs (Garman et al, 1999; Garman, 2001). This level of financial dissatisfaction and distress is much higher than in the general population. Garman (2004b) estimates that approximately 3 million people annually (not 9 million as cited in Schmitt, Timmons, and Cady in 2001) contact a non-profit consumer credit counseling service seeking assistance with their budgeting, money and credit problems. Over a six-year time period that amounts to 18 million financially troubled consumers who contacted a credit counseling agency.6 Since financial dissatisfaction does not go away for many of those who contact a consumer credit counseling agency, the authors of this report estimate that it is likely that approximately one-third of those who sought assistance from a credit counseling during the last six years are still struggling financially. Thus, we calculate that 33% of the 18 million financially dissatisfied and distressed who contacted a credit counseling agency in the past six years, or 6 million people, currently remain seriously dissatisfied with their personal financial situation. Bankruptcy represents another substantial group of financially dissatisfied adults. For the calendar year of 2004, about 1.5 million (1,563,145) consumers filed for personal bankruptcy (Bankruptcy Statistics, 2005). Sullivan (2003) notes that the genuine annual bankruptcy figures are really much higher because of jointly filed bankruptcy petitioners. Bankruptcy expert Elizabeth Warren agrees (Garman, 2005, March 17). Based on the 1,563,145 filings in 2004, Warren notes that there were 475,712 cases of joint petitions. That means, notes Warren, that the 2004 multiplier is about 1.304. (In 2001, the multiplier was 1.319 [see Warren, Thorne, & Sullivan, 2001].) Using Warren's multiplier of 1.304 for the number of married couples filing for bankruptcy, the number of adults impacted by bankruptcy in 2004 was 2,038,341 (1.304 X 1,563,145). These experts also observe that bankruptcies really affect a total of about 5 million people annually in households when one counts both the petitioners' spouses as well as their children. Combining data from the American Bankruptcy Institute and previous annual data (Quarterly U.S. Bankruptcy Statistics, 2005) show that there have been 8,678,826 non-business, or personal, bankruptcies for the six-year period between 1999 and 2004. Since consumers cannot declare bankruptcy again for six years, these numbers are mutually exclusive. Applying Warren's proportional estimate of bankruptcies with spouses (1.304) means that over 11 million (11,317,189 = 1.304 X 8,678,826) adults declared bankruptcy during the past six years. Next year more than a million consumers (1,281,360) who declared bankruptcy six years ago in 1990 will be eligible again, and that point has been observed by others (Bankruptcy boomerang, 2003). Since financial dissatisfaction just does not simply disappear for many of those who file bankruptcy, the authors of this report estimate that it is likely that approximately 50% of those who filed for bankruptcy during the last six years are situations. Thus, we calculate that half of the 11,317,189 adults who filed for bankruptcy in the past six years, or 5.6 million people (11,317,189/0.5), currently remain seriously financially dissatisfied. Stress About Personal Finances An American Express survey found that 60% of working Americans were experiencing moderate (41%) to high (19%) levels of financial stress. Thirty-nine percent were stressed by dealing with debts and 38% were stressed by paying regular bills (2nd American Express, 2004; Field & Vogt, 2004). The stress levels by income groups were: 30% of people with incomes up to $30,000; 22% $30,000-$50,000; 22% $50,000-$75,000; 17% $75,000-$100,000; and 9% of those with incomes of $100,000 or more. In a MetLife Study of Employee Benefit Trends (2003), 69% of employees surveyed were concerned with "having enough money to make ends meet." A Roper ASW survey for Money magazine found that 6 in 10 respondents say they worry a lot or sometimes about their finances, about twice as many as worry about their self-esteem, jobs, marriage, and friendships (Chatzky, 2003). A Caravan Saray poll (2004) found nearly three in four adults age 18-64 (72%) say paying current bills (54%) or paying off debt (18%) are usually their main financial concerns each month. A Consumer Federation of America and Credit Union National Association poll (Consumers say, 2003) found 46% of adults said they were concerned about meeting all their monthly payments on all types of debt other than their mortgage, and half of those, 28%, reported they were very concerned. When asked what they would do with a $5,000 windfall, 46% said they would pay down some debt. A Family Credit Counseling Service national survey (Research Report: Financial Stress Survey, 2004; Kidd, 2005) of people carrying credit cards asked what they would do with an unexpected $1,000 gift, and three-quarters (73.3%) said they would use it to pay down debt. Fifty percent of middle-income Americans ($25,000 to $75,000) revealed they were worried about their financial condition, according to a poll by Consumer Federation of America (Middle Americans become, 2003). More than two-thirds (69%) of those with incomes under $25,000 reported they were worried about their finances, and they are likely to have too little savings and too little income. A ComPsych survey (Reality of financial trouble, 2004) of employees' financial health found half (49%) doing poorly: 27% noted "I am one major setback away from financial disaster" and 22% marked "I am worse off than last year, with less savings/income and more debt than before." The remaining half (51%) reported they were the same or better off than before: "I am about the same as last year, with no changes in savings/income or debt" (23%); "I am better off than last year, with more savings/income and less debt that before" (22%); and "I am in the best financial shape ever, with bountiful reserves and very little debt" (6%). A ComPsych survey of employees found that personal finances cause stress in 36% of employees (ComPsych's Tell-It-Now, 2001). Financial Finesse, a financial education company with approximately 300 different companies as clients and 250,000 employees, regularly received telephone calls from employees seeking assistance. Thirty-nine percent of callers requested assistance with consumer debts and 17% called about budgeting and savings (Garman, 2005, March 22). These numbers were similar to the previous year (Debt, retirement, 2003). A Gallup Organization poll (Moore, 2004) found that 17% of Americans are very or moderately worried about paying the minimum amount due on their credit cards. Twenty-two percent were not too worried, and 46% were not worried at all. A Family Credit Counseling Service national survey (Research Report: Financial Stress Survey, 2004) found that the biggest financial fear of people carrying credit cards was that they'll never get out of debt (32.5%). A WoldWIT and E-Duction survey of 10,000 professional women, it was found that 90% of women who pay more than five bills while at work are moderately or considerably stressed about personal finances (People who pay, 2003). Twenty-seven percent of respondents to a Los Angeles Times survey reported that their personal finances were shaky, and 40% said they had difficulty making car and insurance payments and other installment loans (Atkinson, 2001). Employees who are financially distressed sometimes bring their financial troubles to the workplace with the result being reduced productivity. Researchers have determined that approximately15% of workers are so financially distressed that it negatively impacts the employer's bottom line (Garman, Leech & Grable, 1996). The full extent of the costs is unknown. Living Paycheck-to-Paycheck The MetLife Study of Employee Benefit Trends (2004) found that 28% of full-time employees report they sometimes have trouble paying their monthly bills, and 42% say they live paycheck to paycheck. The parallel 2003 MetLife Study of Employee Benefit Trends (2003) found that 52% of employees surveyed report they manage their finances by living paycheck-to-paycheck. Among those with a household income of less than $30,000, 87% say they live paycheck-to-paycheck and 65% of those earning $30,000 to $49,999 say the same. Among people who earn $75,000 or more a year, 34% live on the edge financially (Yip, 2003). More 21- to 30-year-olds than 41 to 50-year-olds live paycheck to paycheck; however, 51% of those nearing or in the traditional retirement age range of 61 to 69 do, too. In a CIGNA survey (2004), 39% of employees feel they are "underwater" financially, stating that they can barely keep up with bills. As a result of these bills, many people reported they had little discretionary income to save for college or retirement. More than two-thirds (68%) of parents with children under age 18 are extremely or very concerned about having enough money for their children's education. A Caravan poll found that nearly three in four adults age 18-64 (72%) said paying current bills (54%) or paying off debt (18%) were usually their main financial concerns each month (Caravan Saray, 2003). Women (78%) were more likely than men (65%) to be focused on paying current bills or debts. In a study of 16,000 employees working for a large insurance company who lived in eight geographic regions of the United States (Hira & Itote, 2001), over half (55.9%) reported that they handled large or unexpected expenses by using credit cards. Other coping mechanisms were borrowing from family or friends (16.4%) or not paying other bills (17.9%). Data on living paycheck-to-paycheck go back a few years. A revealing question on a 1996 poll reported by The Washington Post (Chandler & Morin, 1996) found that 75% of Americans recently faced at least one significant financial problem (e.g., unable to save for future needs, delaying medical care, communications from a collection company). A poll reported that same year in USA Today (Coping, 1996) noted that two-thirds of Americans indicated they had trouble paying bills and worried about money. Stress About Retirement. The American Express Retirement Services' 2004 National Survey on Financial Stress and Retirement Savings found that 44% were stressed about retirement. The stress levels by income groups were: 30% up to $30,000; 22% $30,000-$50,000; 22% $50,000-$75,0000; 17% $75,000-$100,000; and 9% $100,000 or more (Field & Vogt, 2004). The American Express study found that people's financial stress in 2004 is very similar to what was found in 2002. In 2004, 22% reported that they were either very interested (14%) or somewhat interested (7%) in financial advice on debt consolidation (21% in 2002). A Hewitt Associates survey of 5,000 employees (Survey Findings: Your Financial, 2005) found that "employees lack very basic knowledge of their 401(k) plans." Half of workers "say they are less than knowledgeable or not knowledgeable about investing." A MetLife study (With fear of outliving, 2004) found that one out of four employees (25%) have not done any specific retirement planning. Thirty-one percent say they are "on track" for reaching retirement goals, 30% are somewhat behind and 23% are significantly behind. Nearly half (48%) believe they will have to work full- or part-time in retirement. Among employees in the 41-to-60 year age group, only 4% have reached their retirement goals. In this age group, 48% of employees say that outliving their savings as the greatest retirement fear. Confirming findings are in the 2004 MetLife Study of Employee Benefit Trends (2004) of employees as similar numbers report being extremely concerned about outliving their retirement money and only 24% report they are on track for reaching retirement savings goals. A poll by Putnam Investments found that nearly half (46%) of current workers are resigned to accepting that they will struggle financially in retirement (Many workers, 2004), and another 13% believe they cannot amass enough to retire so they are not going to save for retirement at all. In a CIGNA (2004) survey of retirement awareness, 47% said they were either confused, apathetic or felt their retirement planning situation was futile. A Principal Financial Group survey of American workers found the average expected retirement age was 65, although 20% did not plan on retiring (The Principal, 2004). More than half (53%) expected that their standard of living in retirement would decline. Seven in ten (71%) did not have a plan for transitioning retirement savings into a stream of income in retirement. A Thrivent study found that more than half of non-retired Americans had either not yet begun saving for retirement or reported they had saved less than $10,000 (Thrivent Financial, 2004). Sixty-two percent had never estimated how much they needed to save for retirement. Sixty percent of adults were not confident that Social Security would exist when they retire (Caravan Saray, 2004). The percentages lacking confidence varied for different age groups: 55-64 years (30%), 45-54 (55%), 35-44 (70%), 25-34 (76%), and 18-24 (53%). One professional woman summed up the challenge of saving for retirement with the comment that "Life just gets in the way of saving" (Duka, 2004). Lack of Confidence About Ability to Manage Personal Finances An AARP study (Block, 2004) found that more than a quarter of baby boomers described themselves as worse money managers than their parents. A Roper Starch Worldwide survey (Stoneman, 1998) found 82% of low-income adults lacked confidence in their ability to plan for their family's future. Even 64% of those in the highest income group lacked confidence. Health and Stress About Personal Finances are Related Health is negatively affected by financial stress (Drentea & Lavrakas, 2002; Hendrix, Spencer & Gibson, 1994; Peirce, Frone, Russell & Cooper, 1994). Financial stress negatively impacts both physical and psychological health (Kim & Garman, 2003; O'Neill, Xiao, Sorhaindo, & Garman, in press). Both the amount of credit card debt and stress regarding overall debt are associated with health (Drentea & Lavarkas, 2000). A poor debt-to-income ratio is associated with poor health. Having more stress about overall debt was associated with worse health. Consumer indebtedness for such things as housing, home entertainment systems, appliances, vehicles, and student loans may be a "chronic strain on an individual's financial well-being, and ultimately emotional well-being" (Drentea & Lavarkas, 2000). Perceived financial security has been found to be a significant predictor of emotional distress (Jackson, 1997). A Family Credit Counseling Service survey (Research Report: Financial Stress Survey, 2004) of a nationally representative sample of 1,590 adults who carry credit cards found that half (50.8%) said that at times they can't sleep because of stresses about personal finances. Over one-third said it was hard to concentrate. Another 29.1% said they sometimes feel sick to their stomachs, and 26.3% reported that they get headaches. Almost one in ten (8.1%) reported they went to a doctor because of their financial distresses. One-quarter reported never having any physical effects. One study (Kim, Garman & Sorhaindo, 2003a 2003b) examined the relationships among credit counseling, financial behaviors, financial stressor events, perceived financial well-being, and health among clients of a large credit counseling organization in a one-year follow-up study over a time period of 18 months. Credit counseling and participation in a debt management program, both designed to improve one's personal finances, reduced financial stress and improved people's perceived financial well-being and health. A study by Bagwell (2000) found more than half (57%) of new credit counseling clients reported their health status being negatively affected by their financial problems. Of those, 52% reported general stress, anxiety and worry, 23% reported headaches, 18% general health problems, 13% sleeping disorders, and 12% stomach problems. An illustrative client comment was "I feel very stressed mainly because I do not see any solution to our financial situation. Headaches, depression and poor diet is [sic] the results of worrying." Another wrote, "Yes, I lose a lot of sleep. I get all these problems on my mind. Feel sick a lot, at times, when I do sleep some it's the first think [sic] on my mind and I feel so depressed, I don't even want to get out of bed." Examples of specific health problems associated with finances that were reported by financially distressed employees (O'Neill, Xiao, Sorhaindo, & Garman, in press) are: "Staying behind on bills made me very nervous." "I can't sleep because of worrying about paying bills." "Caused anxiety and depression to be worse than it was." "Stressed out, overwhelmed with anxiety." "Could not afford to go to doctor when I was sick." "Can't afford to eat healthier." "I have high blood pressure from the stress." "Cost of medication." "I have been depressed and gained weight." "Stress, catch sickness easier." A study of a large number of new credit counseling clients found they reported poorer health than the general population (Garman, 2004a). Forty percent of new credit counseling clients report their health has been negatively affected by their financial problems. Three-quarters of this 40% specified the nature of their problem, and the most cited problem was stress followed by sleep disorders. The range of health for credit counseling clients was: very good, 24%; good, 43%; satisfactory, 27%; and poor, 7% (Garman, 2004a). This contrasts with the health reported by the general population by the Gallup Organization (Personal health issues, 2001):  Excellent Health Good Health Fair Health Poor Health General Population 29% 49% 17% 5% Credit Counseling Clients 24% 43% 27% 7% Excellent, 29%; good, 49%; only fair, 17%; and poor, 5%. Comparing the responses on the two 4-point continuum scales with the Gallup categories provides the following: Excellent Good Fair Poor Health Health Health Health General Population 29% 49% 17% 5% Credit Counseling Clients 24% 43% 27% 7% Encouragingly, 43% report that health improved soon after enrolling in a debt management program of a credit-counseling agency (O'Neill, et al, in press). . The relationship between poor health and serious financial distress suggests provocative clues that should be further investigated, particularly by the health care industry, employers, governments, and others involved in paying the costs for medical care. Distress About Health Care Costs and Bills "One-half of Americans say they have found medical bills to be a source of financial stress within the past two years (18% major source; 32% minor source." Data are from the 2003 Health Confidence Survey conducted by the Employee Benefit Research Institute and Mathew Greenwald and Associates, Inc., using data from their 1998 through 2003 Health Confidence Surveys (2003 Health Confidence Survey). Data from the most recent Health Confidence Survey (2004 Health Confidence Survey) found one-quarter of people experiencing medical care cost increases reduced retirement savings contributions because of medical costs. One-quarter reports, "They have used up most or all of their savings to pay health bills." The Employee Benefits Research Institute report titled Financial Stress Related to Health Care Costs (Financial Stress Related, 2003) using information from the 2003 Health Confidence Survey found that more than 4 in 10 (41% - up from 35% in 2002) are "not too confident" or "not at all confident" about being able to afford health care in the next 10 years or until age 65 when they become eligible for Medicare. Nearly half (up from 44% in 2002) are "not too" or "not at all" confident in their ability to afford health care once they are eligible for Medicare, without financial hardship. The results of a study on increasing health care costs by American Express Retirement Services (Field & Vogt, 2001) found that "73% of workers responded they were either somewhat or very concerned about how rising health care costs might impact their ability to fund their retirement and other financial goals." 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Debt, delinquencies, and consumer spending. Current Issues in Economics and Finance; 3:3, (pp. 1-6). Federal Reserve Bank of New York, Merriiam Webster's Collegiate Dictionary (1995). 10th edition. Springfield, MA. The MetLife study of employee benefits trends: Findings from the 2003 national survey of employers and employees (2003, November). MetLife. Taken on November 14, 2004 from http://www.metlife.com. The MetLife study of employee benefits trends: Findings from the 2004 national survey of employers and employees (2004, November). MetLife. Taken on January 22, 2005 from http://www.metlife.com. Middle Americans become more financially prudent and build more wealth during economic boom, yet many worry about finances today (2003, October 6). Consumer Federation of America. Press release. Taken on January 18, 2005 from http://www.consumerfed.org. Moody's (2004) Moody's reports on Feb auto loan delinquency rates. Taken on April 23, 2004 from http://inserviceextra.firechief.com Moore, D. W. (2004, April 16, 2004). Average American owes $2,900 in credit card debt. Gallup News Service. Taken on May 22, 204 from http://www.gallup.com. Mortgage foreclosures fall (2004, September 10). MSNBC News. Taken on April 20, 2004 from http://msnbc.msn.com. Murry, C. (2004, April 28). Critics take aim at Bush plan. Newsday. Taken on May 5, 2004 from http://www.newsday.com. National Center for Health Statistics (2004). Taken on January 19, 2005 from http://www.cdc.gov. National Foundation for Credit Counseling (2003, June). Agency stats & client profile. Silver Spring, MD: Author. CIGNA (2004, March 17). New workplace survey shows that confusion, apathy and futility are laving U.S. employees perplexed and struggling to achieve "financial follow-through" in their 401(k) retirement planning. Press release. NCUNA (2003). 2002 midyear statistics for federally insured credit unions. Taken on March 22, 2004 from http://www.ncua.gov. Niesse, M. (2003, February 19). Payday loans thrive in bad times. Lewiston Tribune (an Associated Press article), E1, E6. O'Neill, B., Xiao, J. J., Sorhaindo, B., & Garman, E. T. (in press). Relationships among financial practices, financial well-being, and health of financially distressed consumers, Consumer Interest Annual. American Council on Consumer Interests. Pacelle, M. (2004, July 6). Growing profit source for banks: Fees from riskiest card holders, late payers, and big borrowers are becoming cash cows. The Wall Street Journal. Taken on January 20, 2005 from http://www.WSJ.com. Peirce, R.S., Frone, M.R., Russell, M., & Cooper, M.L. (1994). Relationship of financial strain and psychosocial resources to alcohol use and abuse: The mediating role of negative affect and drinking motives. Journal of Health and Social Behavior, 35, 291-308. Pelorus "Stored Value" report: Prepaid debit card usage to soar (2003, June 19). The Pelorus Group, press release. Taken on January 14, 2004 from http://www.pelorus-group.com. People who pay bills at work are stressed (2003, November 5). Newsline. Taken on May 29, 2004 from http://www.acaonline.org. Personal bankruptcy filings continue to break records (2003, November 14). Press release, American Bankruptcy Institute. Taken on December 22, 2003 from http://abiworld.org. Personal communication (2004, June 26). No way out.- payday loans. Personal health issues (2001, November 8-11). The Gallup Organization. Taken on February 13, 2002 from http://www.gallup.com. Pizzo, S. (2004, February 25). Credit card crack. Taken on April 16, 2004 from http://www.tompaine.com. Porter, N.M. (1990). Testing a model of financial well-being. Unpublished doctoral dissertation, Virginia Tech, Blacksburg. Porter, N.M., & Garman, E.T. (1993) Testing a model of financial well-being. Financial Counseling and Planning, 4, 135-165. The Principal financial well-being index executive summary-Third quarter 2004: Summary of findings (2004, September). Principal Financial Group. Taken on January 20, 2005 from http://www.principal.com. Principal financial well-being index reveals increasing anxiety on workplace matters and the wallet (2004, October 6). Principal Financial Group. Press release. Taken on January 20, 2005 from http://www.principal.com. The Principal financial well-being index (2003, April). The Principal Financial Group. Taken on August 20, 2003 from http://www.principal.com. Q&A (2003, November 27). CardWeb.com. Taken on December 22, 2004 from http://cardweb.com. Quarterly U.S. bankruptcy statistics (2005). American Bankruptcy Institute. Taken on January 30, 2005 from http://www.abiworld.org Reality of financial trouble hits hard for employees, according to ComPsych (2004, February 9). ComPsych. Press release. Taken on January 17, 2005 from http://www.compsych.com. Research Report: Financial Stress Survey (2004, December). Family Credit Counseling Service study conducted by Impulse Research Corporation. 2nd American Express national survey finds worker financial stress lingering into 2004 (2004, April 1). Press release, American Express Financial Services. Sahadi, J. (2004, February 3). Top credit card issuers hike fees. CNN Money. Taken on April 23, 2004 from http://money.cnn.com Schmitt, C.H., Timmons, H., & Cady, J. (2001). A debt trap for the unwary. Business Week Online. Taken on November 5, 2001 from http://businessweek.com. Sorhaindo, B. & Garman, E. T. (2005, report in progress). The financial distress/financial well-being of Americans. InCharge Education Foundation. Staten, M. (2002, September 5). College students and credit cards. Testimony before the U.S. Senate Committee on Banking, Housing and Urban Affairs on "The Importance of Financial Literacy of College Students." Staten, M.S., Elliehausen, G., & Lundquist, E.C. (2002). The impact of credit counseling on subsequent borrower credit usage and payment behavior (Monograph No. 36),Washington, D.C.: Georgetown University, Credit Research Center. Stewart, W.F., Ricci, J.A., Chee, E., Morganstein, D., &Lipton, R. (2003). Lost productive time and cost due to common pain conditions in the US workforce. The Journal of the American Medical Association, 290(18), 2443-2454. Stoneman, B. (1998, February). High finance, hard sell. American Demographics, 43-47. Study finds pain at work costs billions (2003, November 18). CNN.com. Taken on November 20, 2003 from http://www.cnn.com. Study: Workers in pain don't excel (2003, November 11). Plan Sponsor. com. Taken on November 13, 2003 from http://www.plansponsor.com. Sullivan, T. (2003, November 20). Bankruptcy and consumer credit in America. Speech to Association for Financial Counseling and Planning Education. Savannah, Georgia. Surf's up for crackdown on credit repair scams (2000, August 21). Federal Trade Commission, Press release. Taken on March 22, 2004 from http://www.ftc.gov. Survey findings: Your future financial security 2005. Hewitt Associates LLC, 1-24. Thrivent Financial study finds retirement funding a "guessing game" for most Americans (2004, January 28). Thrivent Financial for Lutherns, press release. Taken on January 15, 2005 from http://www.thrivent.com. 2005 New Year resolutions (2005). Cambridge Credit. Taken January 18, 2005 from http://www.cambridgeconsumerindex.com. Turner, J. (2001, August). Coping with stress. Money Management Newsletter. University of Florida. Taken on February 24, 2004 from http://fycs.ifas.ufl.edu. Two steps back: The dual mortgage market, predatory lending, and the undoing of community development (undated). Woodstock Institute. Taken on November 10, 2004 from http://woodstockinst.org. 2004 Health confidence survey: Americans cut savings to pay rising health bills; fear future cost, access problems (2004, October 27). Press release. Employee Benefits Research Institute. Taken on March 15, 2005 from http://www.ebri.org. Uncarded Americans (2003, June 6). CardWeb.com. Taken on May 22, 2004 from http://www.cardweb.com. Understanding my credit score (2003, November). FICO. Taken on January 19, 2005 from National score (2004). National Score.com. Experian. Taken on January 19, 2005 from http://www.nationalscore.com. Ulrich, L. (2004, February). Topsy-turvy: For too many auto buyers, car debt is growing out of control. Money, 145. U.S. bankruptcy filings 1980-2002: Business, non-business, total (2002). American Bankruptcy Institute. Taken on March 22, 2004 from http://www.abiworld.org. U.S. Census (2000). Statistical Abstract of the United States: 2000, page 511. U.S. housing market conditions: 4th quarter (2004, February). U.S. Department of Housing and Urban Development Office of Policy and Research. Taken on December 10, 2004 from http://www.huduser.org. US Q1 credit card delinquencies stay at record high (2003, June 26). Reuters. Taken on June 22, 2004 from http://www.forbes.com. VA mortgage debt-to-income ratio (2005). VA loans.com. Taken on January 15, 2005 from http://www.valoans.com. Yip, P. (2003, November 24) Focus on savings, not spending. Dallas Morning News, 4D. Yochim, D. (2001). Our credit crunch. The Motley Food Credit Center. Taken on January 21,2004 from http://www.fool.com. Warren, E., Thorne, D., & Sullivan, T. (2001, September). Young, old and in between: Who files for bankruptcy? Norton Bankruptcy Law Advisor, Issue # 9A. Warren, E., & Tyagi, A. W. (2003). The Two-Income Trap: Why Middle-Class Mothers and Fathers are Going Broke. NY: Basic Books. Warren, E., & Tyagi, A. W. (2004, February 15). Digging out of debt. Orlando Sentinel, G-1. Weisman, R. (2002). Personal financial stress, depression and workplace performance. Financial stress and workplace performance: Developing employer-credit union partnerships (pp51-65). A Colloquium at the University of Wisconsin-Madison. Madison, WI: Center for Credit Union Innovation and Filene Research Institute. Winter, M., & Morris, E.W. (1983). Used resources, met demands and satisfaction. Paper presented at the annual meeting of NCR-116 (Family Resource Management), Ames: IA. With fear of outliving retirement savings, nearly half of all employees anticipate working during their golden years (2004, February 4). Press release, MetLife. Taken on March 4, 2004 from http://www.metlife.com. www.myfico.com. Wolk, M. (2004, January 16). The pitfalls of plastic: Credit-dependent Americans pushed to the edge. MSNBC's Eye on the Economy. Zuckerman, M. B. (2004, March 15). America's high anxiety. U.S. News & World Report. Taken on March 30, 2004 from http://www.usnews.com. Internet Resources to Build Wealth Barbara O'Neill, Ph.D., CFP® Extension Specialist in Financial Resource Management March 23, 2005 Below is a list of federal government or non-profit organization online resources that can help users build wealth: America Saves www.americasaves.org Provides information about savings topics such as finding money to save, building wealth through homeownership, and compound interest. Information is also provided about U.S. savings campaigns. American Savings Education Council/Choose to Save Partnership www.asec.org (Click on "Savings Tools") Includes downloadable publications and interactive online tools such as the Ballpark Estimate retirement savings calculation worksheet, the Retirement Personality Profiler, and financial planning calculators. Certified Financial Planner Board of Standards, Inc. (CFP Board) www.cfp-board.org Provides consumer information about financial planning topics and information about how to find a certified financial planner in a particular geographic region. Federal Citizen Information Center www.pueblo.gsa.gov Provides an online source of federal government publications, including both health and personal finance topics. Financial Security in Later Life Web Site www.csrees.usda.gov/fsll (Click on "Tools For Consumers") Cooperative Extension System site includes links to a variety of online financial education resources with a focus on planning for retirement and long-term care. Guidebook to Help Late Savers Prepare for Retirement www.nefe.org/latesavers/index.html Provides a downloadable 51-page booklet that describes over a dozen catch-up strategies for middle-aged late savers who are trying to make up for lost time. Internal Revenue Service Web Site www.irs.gov Provides information on federal income tax topics and downloadable forms and publications. Investing For Your Future www.investing.rutgers.edu Cooperative Extension System basic investing home study course includes 11 units on investment topics, a study guide, monthly investment messages, and links. Investment Company Institute www.ici.org Provides information about mutual fund investing from the industry's trade association. My Money.Gov Web Site www.mymoney.gov Financial Literacy and Education Commission website contains financial information in English and Spanish from a variety of federal government agencies on the following personal finance topics: budgeting and taxes, credit, financial planning, home ownership, home equity, mortgages, paying for education, privacy and fraud, responding to life events, retirement planning, saving and investing, and starting a small business. Users can download these publications from the links provided and can also order a free My Money Toolkit, sent via U.S. mail. National Association of Investors Corporation www.better-investing.org NAIC website provides information about investing in stock and resource materials for investment clubs. National Endowment For Financial Education www.nefe.org NEFE website contains information about NEFE financial education programs and publications for youth and adults. National Foundation for Consumer Credit www.nfcc.org Includes information about credit-related topics and information about how to find a non-profit credit-counseling agency in a particular geographic region. PowerPay http://extension.usu.edu/cooperative/powerpay/ or http://powerpay.org Utah State University Cooperative Extension website provides a debt reduction calendar and estimated time and cost savings for users who continue to pay the same amount to creditors monthly. When a creditor is repaid, the monthly payment that was previously paid is added to the monthly payment due to a remaining creditor. Users input their personal data (e.g., name of creditors, outstanding balance, monthly payment, and interest rate) for a personalized analysis. Rutgers Cooperative Research and Extension Money and Investing Web Site www.rce.rutgers.edu/money2000 Includes dozens of downloadable personal finance publications, online presentations, self-assessment quizzes, conference summaries, federal marginal tax rate tables, and other financial education resources for consumers. Save For Your Future www.saveforyourfuture.org or www.asec.org/sfyf Website includes publications, posters, and online calculators from a 2003 national campaign to promote retirement savings. U.S. Savings Bonds Web Site www.savingsbonds.gov or www.easysaver.gov Provides information about how to purchase U.S. savings bonds and current rates of return. 1 Lander, D. A. (2004). "It 'is' the best of times, it 'is' the worst of times": A short essay on consumer bankruptcy after the revolution. The American Bankruptcy Law Journal (78)2, 201-220 (quote page 209). 2 Howard, C. (2001). Get Clark Smart. Hyperior: New York. 3 Gramlich, E. M. (2004, May 20). Workplace financial education: Remarks by Governor Edward M. Gramlich. Speech to the second meeting of the Financial Literacy and Education Commission, Washington, DC. Taken on May 20, 2004 at http://www.federalreserve.gov/boarddocs/speeches/2004/20040520/default.htm. 4 Field, R., & Vogt, V.A. (2004, April 1). Employee financial stress & investment advice needs. American Express Retirement Services. Quote page 16. 5 The role that financial education companies play in participant behavior in 401(k) plans (2004, November). Ernst & Young LLP Human Capital Practice, 13. 6 Fewer than 10% of credit counseling clients declare personal bankruptcy (Elliehasuen, Lundquist, & Staten, 2003; Staten, Elliehausen, & Lundquist, 2002). Click here to download this article (PDF). Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[12]=new Array("http://www.personalfinancefoundation.org/video/tom_video.html","tom_video","","");sQ1[13]=new Array("http://www.personalfinancefoundation.org/features/feature-4.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact How Employers Profit Video Transcript: Hello. I'm Dr. E Thomas Garman, Professor Emeritus and Fellow, Virginia Tech University. My comments today reflect over 20 years of research on financial literacy. The question posed is "Why should employers care about employee financial literacy?" First of all, most employees would agree they would be better financially if they had more income. While it is nice to have a bigger income that alone is not the solution for better financial well-being. What does increase one's level of living is improving financial literacy and putting into practice the newly learned good financial behaviors. Employers have a large stake in employee financial literacy. Why? Because increasing employee financial literacy improves employer profits. It is that simple. During my career at Virginia Tech I directed the University's National Institute for Personal Finance Employee Education. There a collection of scholars conducted breakthrough research on the negative costs to employers for the poor financial well-being of employees. One study found that the Department of Defense loses $1 billion annually in direct costs and reduced productivity due to employee stress about money matters. Examples of direct costs are absenteeism, short-term disability, turnover, wage garnishments, and accidents. A national award-winning research study by Dr. So-hyun Joo concluded that employers increase profits by $450 annually for each employee who slightly improves his or her financial behaviors. The return comes from reduced absenteeism and less work time used dealing with personal financial matters. Now here are some newer numbers. Employees who are stressed about their personal finances, who are not making good money and credit management decisions and who have not wisely selected among employer provided benefits cost their employers between $450 and $2,100 annually. This is wasted employer money. And $550 of the larger amount is cash money on the table-employer dollars that need not be given in FICA taxes to the federal government. Financially literate employees practice good financial behaviors. They save and invest within their employer's 401(k) plan at a level sufficient to anticipate a comfortable retirement. Where appropriate for their situations they sign up for health care and dependent care reimbursement plans. And when given a choice in health care plans they select one that best suits their situation that often is not the most expensive. Importantly, financially literate employees typically enjoy better health. So, how many employees are we talking about? A national group of academic researchers and business experts recently measured the extent of financial distress in the workplace. The conclusion: "Thirty million workers in America-one in four-are seriously financially distressed and dissatisfied with their personal financial situations." These employees are unhappy with their finances and they worry about money, debt and bills. They worry about having enough money to live on once they retire. They often lack confidence about their abilities to manage personal finances. Many do not even have hope that they might one day be able to catch up financially. People at all income levels experience distress about financial matters. And it may not be just 25% of your employees who are stressed about money. Other research shows that depending upon where they work, 30% to 80% of financially distressed workers spend time at work worrying about personal finances and dealing with financial issues instead of performing on the job. It is also extremely important for employers to realize that a number of studies show that a large proportion of those who are financially distressed, 40% to 50%, report that their health is directly impacted-negatively-by their financial worries and problems. Health problems caused by financial distress cost employers big money. See my website for a concise valid and reliable measure of financial distress and financial well-being. So, we can conclude that employee financial illiteracy does impact employers. In short, financially illiterate employees do not make the best decisions for themselves or their employers. These findings should motivate employers to offer employees access to resources, education, counseling, and advice to decrease their stress about money matters and improve their financial lives. By the way, my calculations illustrate that for every dollar employers spend on financial education they gain a return of $3 or more. Recognize too that financial literacy is not just about knowledge even though comprehension is key. The most important part of financial literacy is to apply the knowledge by practicing good financial behaviors. People cannot build assets without good financial literacy. Moreover, it is vital to empower employees to be financially literate. I will close with two observations. One, since financially literate employees improve profits find out what you can do to increase the financial literacy of your employees. Two, what could be more important to your employees, morally and socially, than to have them be better off financially when they leave you than when they started with you? Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[14]=new Array("http://www.personalfinancefoundation.org/questions/key-questions.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Key Questions Key Questions Topics: What Should a Quality Financial Literacy Program Accomplish? Why Don't Employees Save, or Save Enough, for Retirement? How Can Employee Benefits Help? What Can People Do to Get Ahead Financially? What are Good Financial Behaviors? How Can Employers Help Employees Improve Their Personal Financial Behaviors? What Are The Components Of A Quality Financial Program? Should Workplace Financial Program Providers Teach to the "Test of Financial Health"? Yes! What Should a Quality Financial Literacy Program Accomplish? A quality financial literacy program should help people practice good financial behaviors that over time result in positive changes in their financial lives. The changes include increases in assets, decreases in liabilities, increases in net worth, decreases in financial distress, increases in financial well-being, being on track for a financially successful retirement, and being prepared to legally transfer assets to beneficiaries. A quality workplace financial program should provide employees access to help with their overall financial fitness at every stage of their careers. This helps employees live better financial lives as well as maximize savings for retirement. Why Don't Employees Save, or Save Enough, for Retirement? The lack of financial literacy-spending plans, credit management, and savings-is the major reason why employees do not save for retirement. Research shows that 30 million American workers-1 in 4-report they are seriously distressed and dissatisfied with their financial matters. Financially unwell employees do not make the best decisions for themselves. And of those who contribute to a 401(k) retirement program, 7 in 10 are not saving enough for a financially successful retirement. How Can Employee Benefits Help? The employer's benefits package is at the very core of financial success for an employed person. Those who make wise choices among benefit options save money, reduce income taxes, and increase retirement savings while having benefits that genuinely fit their needs. Such decisions lead to better personal money management behaviors, which maximize the likelihood of financial success throughout their lives. What Can People Do to Get Ahead Financially? People can get ahead financially only by sacrificing some current spending to save and invest and by practicing good financial behaviors. On your side working for you, instead of against you, will be compound interest earnings on savings accounts and retirement funds (instead of rising credit card balances) and the favorable effects of inflation on rising stock market prices and growing home equity (instead of price rises on a home not yet purchased). What are Good Financial Behaviors? There are many good personal financial behaviors that are important in achieving financial success. A fundamental truth is that one must spend less than one earns, thus sacrificing some income to invest for a future lifestyle. Some additional (but not all) good financial behaviors are: Establish financial goals and realistic plans to achieve them; join a credit union; save regularly; maintain an emergency saving fund; take advantage of opportunities to tax-shelter some income through one's employer; use a budget to control spending; budget for irregular expenses; save for a down payment on a home using a Roth IRA account; buy a home to take advantage of income tax deductions and eventual rises in one's home equity; pay credit card charges in full every month; pay bills off fast; maintain an excellent credit reputation; calculate personal debt limits and adhere to them; evaluate and compare services, comparison shop for expensive purchases, installment credit, mortgage loans, insurance, and investments; carefully make risk-management assessments of what types and amounts of insurance are appropriate; save as much as possible every year for retirement by investing in mutual funds through tax-sheltered retirement accounts; always save within an employer-sponsored retirement plan at least the amount required to obtain the largest matching contribution; leave your retirement money where it belongs during your working life-in your retirement accounts; prepare and update as needed a will, advance directive documents and beneficiary and ownership designations. How Can Employers Help Employees Improve Their Personal Financial Behaviors? Many employees need to realize that they have some financial behaviors that need changing. To succeed they must believe that they can successfully change those behaviors, and they must have a plan to change. Employers can help by giving employees easy access to quality financial programs. What Are The Components Of A Quality Financial Program? Budgeting and credit counseling Credit union Bank Benefits information and education Tax preparation service Mortgage lenders and counseling Insurance Investment education and advice Retirement Planning Estate transfer Post-retirement financial education Should Workplace Financial Program Providers Teach to the “Test of Financial Health”? Yes! Click here for more information (PDF). Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[15]=new Array("http://www.personalfinancefoundation.org/speeches/speeches-list.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Speeches National Speakers Bureau Click here for more information. Speeches Employee Personal Finances and Health Impact the Employer’s Bottom Line, Health Benefits Conference & Expo, January 2008, Tampa, Garman Read more (PowerPoint)... Lifestyle Risk Factors, Health Status, and Financial Distress: Framing Interventions Using the Transtheoretical Model of Change, November 2007, Association for Financial Counseling and Planning Education, Tampa, Prawitz Progress in Measuring Changes in Financial Distress and Financial Well-Being as a Result of Financial Literacy Programs: Reports from Four States, Association for Financial Counseling and Planning Education, November 2007, Tampa, Garman The Need for Workplace Financial Education and Some Solutions, Federal Reserve Band of Dallas, September 2007, Dallas, Garman Read more (PowerPoint)... Use of the Financial Wellness/Distress Assessment Tool and Its use in Counseling Clients, September 2007, Columbus, Garman Pension Protection Act Update, International Society of Certified Employee Benefit Specialists, September 2007, Seattle, Garman Read more (PowerPoint)... Fiduciary Advisor: A Holistic Solution, August 2007, Integreated Benefits Solutions' Executive Day Out at the Ballbark, Houston, Garman Employers Can Profit by Meeting the Educational Desires of Financially Distressed Credit Counseling Clients, August 2007, Financial Counseling Network, Orlando, Garman Read more (PowerPoint)... Workplace Financial Education: Insight into Best Practices, Worksite Wellness Committee of the Consortium for a Healthier Miami-Dade, July 2007, Miami, Garman Why There are Bottom-Line Benefits to Financial Education, April 2007, The Educated Investor Conference, San Diego, Garman Progress in Measuring Changes in Financial Distress and Financial Well-Being as a Result of Financial Literacy Programs, April 2007, American Council on Consumer Interests, St. Louis, Garman Financial Literacy and Workplace Productivity, April 2007, Georgia Consortium for Financial Literacy, Garman Read more (PowerPoint)... Retirement Planning and Poor Personal Finances, March 2007, Alabama Association of Family & Consumer Sciences, Garman Retirement Planning and Personal Finances, 2006, National Conference on Ageing and National Development: Improving Quality of Later Life Organized by University of Putra Malaysia Institute of Gerontology, Employees Provident Fund, and United Nations Population Fund Marriott Putrajaya Hotel, Putrajaya, Malaysia, Garman Changes in Health, Negative Financial Events, and Financial Distress/Financial Well-Being for Debt Management Program Clients, 2006, Association for Financial Counseling and Planning Education, San Antonio, O'Neill Small Steps to Health and WealthT: The Total Package, 2006, American Council on Consumer Interests, Baltimore, O'Neill Driving Better Participant Outcomes: Taking the Holistic Approach to Advising Employees, 2006, P&I East Coast Defined Contribution Conference, Palm Beach Gardens, FL, Garman-Thomson-Slade-Mullin-Coopersmith Read More (PowerPoint)... National Norming Data for Financial Well-Being and Financial Distress, 2005, Association for Financial Counseling and Planning Education, Scottsdale, AZ, Sorhaindo-Kim-O'Neill-Prawitz-Garman Read More (PowerPoint)... National Norms on Financial Distress, 2005, 51st Annual Conference of the American Council on Consumer Interests, Columbus, OH, Garman-Sorhaindo-Prawitz-Osteen-Kim-O'Neil-Drentea-Haynes-Weisman Health, Financial Well-being, and Financial Practices of Financially Distressed Consumers, 2005, 51st Annual Conference of the American Council on Consumer Interests, Columbus, OH, O'Neill-Sorhaindo-Xiao-Garman Fixing 401(k) Education: The Glass Need Not Remain Half Empty, 2005, 13th Annual Defined Contribution/401(k) East Coast Conference, Miami, Garman Workplace Financial Education: What Does the United States Federal Reserve Board Believe?, 2004, Financial Literacy and Education Commission, Washington, Gramlich Read More... Super Literacy: From Bamboozlement to Engagement--The Bottom Line for Funds and Employers, 2004, Association of Superannuation Funds of Australia, Adelaide, Australia, Garman Read More (PowerPoint)... Retirement Education: Educating Pension Plan Participants, 2004, Pension Research Council Symposium at the Wharton School in Philadelphia, Pennsylvania, Arnone Read More (PDF)... Financial Education is Good for the Employer's Bottom Line, 2004, Enhancing Retirement Education Programs, World Research Group, Scottsdale, Arizona, Garman Financially Distressed Credit Counseling Clients and the InCharge Financial Distress Scale, 2004, Eastern Family Economics and Resource Management Association, Tampa, Florida, Sorhaindo The Effects of Credit Counseling on Financial Stressors, Behaviors and Well-being, 2003, Association for Financial Counseling and Planning Education, Savannah, Georgia Sorhaindo-Garman-Kim The Role of 401(k) Plans for Pre-Retirees in the Context of Total Wealth, 2003, National Association for Variable Annuities, Orlando, Florida, Garman Financial Education, 2003, Legislative Conference of the Congressional Black Caucus, Greenspan Read More... Increase Profitability by Improving Employee Personal Financial Well-Being, 2002, Senior Human Resources Executives, Tampa, Garman The Educational Desires of Financially Distressed Credit Counseling Clients, 2002, Scottsdale, Arizona, Bailey-Sorhaindo-Garman Personal Financial Stress, Depression and Workplace Performance, 2002, Madison, WS, Weisman Treasury Secretary Paul H. O'Neill Keynote Address to Jumpstart Coalition for Personal Financial Literacy, 2002, JumpStart Coalition for Personal Financial Literacy, Washington, D.C., O'Neill Read More... Remarks by Chairman Alan Greenspan, 2002, Ninth Annual Development Summit, The Greenlining Institute, Garman Read more (Word)... Improving Employee Personal Financial Wellness Increases Profitability, 2001, Filene Research Institute, Madison, Wisconsin, Garman Successes in Workplace Financial Education, 2000, American Council on Consumer Interests, San Diego, California, Garman Measuring the Impact of Workplace Financial Education and Advice: A Pre-Post Design, 1999, Personal Finance Employee Education, Roanoke, Virginia, Kim Read More (PowerPoint)... Deploying Financial Education Through the Right Channels, 1999, The Conference Board, New York and Chicago, Garman Selling the Value of Employee Financial Education to Management, 1999, Personal Finance Employee Education Conference, Blacksburg, Virginia, Arnone Read More... The Business Case for Workplace Financial Education-Personal Financial Wellness and Productivity, 1998, The Conference Board, Atlanta and San Diego, Garman PowerPoint PDF Benefits of Financial Education Programs: How and Why Your Organization Can Profit from Education, 1998, Financial Education Strategies Conference, Toronto, Canada, Garman Read More... Worker Productivity and Money Matters, 1997, National Foundation for Credit Counseling, Atlanta, Garman Read More... Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[16]=new Array("http://www.personalfinancefoundation.org/providers/best-providers.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Best Providers The following financial education providers are among the very best in the United States of America. Their workplace financial information and education programs emphasize basic financial literacy that results in improvements in employees' personal financial behaviors, decreases in their financial distress and improvements in employee financial well-being. Such employees often make better use of their employer benefits programs and increase their contributions to their employer-sponsored retirement programs. Some of the Best Providers of Workplace Financial Literacy Education The Heartland Institute of Financial Education is a Colorado non-profit organization whose mission is to promote financial literacy across America. We are dedicated to empowering organizations and their people through financial education. This focused education is provided by experienced financial professionals who are recognized by The Institute as qualified instructors. All of these individuals have earned their CFEd® designation - CFE Certified Financial Educator® the first registered credential of its kind. The CFEd™ recognizes the financial professional who teaches others. The Heartland Institute provides financial education programs for companies and organizations that want their people to enjoy a more financially secure future. When employees and members are more sure of their future and working toward their goals through a sound game plan they are more productive in the workplace. The programs are offered through alliances with some of the nation's top educational institutions and are taught by CFEd® instructors who have been approved for membership in the Registry. Contact: Alan Gappinger, CEO Telephone: 303-597-0197 and 888-895-1479 E-mail: agapp@hife-usa.org Precision Information (PI) is a rapidly growing personal finance software company devoted to developing and distributing innovative educational software and online applications for the financial services market. PI provides efficient, effective, and affordable financial education tools and learning systems to serve the needs of financial service firms, financial professionals, students, individual investors, and independent learners alike. The "Encyclopedia of Personal Finance"™ is a comprehensive, interactive financial education tool featuring more than 260 tutorials on a wide range of topics. These tutorials will help you: evaluate your investment options, plan your long-term tax strategies, evaluate your need for estate planning and insurance choose a retirement plan to fit your needs, and much, much more. The Educated Investor Guides™ include content featured in the Encyclopedia of Personal Finance™. They focus on topics of immediate interest to you, such as retirement planning, financial planning, and investing for important life events. Like the Encyclopedia, the guides enable you to test your learning progress and brush up on your terminology. Currently, there are five guides (more under development): Guide to Personal Finance Guide to Long-Term Care Guide to Investing Guide to Tax Planning Guide to Financial Planning Contact: Joe Saari, CEO Telephone: 313-407-0151 E-mail: jmsaari@educatedinvestor.com InCharge® Education Foundation, Inc. is a national 501(c)(3) non-profit organization dedicated to providing educational products, services and research supporting the personal financial literacy of consumers across America. We are affiliated with InCharge® Institute of America, Inc., a 501(c)(3) non-profit organization, and InCharge® Debt Solutions, Inc., a 501(c)(3) non-profit organization specializing in personal finance education and credit counseling. We develop a variety of innovative personal finance tools, from content-rich magazines and websites to print, CD- and web-based educational programs and more, to meet the needs of unique groups of consumers. These include (1) Young Money and Military Money (Two award-winning magazines); (2) Bankruptcy Education (An interactive web-based program to meet the pre-discharge debtor education requirements of the Bankruptcy Code); (3) Mind Your Finances e-Learning (A one-stop shop for personal finance tools and educational materials); (4) Broadcast (Money tips in an upbeat and entertaining format); and (5) Research (ongoing research and information). Contact: Al Duarte, Vice President Telephone: 407-532-5896 E-mail: aduarte@incharge.org The EDSA Group® has been recognized for its proven, results-driven programs. Offering financial education solutions since 1993, EDSA is an independent financial education company that specializes in teaching people to make informed decisions about their personal finances and employer-sponsored benefit plans. EDSA offers an array of tools to assist almost every audience: individuals, companies and organizations, as well as financial professionals and institutions. All tools can be private labeled and customized to suit your unique needs. Tools available include live workshops, software, and an E-Learning tool (www.Goodmoneyhabits.com (Demo) By providing ongoing workplace financial education, employers are rewarded with both a strong offensive and defensive program. By providing employees with the tools to make decisions about planning, saving, and the retirement plan, many terrific things can result for the company AND the employee (better use of benefits, improved productivity, reduced turnover, improved morale, etc.). In addition to these "offensive" reasons for financial education, employers are also putting forth a strong defense by providing employees with the information they need to make educated decisions (addressing ERISA) and managing possible risk/liability with ongoing and documented action (addressing SOX). Contact: William Pomeroy, President Telephone: 800-942-2777 E-mail: bpomeroy@SHOBE.com The LFE Institute has been focused on "Employee Financial Wellness" for over two decades. LFE's unique "Managing Your Money!" workshop has helped over 300,000 employees stretch their paychecks, reduce their debts, ease family conflicts over money, avoid costly financial traps and pitfalls, and find an average of $3,000 - $5,000 extra each year. It's like giving employees a raise without adding a dime to the payroll! LFE also makes this course available under the cost-effective Train-the-Trainer option. LFE's "Investing for a Great Retirement!" workshop teaches the basics of investing as defined by the Department of Labor. This course motivates employees to increase their 401(k) participation and helps provide "Safe Harbor" protection for employers under ERISA. All of LFE's results-oriented workshops are designed in an interactive, skill-based format, utilizing the latest accelerated learning methodologies to facilitate a positive change in attitudes and behaviors about money. Each course includes six months of HotLine e-mail support to continue the learning process. LFE's unbiased Certified Instructors are Financial Educators, not financial sales people; employees will never be sold investments, insurance, or any type of retirement products. LFE also provides "Financial Wellness Coaching" via a comprehensive e-mail response service, giving employees access to unbiased experts who can answer their specific questions throughout the year at the time they are making critical financial decisions. LFE's highly trained Coaches have extensive tax, legal, investment, insurance, banking, credit and mortgage backgrounds. Employees now have their own personal "Money Coach" to help them learn how to reduce financial distress and improve financial well-being. Contact: Alice Whinnery, President Telephone: 888-872-4611 E-mail: awhinnery@lfeinstitute.com The Texas Society of Certified Public Accountants (TSCPA) is a nonprofit, voluntary, professional organization representing Texas CPAs. TSCPA has 20 local chapters statewide and has 27,000 members, the largest in-state membership of any CPA organization in the nation. The Society is committed to serving the public interest with programs that advance the highest standards of ethics and practice within the CPA profession. The TSCPA offers a free employee enrichment program intended to teach employees how to decode their 401(k) statements, demystify their credit ratings, and discover the power of compound interest. CPAs are uniquely qualified to educate employees about personal financial matters.  Plus, a CPA guest speaker can visit your workplace and talk with employees about the personal financial issues that matter to them. All these resources are bundled in one place at www.ValueYourMoney.org. Visit the site today to learn how you can bring the free resources of “Money Management U” to your workplace. Contact: Jennifer Nimmo, Supervisor, Marketing and Communications Telephone: 972-687-8552; 800-428-0272, x652 E-mail: jnimmo@tscpa.net Money Management International (MMI) and its family of Consumer Credit Counseling Service (CCCS) agencies make up the largest nonprofit, full-service credit counseling agency in the United States, and is qualified to do business in all 50 states. Since 1958, we have been helping consumers find the tools and solutions they need to achieve financial freedom. We provide professional financial guidance, free credit counseling services, community-wide educational programs, debt management assistance, bankruptcy counseling and education services, and housing counseling assistance to consumers via phone, Internet and in-person sessions. We are members of the National Foundation for Credit Counseling (NFCC) and The Association of Independent Consumer Credit Counseling Agencies (AICCCA). For employers of all sizes, MMI provides quality financial education programs in workplaces designed to help employees move towards a debt-free future. MMI also partners with financial institutions to design counseling and education programs that will make a difference in the lives of their customers, members, and employees. Contact: Mel Stiller, Senior Vice President Telephone: 617-960-8101 E-mail: Mel.Stiller@MoneyManagement.org   Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[17]=new Array("http://www.personalfinancefoundation.org/resources/best-resources.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Best Resources Books by E. Thomas Garman Click here to see the list of books that are currently available. Certification Programs Click here for more information. Personal Finance Topics: Money Management Credit College Savings Investing Retirement Financial Literacy Government Foundations, Institutes and Centers Professional and Trade Associations Calculators and Websites 1. Money Management Money 101 (Money Magazine) http://money.cnn.com/pf/101 Includes a 23-lesson personal finance course from the writers at Money magazine. Users can read the entire course or choose lessons of interest. Topics include: making a budget, basics of banking and saving, basics of investing, investing in stocks, investing in mutual funds, investing in bonds, buying a home, controlling debt, saving for college, kids and money, asset allocation, and taxes. MSN.Money www.moneycentral.msn.com Includes daily financial updates and stock quotes and feature articles on financial topics such as insurance, credit, income taxes, and college and retirement planning. Rutgers Cooperative Extension Money and Investing www.rce.rutgers.edu/money2000 Includes dozens of downloadable personal finance publications, online presentations, self-assessment quizzes, conference summaries, federal marginal tax rate tables, and other financial education resources for consumers. The interactive Rutgers Cooperative Extension Financial Fitness Quiz can be found at www.rce.rutgers.edu/money/ffquiz. Smart About Money (National Endowment for Financial Education) www.smartaboutmoney.org Contains financial information organized around major life events, interactive self-assessment quizzes, and links to a comprehensive resource center of financial education materials. Workplace Financial Education http://www.tscpa.org/general/moneyu/index.asp Brings financial literacy messages to employees via 11 excellent downloadable resources available to employers for free in 4 formats: (1) articles (Word documents), (2) table tents for break rooms, (3) flyers for bulletin boards, and (4) paycheck inserts. The 11 topics include budgeting, disaster planning, identity theft, surviving divorce and starting over financially, using your tax refund wisely. Wise Up A Financial Planning Handbook for Generation X Women (U.S. Department of Labor) www.wiseupwomen.tamu.edu/index.php Provides a 9-unit financial course targeted toward young women in their 20s through early 40s. Each chapter contains worksheets for readers to apply information to their lives. Women's Institute for Financial Education (WIFE) www.wife.org Includes reviews of personal finance books, feature articles on personal finance topics, online video clips, and archived WIFE e-newsletters, all designed to improve the financial expertise of women. 2. Credit Annual Credit Report www.annualcreditreport.com Provides a free credit report from the three major credit bureaus- Equifax, Experian, and TransUnion- according to federal law. This centralized Website allows consumers to request a free report once a year. There is also information available to request a free annual credit report by telephone or mail. Association of Independent Consumer Credit Counseling Agencies http://www.aiccca.org/ Includes information about credit-related topics and information about how to find a non-profit credit-counseling agency in a particular geographic region. National Foundation for Consumer Credit www.nfcc.org Includes information about credit-related topics and information about how to find a non-profit credit-counseling agency in a particular geographic region. PowerPay© "Debt Reduction Analysis" (Utah State University Cooperative Extension) http://extension.usu.edu/cooperative/powerpay/ or http://powerpay.org Provides a debt reduction calendar and estimated time and cost savings for users who continue to pay the same amount to creditors monthly. When a creditor is repaid, the monthly payment previously paid is added to payments due to remaining creditors. Users input personal data (e.g., name of creditors, outstanding balance, monthly payment, interest rate) for an analysis and debt repayment schedule. 3. College Savings College Savings Plan www.savingforcollege.com www.collegesavings.org Provides information about state-run 529 college savings plans. 4. Investing Investment Company Institute www.ici.org Provides information about mutual fund investing from the industry's trade association. Investing For Your Future (Cooperative Extension System basic investing home study course) www.investing.rutgers.edu Includes 11 units on investment topics, a study guide, monthly investment messages, and links. National Association of Investors Corporation (NAIC) www.better-investing.org Provides information about investing in stock and resource materials for investment clubs. 5. Retirement America Saves www.americasaves.org Provides information about savings topics such as finding money to save, building wealth through homeownership, and compound interest. Information is also provided about U.S. savings campaigns. American Savings Education Council/ Choose to Save Partnership www.asec.org (Click on "Savings Tools") Includes downloadable publications and interactive online tools such as the Ballpark Estimate retirement savings calculation worksheet, the Retirement Personality Profiler, and financial planning calculators. Financial Security in Later Life (Cooperative Extension System) www.csrees.usda.gov/fsll (Click on "Tools for Consumers") Includes links to a variety of online financial education resources with a focus on planning for retirement and long-term care. Guidebook to Help Late Savers Prepare for Retirement www.nefe.org/latesavers/index.html Provides a downloadable 51-page booklet that describes over a dozen catch-up strategies for middle-aged late savers who are trying to make up for lost time. Planning For a Secure Retirement (Purdue University Cooperative Extension) www.ces.purdue.edu/retirement Contains a distance learning course on wealth accumulation and retirement planning that consists of ten lessons and dozens of interactive links to calculators (e.g., for life expectancy) and other resources. Retirement Personality Profiler (American Savings Education Council) www.asec.org/profiler Contains an interactive self-assessment quiz that classifies users into one of five distinct retirement planning personalities (e.g., savers, and deniers). Based on this information, users can better understand their financial decision-making style and identify workable strategies to improve their financial security. Save For Your Future www.saveforyourfuture.org or www.asec.org/sfyf Includes publications, posters, and online calculators from a 2003 national campaign to promote retirement savings. 6. Financial Literacy InCharge Education Foundation COPET Scale (InCharge Education Foundation) http://www.inchargefoundation.org/surveys/cope The valid and reliable InCharge COPE Scale is the same of the PFEEF Personal Financial Well-Being scale. Personal Financial Well-Being scale (Personal Finance Employee Education Foundation) http://www.personalfinancefoundation.org/scale/well-being.html The valid and reliable PFEEF Personal Financial Well-Being scale is the same as the InCharge COPE Rutgers Cooperative Extension Financial Fitness Quiz www.rce.rutgers.edu/money/ffquiz The interactive Rutgers Cooperative Extension Financial Fitness Quiz. 7. Government Federal Citizen Information Center www.pueblo.gsa.gov Provides an online source of federal government publications, including both health and personal finance topics. Financial Literacy and Education Commission www.mymoney.gov Contains financial information in English and Spanish from a variety of federal government agencies on personal finance topics. Users can download these publications from links provided and can also order a free My Money Toolkit, sent via U.S. mail. Social Security Administration www.socialsecurity.gov Includes online calculators, contact information, and publications about Social Security. U.S. Savings Bonds www.savingsbonds.gov Provides information about how to purchase U.S. savings bonds and current rates of return. U.S. Securities and Exchange Commission www.sec.gov Includes links to investment publications and online assistance with investing and investment fraud questions. Scale. 8. Foundations, Institutes and Centers Institute of Consumer Financial Education www.financial-education-icfe.org Includes information on credit, debt, and other financial topics, as well as an online bookstore. National Endowment for Financial Education (NEFE) www.nefe.org Contains information about NEFE financial education programs and publications for youth and adults. 9. Professional and Trade Associations Association for Financial Counseling and Planning Education http://www.afcpe.org/pages/page.cfm?page_id=11 Profit Sharing/401k Council of America http://www.psca.org/ 10. Calculators and Websites Click here for more than 150 recommended websites.  Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[18]=new Array("http://www.personalfinancefoundation.org/PFEEF_Provider__FINAL_8_16_07[1].pdf","Microsoft Word - PFEEF Provider- FINAL 8-16-07.doc","","PFEEF Helps Providers 1. Demonstrate the value of your workplace financial program to employers 2. Use the Personal Financial WellBeing (PFW) scale at no cost 3. Provide employers no-cost-touse tools and expertise 4. Assess the financial distress/financial well-being of employees 5. Project the ROI of your program to top management, one employer at a time 6. Prove the ROI of your workplace financial program to employers 7. Train advisors/educators on techniques of ROI assessment 8. Provide advice to enhance program effectiveness to change employees' personal financial behaviors 9. Endorse, recommend, and promote the best providers of workplace financial programs 10. Participate in request-forproposal (RFP) preparations 11. Reduce fiduciary liability Providers Help PFEEF Be an underwriter or donor: · Platinum Underwriter · Gold Partner · Silver Partner · Bronze Partner PFEEF Website 1. Personal Finance Well-Being (PFW) Scale 2. Return-on-Investment Model 3. Video for Employers 4. PowerPoint for Employers 5. Best Resources 6. Best Providers 7. Employer Case Studies 8. Underwriters and Partners 9. National Speakers Bureau 10. Press and Media Citations 11. Speeches 12. Over 60 Research Studies We can help your organization build market share in workplace financial education! 9402 SE 174th Loop, Summerfield, FL 34491 Phone: (352) 347-1345 info@pfeef.org FOR PROVIDERS www.PersonalFinanceFoundation.org www.PersonalFinanceFoundation.org The Personal Finance Employee Education FoundationTM (PFEEF) Helps Providers Over 60 research studies prove quality financial programs lead to: 1. The lack of financial literacy­­spending plans, credit management, and savings­­is the major reason why employees do not save for retirement. For Employees Lower financial distress Increased financial wellbeing Better health Adequate retirement preparation Improved family relationships Gains in job performance For Employers Higher productivity Lower absenteeism Better presenteeism Lower turnover Better employee health More profits 2. Money worries hinder employee job performance. The non-profit scientific Personal Finance Employee Education Foundation advocates best practices in workplace financial programs that increase employee well-being and employer profits. If you believe what we believe, ask PFEEF to help. The PFEEF identifies the best providers of workplace financial programs and for no cost projects their value to the employer's bottom line.");sQ1[19]=new Array("http://www.personalfinancefoundation.org/PFEEF-Employer__2-10.doc","Microsoft Word - PFEEF Employer -FINAL 8-16-07.doc","","PFEEF Helps Employers PFEEF is a non-profit scientific organization that helps top management­­one employer at a time­­use company data to prove the bottom-line wisdom of providing employees easy access to quality programs that improve personal financial behaviors. PFEEF supports research with employers to: Access the value of workplace financial programs Identify the best providers Project the ROI of quality programs Prove the ROI of workplace financial programs Feature model employers PFEEF Website 1. Personal Finance Well-Being (PFW) Scale 2. Return-on-Investment Model 3. Video for Employers 4. PowerPoint for Employers 5. Best Resources 6. Best Providers 7. Employer Case Studies 8. Underwriters and Partners 9. National Speakers Bureau 10. Press and Media Citations 11. Speeches 12. Over 60 Research Studies We give employers no-cost-to-use tools and expertise to detail the bottom-line ROI of quality workplace financial programs. PFEEF does not provide financial programs; instead we recommend the best. 9402 SE 174th Loop, Summerfield, FL 34491 Phone: (352) 347-1345 info@pfeef.org FOR EMPLOYERS www.PersonalFinanceFoundation.org www.PersonalFinanceFoundation.org The Personal Finance Employee Education FoundationTM (PFEEF) Helps Employers Over 60 research studies prove quality financial programs lead to: 1. The lack of financial literacy­­spending plans, credit management, and savings­­is the major reason why employees do not save for retirement. For Employees Lower financial distress Increased financial wellbeing Better health Adequate retirement preparation Improved family relationships For Employers Higher productivity Lower absenteeism Better presenteeism Lower turnover Better employee health More profits 2. Money worries hinder employee job performance. The non-profit scientific Gains in job performance Personal Finance Employee Education Foundation advocates best practices in workplace financial programs that increase employee well-being and employer profits. If you believe what we believe, ask PFEEF to help. The PFEEF identifies the best providers of workplace financial programs and for no cost projects their value to the employer's bottom line!");sQ1[20]=new Array("http://www.personalfinancefoundation.org/exemplary-employers.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Exemplary Employers Employers With Exemplary Financial Programs The Personal Finance Employee Education Foundation is proud to feature employers who provide an "Exemplary Financial Program" for employees. PFEEF holds up these employers as examples of the nation's best organizations who genuinely care about improving the personal financial well-being of their employees. Their multi-faceted financial programs reduce employees' financial distress and increase their personal financial well-being while also increasing voluntary contributions to the employer-sponsored retirement programs. Other employers are encouraged to contact these exemplary employers to learn more. Click on the program for descriptive information. Featured Exemplary Employers Weyerhaeuser CF Industries IBM Marriott Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[21]=new Array("http://www.personalfinancefoundation.org/donorinfo.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Donor Information Donor Form Click here to download the Donor Form (PDF). List of Donors Click here for more information. The non-profit scientific Personal Finance Employee Education Foundation (PFEEF) shares research, resources, and best practices demonstrating that employer profits increase when employees have access to resources that reduce personal finance distress and improve financial well-being. Members of the PFEEF Board of Directors donate their time. Our nationally acclaimed website, policy of no-cost-to-use Personal Financial Well-Being scale, financial support for return-on-investment research, and the "First Alert" PFEEF E-Newsletter are all made possible generous donations from individuals and corporations. They support PFEEF because they are dedicated to promoting basic financial education for employees. Funds are used to carry out research, communicate with financial program providers and employers, and publicize findings. Suggested donation levels are Bronze ($500), Silver ($5,000), Gold ($25,000), and Platinum ($100,000). Donations are subject to approval by the PFEEF Board of Directors. In-kind contributions also are welcome. An outline of PFEEF services provided to donors follows: Platinum Underwriter Support initial and follow-up data collections to assess the financial distress/financial well-being of employees with one employer (100,000+ employees) Regular consultations Co-brand organization with PFEEF Promote program to employers, industry, trade associations, and media Participate in request-for-proposal (RFP) preparation (a marketing value-added advantage over competitors) On-site presentations to top management Train staff on return-on-investment (ROI) assessment and marketing with Personal Financial Well-Being (PFW) scale Co-author manuscript submissions for Harvard Business Review and other prestigious publications Invitation to present at annual Trustees meeting Invitation to membership on PFEEF Advisory Board  Gold Donor Support initial and follow-up data collections to assess the financial distress/financial well-being with one employer (<5,000 employees) Project the return on investment (ROI) in consultation with employer's human resources vice president Prove the return on investment (ROI) one year later using work outcomes data Endorse financial program and help write descriptive case study Invitation to join PFEEF Trustees Program and findings included (if desired) in academic research articles Specific advice to enhance workplace financial programs to more effectively change employees' personal financial behaviors Silver Donor Support for one-time data collection to assess the financial distress/financial well-being of employees with one employer (<500 employees) Provide written report and PowerPoint presentation of findings Project the return on investment (ROI) using standardized procedures Invitation to annual PFEEF Trustees meeting Identification as PFEEF donor and research partner Findings included (if desired) in academic research articles Bronze Donor Free use of Personal Financial Well-Being (PFW) scale to assess financial distress/financial well-being of employees Resources to enhance workplace financial programs to more effectively change employees' personal financial behaviors Listing on PFEEF website Other Donors PFEEF expresses its appreciation to those organizations and individuals who make other valuable inkind and cash donations. Donor Form Click here to download the Donor Form (PDF). List of Donors Click here for more information. Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[22]=new Array("http://www.personalfinancefoundation.org/scale/well-being.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Personal Financial Well-Being Scale What's Your "Personal Financial Well-Being" Score? Answer these eight questions to find out. About the Scale Click here for more information. Scale Uses and Policies Click here for more information (PDF). Permission Form (Submit online) Click here for more information (HTML). Approved List of PFW Scale Users Click here for more information (PDF). Research Article on Scale Validity and Reliability Click here for more information (PDF). Teach to the Test Click here for more information (PDF). The PFW Scale has been modified for use in different cultures. It is currently used in Australia, Malaysia, Africa, Mexico, US Latino, and India. Inquire if interested. Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[23]=new Array("http://www.personalfinancefoundation.org/Generic PP for Website.ppt","Tom Garman’s Thoughts on Employee Education","","“Presentation for Employers” The PFEEF wants quality financial program providers to modify this presentation and use whatever slides you want to make it your presentation to employers. Then add in your slides. Remove the copyright notation below and somewhere within your presentation simply make reference to PFEEF and its website (www.PersonalFinanceFoundation.org) Good luck! Today’s Date Your Name Your Company Name ©Personal Finance Employee Education Foundation, Inc., 2008. Employers Already Know That Smoking is bad for employee health and the company’s bottom line Do Employers Also Know? The same is true of employees who have money worries Employee Personal Finances and the Bottom-line Financially illiterate adults do not manage their personal finances very well… And they do not save and invest enough for a financially successful retirement. THIS contributes to lower productivity as well as higher health care costs Employers Often Recognize These Issues But Do Nothing “You can lead a horse to water, but you can’t make it drink.” Let’s Talk About Employee’s Finances Employer’s Bottom-line USA System of Retirement Income Security The metaphor is a 3-legged stool: Social Security Employer provided pensions Personal savings USA Retirement Finances Defined-Benefit Retirement Pensions (DB Plan = Monthly checks for life) Most USA workers earn Social Security Administration credits during their working years, and retirees are eligible for a SSA defined-benefit pension Average today: $963 per month Aged adults who never worked and those with limited income and resources are eligible for SSA-administered Supplemental Security Income defined-benefit pension Average today: $466 per month Some working employees qualify for and may receive an employer-sponsored defined-benefit pension. Only 17% of today’s retirees get corporate defined-contribution pension Average today $641 per month) USA Retirement Finances Defined-Contribution Retirement Savings Plans (DC Plan = Lump sum at retirement to manage) Employer-sponsored voluntary retirement plans for individually accumulated savings, such as 401(k) and profit-sharing: Only 2 in 3 eligible employees join DB plans Of those who do participate, 7 in 10 are not saving enough for a financially successful retirement (Median balance=$58,000; Fidelity says $32,000) Observation Financing retirement in the USA today is the sole responsibility of the employee Realities of Saving for Retirement (All Are Negatives) Participation and deferral rates in USA retirement savings plans are inadequate Most are not saving enough for retirement Workplace education and advice programs have been less than successful Millions of employees say they cannot afford to save for retirement, and 1 in 4 say credit card debt is a reason Employees do not know how to help themselves Employers do not understand the value of providing their employees easy access to the best mix of quality financial programs “The lack of financial literacy–spending plans, credit management, and savings—is the major reason why employees do not save for retirement” The Financially Unhealthy 30 million American workers— 1 in 4—report they are seriously financially distressed and dissatisfied with their personal finances National Norms for Financial Well-Being on PFW Scale© (Mean=5.7; SD=2.4) (1-4: 30%) High distress (7-10: 42%) Low distress (5-6: 28%) Source: InCharge Education Foundation, National Norms on InCharge Financial Distress/Well-Being Scale© for General Adult Population. 1 Means “Overwhelming Financial Distress/Worst Financial Well-Being”; 10 Means “No Financial Distress/Excellent Financial Well-Being” ©Copyright by InCharge Education Foundation and E. Thomas Garman, 2004-2008. All rights reserved. 30% Are Failing Financially! (Scores of 1-4) 60% of Employees “Live Paycheck-to-Paycheck” And Do Not Save Enough for Retirement Credit card payments ($8K) $200-$300 month Vehicle payments ($15K) $400-$500 month College loan payments ($30K) $400-$600 month Child-care ($5-$12K) $400-$1200 month Mortgage loan payments $ Property taxes $ Homeowner’s insurance $ ½ do NOT budget 30-80% waste time at work on money issues Don’t give employees a raise! Offer help with money management problems. “Employees with money problems are like sharks swimming around the workplace taking bites out of the bottom line” Big Point “Financially unwell employees do not make the best decisions for themselves… or their employers” Not Engaged Passive Confused Anxious What Does Poor Financial Literacy Cost? Research says, “Every time someone on your work team brings his/her money worries to the job, workplace productivity drops” Pay no attention to the elephant! Can you recognize a financially stressed employee? No! Research Proves ALL These Factors are Correlated in the Ways Expected Personal Finances: Financial well-being Financial satisfaction Financial distress Financial stressor events Financial behaviors Credit card debt Credit card delinquencies Job Outcomes: Work satisfaction Pay satisfaction Absenteeism Presenteeism (cutting down on normal activities) Personal financial matters interfering with work Work time used to handle personal finances Health Which Purposefully Decreases Employee Financial Distress and Increases Financial Well-being? Salary increases? No Bonuses? No Most retirement education workshops? No Employee Assistance Programs? No Marriage counseling? No Employee Assistance Programs? No What Reduces Financial Distress and Increases Financial Well-Being? Employers Who Provide Employees Easy Access To Quality: Basic financial education Credit counseling Benefits information/education Credit union Retirement education Financial advice Bring together the basic financial resources to truly help employees. Estimated Annual Costs of Ignoring Financial Illiteracy © Lost productivity $450a Health care costs (poor health) 300b Subtotal = $750 Health care reimbursement (FICA) 92c Dependent care reimburse (FICA) 382d Traditional health plan choice 800e TOTAL $2,000+ ($7,982 - $1,690 = $6,292 - $800) “Employer cost for no action is $750 to $2,000+ per employee!” © Personal Finance Employee Education Foundation, 2008. Research Shows that Health and Personal Finances are Correlated Those with more financial distress report poor health.f Financially distressed employees have worst health than others.g Financially distressed workers (40–50%) report their financial problems cause their health woes.h Positive changes in financial behaviors are related to improved health.i How Can Employers Save $750 - $2,000+? Demand more from your current 401(k) financial education providers Insist they provide a coordinated quality program that emphasizes the basics of personal finance: Spending Plan Credit Management Saving It’s not a matter of money spent on financial education— it’s a matter of effectiveness! Financially Literate Employees Are Engaged With Money Issues Comparison shop Achieve short, medium and long term savings goals Match product selections with savings goals Enjoy average to above average financial well-being Aware Active Confident Motivated Results for Employees From Quality Financial Program Lower financial distress Increased financial well-being Better health Adequate retirement preparation Improved family relationships Gains in job performance Both Gain…When Employers Provide Employees With Quality Financial Programs Employee Employer The Big Point “Employers do not realize they can improve profits –and prove it– by providing employees easy access to quality financial education programs that improve personal financial behaviors” Personal Finance Employee Education Foundation “PFEEF Advocates Best Practices” Provide employers no-cost-to-use tools and expertise to detail the bottom-line benefits of quality financial programs Identify companies whose workplace programs genuinely improve employees’ personal financial behaviors and increase employer profits Use PFW to Benchmark Employee Personal Financial Well-Being Survey employees using the Personal Financial Well-Being (PFW) scale. PFW is 8-item questionnaire that measures financial distress and financial well-being. PFW is a peer-reviewed, published valid and reliable measure (over 20 years in development). Use of PFW is free with permission. PFEEF can help with this effort at no cost. Compare Financial Well-Being With Last Year’s Job Outcomes Survey Personal Financial Well-Being (PFW) of employees, and array scores into 5 groups (20% in each). Compare the mean scores of highest 20% group with lowest 20% on last year’s job outcomes. The differences? Human Resources can decide to do nothing. Or, do something! PFEEF can help with this effort at no cost. PFEEF Projects Employer’s ROI “Estimate What the Employer Can Gain By Demanding More From Financial Providers?” Assign cost values to each job outcome Estimate projected impacts of financial program on job outcomes Add up projected savings Add up projected financial program costs Calculate projected ROI PFEEF can help with this effort at no cost. Prove Financial Program Works or Not (One Year Later) Number of employees with improved PFW scores Aware Active Lower financial distress Increased financial well-being Confident Motivated PFEEF can help with this effort at no cost. Prove ROI to Employers (One Year Later) Number of employees with improved job outcomes Calculate employer’s return on investment (ROI) Review changes in job outcomes Add up the savings Add up financial program costs Calculate ROI Key Messages 30% of USA employees are dissatisfied with their personal financial situations (scores of 1-4 that are less than middle [5-6]) (What’s the percentage at your workplace?) Employees complete “Annual Financial Health Checkup” online (8 questions in 4 minutes) PFEEF projects ROI for quality financial program (no cost to employers) Employer hires the best providers to improve employees’ financial decision making Provider/PFEEF may conduct research one year later to prove program works Conclusion About Employee Financial Literacy and Employer Profits It is in the employer’s best interest—more profits—to provide employees easy access to quality financial programs Your To Do List Hire the best preventive health strategist Hire the best providers of basic financial education Count the additional profits Demand performance guarantees from service providers! Thanks! Information/Footnotes Dr. E. Thomas Garman President, Personal Finance Employee Education Foundation Professor Emeritus and Fellow, Virginia Tech University 9402 SE 174th Loop, Summerfield, FL 34491 USA Tele/Fax: 352-347-1345 E-mail: info@pfeef or ethomasgarman@yahoo.com Web: www.PersonalFinanceFoundation.org To examine the PFW scale and research articles about its use, see http://www.afcpe.org/pages/journal_abstract.cfm?journal_id=290&top_id=21 http://www.afcpe.org/pages/journal_abstract.cfm?journal_id=303&top_id=21 New Book: Delivering Financial Literacy Instruction to Adults, Garman & Gappinger, Heartland Institute for Financial Education (303-597-0197) For permission to use the PFW scale, fill out online form Footnotes: a Based on reduced absenteeism and less work time dealing with personal financial concerns. See research and press releases at www.PersonalFinanceFoundation.org b Conservative estimate; research underway c $1,200 contribution to health reimbursement plan ($1,200 X 0.0765) d $5,000 contribution to dependent care reimbursement plan ($5,000 X 0.0765) e Employee stays in high-cost health plan instead of choosing less expensive CDHC policy (consumer driven health care) Information/Footnotes Health footnotes f Bagwell & Kim, 2008; Drentea, 2000; Drentea & Lavrakas, 2000; Garman et al, 2004; Genco et al., 1999; Garman et al., 2007;l Jacobson et al., 1996; Lyons & Yilmazer, 2005; Kim, Sorhaindo, & Garman, 2004; Prawitz et al., 2007; Shatwell et al, 2007. g Kim, Sorhaindo, & Garman, 2003; Prawitz et al, 2007; O’Neill et al, 2005 (2 articles); Sorhaindo & Garman, 2002. h Garman et al, 1999; Kim, Garman, & Sorhaindo, 2003 (AFCPE and ACCI); Kim, Sorhaindo, & Garman, 2004; O’Neill et al, 2006; Weisman, 2002. i Kim, Garman, & Sorhaindo, 2003 (AFCPE and ACCI); O’Neill et al, 2006; O’Neill et al, 2005 (2 articles). ABC Company Projected 1-Year Work Outcomes 1. Projected 1-year changes in work outcomes: 12% will improve job performance rating 16% fewer garnishments 16% will have reduced absenteeism 5% less turnover compared to average 10% will spend less work-time spent on personal finances 8% less short-term disability 9% lower health care costs 21% will contribute to 125-plans 5% fewer accidents/workplace violence 5% fewer thefts 10% fewer workers’ compensation claims 14% increase in contributors to 401(k) plan 2. Next assign costs to each factor and estimate increases in work outcomes. Summary of Projected 2.8 ROI for ABC Company* Program offered to 28,000 employees Program impacts 30% of employees, 8,400, in varying degrees of effectiveness resulting in improved financial behaviors and job outcomes for some Total value of projected improved job outcomes $4,499,000 Projected cost of financial program = $1,600,000 Projected ROI 2.8/1 ($4,499,000/$1,600,000) *These calculations are reasonable estimates, not guarantees. Some numbers are very low estimates and ABC Company’s Human Resources Department has the most accurate cost data. Decreases in accidents, workplace violence, and theft, and reduced fiduciary liability are additional ROI values, and they are not part of this ROI calculation, although they should be included. Projected 2.8 ROI for ABC Company Detail* Program offered to 28,000 employees Program impacts 30% of employees, 8,400, in varying degrees of effectiveness resulting in improved financial behaviors and job outcomes: Garnishments (2,484 X 0.30 = 745 X $600) $ 447,000 Absenteeism (56,000 X 0.30 X 0.10 = 1,680 X $100) 168,000 Short-term disability (1,259 X 0.30 X $100) 37,000 Turnover (28,000 X 0.0025% = 140 X $6,000) 840,000 Health care costs (28,000 X 0.30 X 0.10 = 840 X $400) 336,000 Workers’ compensation claims ($32M X 0.005) 1,600,000 Health care spending plan (1,353 X 1 X $1,000 X 0.0765) 10,000 (cash) Dependent care spending plan (259 X 1 X 1,000 X 0.0765) 19,000 (cash) Job performance rating (28,000 X 0.30 X 0.05 = 420 X $2,100) 882,000 Work-time on finances (28,000 X 0.30 X 0.05 = 420 X $167) 70,000 Total value of projected improved job outcomes $4,409,000 Cost of financial program = $1,600,000 ROI 2.8/1 ($4,409,000/$1,600,000) *These calculations are reasonable estimates, not guarantees. Some numbers are very low estimates and ABC Company’s Human Resources Department has the most accurate data. Additional ROI values from decreases in accidents, workplace violence, and theft, and reduced fiduciary liability are not included in this ROI calculation.");sQ1[24]=new Array("http://www.personalfinancefoundation.org/Letter as Flyer.pdf","Your organization wants to succeed in changing employees' personal financial behaviors","","Personal Finance Employee Education Foundation Board, Staff and Affiliations E. Thomas Garman, President, Virginia Tech University Jinhee Kim, Vice President, University of Maryland Raymond E. Forgue, Treasurer, University of Kentucky Barbara O'Neill, Secretary, Rutgers University Al Duarte, Member Ex-Officio, InCharge Education Foundation Jing J. Xiao, Director of Learning, University of Rhode Island Aimee D. Prawitz, Director of Research, Northern Illinois University What is PFEEF All About? Your organization wants to succeed in changing employees' personal financial behaviors, and we want to help make that happen. PFEEF aims to be the "Good Housekeeping Seal of Approval" of workplace financial programs because we promote the best providers and encourage others to catch up. We advocate best practices in workplace financial programs that increase employee financial health and employer profits. PFEEF identifies some of the nation's best providers of workplace financial programs and projects their value to the employer's bottom line. PFEEF is a non-profit scientific organization that helps top management--one employer at a time--use company data to prove the bottom-line wisdom of providing employees easy access to quality programs that improve personal financial behaviors. At its expense PFEEF gives employers the tools, measurement, metrics and expertise to detail the projected return-on-investment (ROI) for a quality workplace financial program. PFEEF does not provide financial programs; instead we recommend the best. Feel free to utilize the resources on the PFEEF website in your marketing. Download the video to give to employers. Print and distribute PFEEF press releases and news articles (such as from Employee Benefit News and USA Today). Take some PowerPoint slides to use in your talks. Print and share pertinent research articles. Put a link to the Personal Financial Well-Being (PFW) questions on your website. The business case for quality financial programs to employers is summarized in the "Employer Brochure" on the PFEEF website, and you might ask us to send copies for you to distribute. The "Provider Brochure" explains why your organization should affiliate with PFEEF. We encourage you to put a link on your website to PFEEF (www.PersonalFinanceFoundation.org). PFEEF promotes our partners to the media. See recent articles in Investors Business Daily (http://www.personalfinancefoundation.org/press/mediacitations/Investors%20Business%20Daily%20113007.pdf) and in The Advocate (http://www.personalfinancefoundation.org/press/mediacitations/Advocate%20Louisianna%20090907.doc?showAll=y&c=y) Personal Finance Employee Education Foundation, Inc. 9402 SE 174th Loop, Summerfield, FL 34491 USA Telephone/Fax: 352-347-1345; E-mail: info@pfee.org www.PersonalFinanceFoundation.org These articles feature PFEEF partners as well as quote the Foundation. Partners may ask their media contacts to talk with PFEEF for quotes and the latest research. PFEEF can add credibility to your efforts and good press can be useful in marketing your organization. Importantly, we help partners work with and promote other non-competing financial programs so a more complete set of financial resources is made available to employees. We also can endorse a partner's requestfor-proposal (RFP) for a contract with an employer. After you read this correspondence, please: Invest some time in your future profitability derived from workplace financial programs by reviewing the PFEEF website (http://www.personalfinancefoundation.org/). Promote the PFEEF's win-win-win mission­­for employers, providers and employees­­to the media, employers and membership associations. Encourage the use the Personal Financial Well-Being (PFW) questions (at no cost) to assess the financial health of employees. (See online Permission Form.) Make a donation to the PFEEF Foundation. (Donor information form is on PFEEF website.) Employers interested in having a productive labor force ought to want to know (1) What is the overall financial health of employees? and (2) Are our financial programs genuinely increasing employee financial well-being? The most important question an employer can ask a financial program provider is: "What proportion of our employees report increases in their financial well-being one year later because of your program?" The 8-question Personal Financial Well-Being (PFW) scale is a valid and reliable tool for getting the answers. Many employees realize they have some financial behaviors that need changing. To succeed they must believe that they can successfully modify those behaviors, and they must have a plan to change. Employers can help by giving employees easy access to quality financial programs. The result is that employees make informed decisions among their benefit choices that are best for them, take actions to enhance their current financial lives, and wisely save and invest for a financially successful retirement. PFEEF believes that at least 25 percent of employees will get the happy results we talk about--when a workplace financial program is delivered by a quality financial provider. And most of these employees will show improvements in job outcomes. This is bottom-line money for employers. An employer who spends a mere $200 a year on quality financial programs is investing a mere ½ of one percent (0.005), based on a $40,000 salary/benefits package, in the employees' future personal financial wellbeing and potential contributions to the organization's profitability. Why does PFEEF do what it does? Harvard University's Lawrence Henry ("Larry") Summers provides this insight: "I think one has to be prepared to accept long casual chains. That is, if you're trying to think about a problem and propose a solution, it does not happen the next day. But it affects the climate of opinion, and things go from being inconceivable to being inevitable." Please know that all PFEEF Board members, including myself, work for no pay. We do, however, get psychic rewards. Funds donated to PFEEF go toward research to build the employer's business case for providing quality financial programs to employees. If you believe what we believe, ask PFEEF to help. Personal Finance Employee Education Foundation, Inc. 9402 SE 174th Loop, Summerfield, FL 34491 USA Telephone/Fax: 352-347-1345; E-mail: info@pfee.org www.PersonalFinanceFoundation.org");sQ1[25]=new Array("http://www.personalfinancefoundation.org/privacy.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Privacy Statement 1. Overview Thank you for visiting PFEEF and reviewing our Privacy Policy. Your privacy is important to us, and our policy is simple: we will collect no personally identifiable information about you when you visit the Web Site unless you choose to provide that information. This Privacy Policy does not describe information collection practices on other sites, including those linked to or from the Web Site. 2. 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Contact Information Questions or comments regarding the Web Site should be sent by: Address: Personal Finance Employee Education Foundation 9402 SE 174th Loop Summerfield, FL 34491 Email: info@pfeef.org Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[26]=new Array("http://www.personalfinancefoundation.org/sitemap.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Site Map Home USA Today says... Worker Financial Distress Read more...   Read full report (PDF)... How Employers Profit Video Video Transcript What's Your Personal Financial Well-Being Level? PowerPoint Presentation for Employers About Us Board of Directors Dr. E. Thomas Garman, President Dr. Jinhee Kim, Vice President Dr. Ray Forgue, Treasurer Mr. Alberto M. Duarte, Secretary Dr. Barbara O'Neill, Board Member Director of Research Dr. Aimee D. Prawitz, Director of Research Advisory Board Board of Trustees ROI Model Return on Investment Model (ROI) (PDF) ROI "Prove it Yourself" (Word) Essay on Personal Financial Literacy and Happiness Research Employee Financial Distress Health and Personal Finances Value to Employers Retirement Preparation Credit Counseling Helps Financial Literacy Education Press Press Releases Media Citations Contact Key Questions Speeches Best Providers National Institute of Financial Education (Denver, CO) Education Foundation (Orlando, FL) Regional Local Strategies, Inc. (Indianapolis, IN) Best Resources Books Authored by E. Thomas Garman Government Foundations Institutes and Centers Professional Associations Trade Associations Well-Being Scale What's Your Personal Financial Well-Being Level? About the Scale Scale Uses and Policies (Word) Approved List of PFW Scale Users (PDF) Research Article on Scale Validity and Reliability (PDF) Privacy Site Map Terms of Use Address: Personal Finance Employee Education Foundation 9402 SE 174th Loop Summerfield, FL 34491 Email: info@pfeef.org Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[27]=new Array("http://www.personalfinancefoundation.org/terms-of-use.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Terms & Conditions These "Terms of Use" set forth the terms and conditions that apply to your use of PFEEF. By using the Web Site (other than to read this page for the first time), you agree to comply with all of the Terms of Use set forth herein. The right to use the Web Site is personal to you and is not transferable to any other person or entity. Copyrights and Trademarks A. All materials contained on the Web Site are Copyright 2006, 2007, 2008. All rights reserved. B. No person is authorized to use, copy or distribute any portion the Web Site including related graphics. C. PFEEF and other trademarks and/or service marks (including logos and designs) found on the Web Site are trademarks/service marks that identify the goods and/or services provided by PFEEF. Such marks may not be used under any circumstances without the prior written authorization of PFEEF. Links to Third-Party Web Site PFEEF may provide hyperlinks to third-party web sites as a convenience to users of the Web Site. PFEEF does not control third-party web sites and is not responsible for the contents of any linked-to, third-party web sites or any hyperlink in a linked-to web site. PFEEF does endorse, recommend or approve any third-party web site hyperlinked from the Web Site, although PFEEF does not warrant the quality of those websites. PFEEF will have no liability to any entity for the content or use of the content available through such hyperlink. No Representations or Warranties; Limitations on Liability The information and materials on the Web Site could include technical inaccuracies or typographical errors. Changes are periodically made to the information contained herein. PFEEF MAKES NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO ANY INFORMATION, MATERIALS OR GRAPHICS ON THE WEB SITE, ALL OF WHICH IS PROVIDED ON A STRICTLY "AS IS" BASIS, WITHOUT WARRANTY OF ANY KIND AND HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES WITH REGARD TO ANY INFORMATION, MATERIALS OR GRAPHICS ON THE WEB SITE, INCLUDING ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT. 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Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[28]=new Array("http://www.personalfinancefoundation.org/about/tom.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact About Us Board Members Dr. E Thomas Garman, President A renowned author, advisor and academic, Garman is a distinguished professor emeritus and fellow of Virginia Tech University, where he directed the National Institute for Personal Finance Employee Education. Author of 30 books and 200 research articles in personal finance and consumer economics, he directed seven award-winning research studies that links the financial fortunes of corporations with the financial health of their employees. This has had a convincing impact on large employers because decreasing employee distress and improving personal financial well-being creates better workers. Garman is an elected Distinguished Fellow in both the American Council on Consumer Interests and the Association for Financial Counseling and Planning Education. He has been president of three professional associations. Garman has served on several boards of directors as well as many advisory boards for corporations and federal government agencies. These include the American National Standards Institute, U.S. Food and Drug Administration, Board of Governors of the Federal Reserve System, National Advertising Review Board, National Foundation for Credit Counseling, and National Advisory Council on Financial Planning for the International Board of Standards and Practices for Certified Financial Planners. His research has been featured in Financial Counseling and Planning, Compensation Benefits Review, Journal of Compensation and Benefits, HR Magazine, HR Today, Employment Relations Today, Journal of Consumer Affairs, Employee Benefit News, Bankrate.com, Ticker, Investment News, USA Today, Wall Street Journal, The Washington Post, Los Angeles Times, The Chicago Tribune, Baltimore Sun, Reader's Digest, U.S. News & World Report, National Public Radio, and NBC Nightly News. He has made speeches to the Society for Human Resource Management, the Conference Board, International Society of Certified Employee Benefits Specialists, International Society for Retirement Planning, Profit Sharing/401(k) Council of America, WorldatWork, World Research Group, U.S. Navy Senior Leadership Seminar, University of Putra Malaysia, and Association of Superannuation Funds of Australia. Garman's employment includes work for a United States Senator, economic development in West Africa, university teaching, and education and research for the USA's largest non-profit credit counseling company. He is president of the Personal Finance Employee Education Foundation. Contact: E-mail: info@pfeef.org Tele: 352-347-1345 More: Full Resume Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[29]=new Array("http://www.personalfinancefoundation.org/about/kim.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact About Us Board Members Dr. Jinhee Kim, Vice President Jinhee Kim is an Associate Professor and Family Finance Extension Specialist for Maryland Cooperative Extension at University of Maryland, College Park. She also teaches courses in personal and family finance. She received B.S. and M.S. from Seoul National University in Seoul Korea and Ph.D. from Virginia Tech. The University of Maryland recently honored Kim with the George F. Kramer Outstanding Practitioner Award and Outstanding Faculty Woman of Color. Prior to joining University of Maryland, she was director of research to Virginia Tech's National Institute for Personal Finance Employee Education and directed research and published articles in academic and professional journals on workplace financial education. While at Virginia Tech, she served as co-editor of the journal Personal Finances and Worker Productivity. Research from her doctoral dissertation won a national award for excellence from the Association for Financial Counseling and Planning Education. She has published refereed journal articles in Journal of Family and Economic Issues, Research Report of Human Sciences, Journal of Compensation and Benefits, Financial Counseling and Planning, Journal of Consumer Education, Journal of National Association of Family and Consumer Sciences, Compensation and Benefits Review, Journal of Personal Finance, and Journal of Family and Consumer Sciences. Kim has made dozens of invited presentations to state, regional and national conferences. Kim serves as Secretary/Treasurer for the American Association of Family and Consumer Sciences. Her research interests are financial stress, financial well-being, and workplace financial education. Dr. Kim is Vice President of the Personal Finance Employee Education Foundation. Contact: E-mail: jinkim@wam.umd.edu Tele: 301-305-3500 Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[30]=new Array("http://www.personalfinancefoundation.org/about/ray.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact About Us Board Members Dr. Ray Forgue, Treasurer Dr. Forgue is an Associate Professor in the Department of Family Studies at the University of Kentucky. He teaches courses in personal and family finance, consumer issues, and family policy. He was Department Chair for five years and served as Acting Dean of the College of Human Environmental Sciences. He has been the departmental Director of Graduate Studies and Director of Undergraduate Studies. He has served his profession as President of the American Council On Consumer Interests and as Chair of the Eastern Family Economics and Resource Management Association. Forgue is President of the Association for Financial Counseling and Planning Education. Dr. Forgue is co-author of Personal Finance published by Houghton Mifflin Company. This college-level textbook has been adopted by instructors at over 300 colleges and universities across the United States. His most recent book is How To Care For Your Parents Money While Caring for Your Parents (McGraw-Hill). It covers the full range of financial activities that adult children may need to address as their parents age. For eighteen years Dr. Forgue's students operated the consumer helpline for the Consumer Protection Division of the Office of Kentucky Attorney General. Professor Forgue has developed curriculum materials for personal finance education in the middle schools through a grant from Economics America. His consulting work has included efforts in personal finance education for the U.S. Army, writing personal finance materials in credit counseling, and developing retirement planning educational publications. Forgue is Treasurer of the Personal Finance Employee Education Foundation. Contact: E-mail: rforgue@uky.edu Tele: 859-257-7756 Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[31]=new Array("http://www.personalfinancefoundation.org/about/barb.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact About Us Board Members Dr. Barbara O'Neill, Secretary Dr. Barbara O'Neill is Rutgers Cooperative Extension's Specialist in Financial Resource Management. From 1978 to 2004, she was Family and Consumer Sciences Educator in Sussex County, NJ and taught over 1,100 classes and speaking engagements to over 24,000 adult learners. She also provides national leadership for the Cooperative Extension programs Investing For Your Future and Small Steps to Health and WealthTM and directed the five-year MONEY 2000TM savings and debt reduction campaign in the 1990s that resulted in almost $20 million of savings and debt reduction reported by participants nationwide. Dr. O'Neill is a prolific writer and has written over 1,500 newspaper articles and over 100 articles for academic journals, conference proceedings, and other professional publications. She is a certified financial planner (CFP®), chartered retirement planning counselor (CRPC®), Certified Financial Educator (CFEd®), accredited financial counselor (AFC), certified housing counselor (CHC), and certified in family and consumer sciences (CFCS). Dr. O'Neill has also held various leadership roles in state and national professional associations and served as president of the Association for Financial Counseling and Planning Education (AFCPE) in 2003. Dr. O'Neill is the author of two trade books, Saving On A Shoestring and Investing On A Shoestring, published by Dearborn Trade, and co-author of Money Talk: A Financial Guide For Women. She has also written three financial case study textbooks, an online Guidebook to Help Late Savers Prepare for Retirement, and six book chapters.She is a frequent presenter at professional conferences. Dr. O'Neill received her Ph.D. in family financial management in 1995 from Virginia Tech and holds a master's degree in consumer economics from Cornell University and a B.S. in home economics education from the State University of New York at Oneonta. She has received over two dozen awards for program excellence from national professional organizations and almost 350,000 in funding to support her financial education programs. Her research interests include families experiencing financial distress, measuring the impact of financial education programs, and associations between health status and personal finances. O'Neill is Secretray of the Personal Finance Employee Education Foundation. Contact: E-mail: oneill@aesop.rutgers.edu Tele: 732-932-9155, X250 More: Full Resume Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[32]=new Array("http://www.personalfinancefoundation.org/about/tiffany.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact About Us Board Members Susan Tiffany, Board Member Susan Tiffany, CCUFC, a 26-year employee of the Credit Union National Association’s Center for Personal Finance (www.finlit.cuna.org) and is director of the its Personal Finance Information for Adults. Her team develops print, online, audio, and video materials credit unions use to help their members make the most of their financial resources. Credit unions frequently are sponsored by individual or multiple employers, thus credit unions are often tied closely to various workplaces. Much credit union financial education occurs in the sponsoring workplace. Tiffany is a Certified Credit Union Financial Counselor. The CCUFC designation was developed by CUNA to train counselors to help credit union members get control of and optimize their finances. She has been a consumer-advocate member of the Ford Motor Company Consumer Appeals Board and an adviser to American Express for a program introducing teens to credit. Tiffany was for eight years an elected trustee/director of Credit Unions Benefits Services, Inc. (CUBS), and served three years as its chairman. CUBS is a pension company providing retirement plans and investments to credit union employees nationally. Her hallmark in that position was pension simplification and education for participants. She has been a publications judge for numerous credit union awards and makes presentations on personal finance topics to consumer, credit union, and state credit union league audiences. She is a CUNA national media spokesperson on consumer and personal finance issues. Tiffany majored in journalism at the University of Wisconsin and in business administration at Edgewood College, Madison, Wisconsin. Her favorite consumer issue is women’s unique personal finance challenges. Tiffany is a Board Member of the Personal Finance Employee Education Foundation. Contact: E-mail: stiffany@cuna.coop Tele: 608-231-4026; 800-356-9655, X-4026 Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[33]=new Array("http://www.personalfinancefoundation.org/about/alberto.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact About Us Board Members Mr. Alberto M. Duarte, Board Member Ex-Officio A nationally recognized financial literacy and e-Learning expert as well as an experienced academic, Duarte is the Vice President of the InCharge Education Foundation, a nonprofit personal finance education organization. During his seven years at InCharge, Duarte has headed the analysis, design, development, implementation, and evaluation of several award-winning programs. Duarte has also co-chaired the national Jump$tart Coalition's College Ad-hoc Committee; and he co-founded and chaired the Florida State Jump$tart Coalition for Financial Literacy. Duarte serves as an advisory board member and founding partner of the American Savings Education Council (ASEC). He is a member of the Board of Directors of the national Jump$tart Coalition for Personal Financial Literacy (Jump$tart), and a member of the America Saves National Advisory Committee and the Forum to Promote Lower Income Household Savings, which are both Consumer Federation of America (CFA) initiatives. He has made presentations and speeches at the Association for Financial Counseling and Planning Education's (AFCPE), Navy and Marine Corp Preconference, ASEC's Choose To Save Partner's Meeting, the e-Learning Guild's e-Learning Producer Conference & Expo, the Employee Benefit Research Institute's (EBRI) policy forum entitled Will Today's Workers Retire with Adequate Income? And, How Are Today's Retirees Surviving From A Financial Perspective?, the Florida Association for Career and Technical Educators Annual Conference, Marcus Evan's Financial e-Learning Forum, the National Council of Higher Education Loan Programs (NCHELP) conference, the Personal Financial Literacy Teacher Conference at Mississippi State University, and several TechLearn conferences. Duarte recently was selected as a delegate to the 2006 National Summit on Retirement Savings hosted by the U.S. Department of Labor in Washington, D.C. He was also recently invited to be a participant in the National Endowment for Financial Education's (NEFE's) Symposium on Closing the Gap between Knowledge and Behavior: Turning Education into Action held in Denver, CO., as well as the Financial Literacy and Education Commission's (FLEC's) roundtable discussion with nonprofit organizations on personal financial literacy and education. He has participated at the Think Tank on Motivating Americans to Develop Constructive Financial Behaviors. He has been a panel member on the Credit Management Panel Discussion, which was hosted by the U.S. Department of the Treasury and the Federal Reserve Board in Washington, D.C. Duarte was the roundtable session leader for the session entitled Thinking Outside the Classroom: Increasing Economic & Financial Literacy Using Non-Traditional Methods at the 2003 Economic and Financial Literacy Conference sponsored by U.S. Senator Daniel K. Akaka and the Hawaii Council on Economic Education (HCEE) held in Honolulu, HI. He was Secretary of the Personal Finance Employee Education Foundation and now serves as Board Member Ex-Officio. Contact: E-mail: aduarte@incharge.org Tele: 407-532-5896 Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[34]=new Array("http://www.personalfinancefoundation.org/about/aimee.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact About Us Board Members Dr. Aimee D. Prawitz, Director of Research Dr. Aimee D. Prawitz is Professor and Area Coordinator of Family and Child Studies in the School of Family, Consumer, and Nutrition Sciences at Northern Illinois University. She earned a Ph.D. and M.S. in Human Ecology at Louisiana State University. Prawitz has taught courses in graduate research methods, family resource management, and family financial planning. The College of Health and Human Sciences at Northern Illinois University recently honored her with the Sullivan Award for Excellence in Research. Dr. Prawitz has published over 40 articles in refereed journals and conference proceedings, and has made over 45 presentations at national and regional conferences. Her doctoral dissertation was recognized with honorable mention awards by both the American Council on Consumer Interests and the College of Agriculture at Louisiana State University. Prawitz has served as a consultant to the Clara Abbott Foundation, and as a Research Scholar with InCharge Education Foundation, Inc. Prawitz has served as the editor of the Journal of Consumer Education, and is on the editorial board for the Journal of Consumer Affairs and Financial Counseling and Planning journal. Additionally, she has served as a reviewer for several professional journals including Financial Counseling and Planning and Journal of Consumer Education. Her research interests include financial distress/financial well-being; consumer choice outcomes, including obesity and consumer satisfaction; and instrument development, validity, and reliability. Currently, she is the Director of Research for the Personal Finance Employee Education Foundation. Contact: E-mail: R20ADP1@wpo.cso.niu.edu Tele: 815-753-6344 Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[35]=new Array("http://www.personalfinancefoundation.org/about/board-of-trustees.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact About Us PFEEF Board of Trustees The Board of Trustees of the Personal Finance Employee Education Foundation informally advises the directors about matters of interest to achieving the purposes of the Foundation. Qualifications for membership on the Board of Trustees in this corporation are interested in promoting to employers the importance of providing employees access to basic financial literacy education. Members of the Board of Trustees meet informally and occasionally hold conference calls to discuss issues to advance the mission of the PFEEF. They speak on behalf of the PFEEF and sometimes make presentations to employers and professional organizations. They offer their counsel to the PFEEF Board of Directors. Members of the PFEEF Board of Trustees are highly respected leaders in their professions. Collectively they represent some of the very best thinkers in the United States on employee education, 401(k) education, financial advice, financial counseling, credit counseling, workplace financial programs, investments, employee benefits, health promotion, and credit and banking. Each is knowledgeable about resources available to enhance the financial well-being of employees. Click here for list of members of the PFEEF Board of Trustees. Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[36]=new Array("http://www.personalfinancefoundation.org/national-research-team.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact About Us National Research Team A List of Prominent Researchers and Communicators in Financial Literacy, and You Will Find Them and Their Work on the Internet. Those persons marked with an asterisk are on the PFEEF National Research Team, and they are willing and able to capably evaluate financial programs. Alabama - University of Alabama-Birmingham, Patricia Drentea (Associate Professor) Arkansas - University of Arkansas, William Bailey* (Associate Professor) California - California State University, Northridge, Allen Martin* (Associate Professor) Canada - Carleton University, Janet Mautler (Assistant Professor) Canada - Carleton University, Christopher G. Davis (Associate Professor) District of Columbia - USDA-CSREES, Jane Schuchardt (National Program Leader) District of Columbia - George Washington University, Michael E. Staten (Professor) District of Columbia - Federal Reserve Board, Jeanne M. Hogarth (Program Manager) Florida - Answer Search Inc., Cathy Giordano* (President) Florida - Florida Community College Jacksonville - Bruce Brunson* (Dean) Florida - InCharge Education Foundation, Benoit Sorhaindo* (Director of Research) Georgia - University of Georgia, Joseph Goetz* (Assistant Professor) Georgia - University of Georgia, Diann Mooman* (Assistant Professor) Idaho - University of Idaho, Virginia Junk* (Professor) Illinois - University of Illinois, Angela Lyons (Assistant Professor) Illinois - Northern Illinois University, Aimee Prawitz* (Professor) Indiana - Purdue University, Sharon DeVaney (Professor)  Indiana - Purdue University, Flora Williams (Associate Professor Emeritus) Iowa - Iowa State University, Tahira Hira (Professor) Iowa - Iowa State University, Cynthia Needles Fletcher (Associate Professor) Kansas - Kansas State University, John Grable (Associate Professor) Kentucky - University of Kentucky, Raymond Forgue* (Associate Professor) Maryland - University of Maryland, Jinhee Kim* (Associate Professor) Massachusetts - University of Massachusetts, M.J. Alhabeeb (Professor) Michigan - Central Michigan University, Haejeong Kim* (Assistant Professor) Montana - Montana State University, George W. Haynes* (Professor) New Jersey - Rutgers University, Barbara O'Neill* (Professor) New Mexico - New Mexico State University, Constance Kratzer (Associate Professor) North Carolina - Fayetteville State University - Richard Ellis* (Associate Professor) Ohio - The Ohio State University, Sherman Hanna (Professor) Ohio - The Ohio State University, Jonathon Fox (Associate Professor) Oklahoma - Oklahoma State University, Sissy Osteen (Associate Professor) Rhode Island - University of Rhode Island, Jing Jian Xiao* (Professor) Rhode Island - University of Rhode Island, Joan Gray Anderson (Professor) South Dakota - South Dakota State University, Rai Yao (Assistant Professor) Texas - Texas Tech University, Dottie Bagwell Durband (Associate Professor) Texas - Texas Tech University, So-hyun Joo (Associate Professor) Utah - Utah State University, Jean Lown (Professor) Virginia - Institute for Socio-Financial Studies, Loit Vitt (Founding Director) Washington - Carol A. Anderson Research, Carol Anderson (President) Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[37]=new Array("http://www.personalfinancefoundation.org/about/xiao.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact About Us Board Members Dr. Jing Jian Xiao, Professor of Consumer Finance Dr. Jing Jian Xiao is Professor of Consumer Finance at the University of Rhode Island. He has been teaching courses in personal finance and consumer economics for many years. Several of his courses are offered online. His research interests include consumer financial education and financial behavior formation and change. His research includes applications of the Theoretical Model of Behavior Change (TTM) and the Theory of Planned Behavior (TPB) to financial behaviors. He is interested in providing leadership to companies with quality financial programs that not only teach financial knowledge and skills but also encourage developments of positive financial behaviors, which will improve people's quality of life. The best financial program providers utilize the principles of TTM and TPB. He is actively involved in national organizations in the field of consumer finance, served as the President of American Council on Consumer Interests (ACCI), the President of Asian Consumer and Family Economics Association (ACFEA), the Program Chair and Proceedings Editor of Association for Financial Counseling and Planning Education (AFCPE), among others. He is currently serving on the board of National Consumer League. He is the Editor-in-Chief of Journal of Family and Economic Issues and also serves on editorial boards of Financial Counseling and Planning, Journal of Consumer Affairs, Journal of Personal Finance, Journal of Consumer Education, and International Journal of Human Ecology. Xiao has published extensively in areas of consumer finance and economics. He published several books including Mathematics of Personal Financial Planning and Chinese Youth in Transition. Currently he is editing a book entitled Advances in Consumer Finance Research. Xiao also conducted research on financial behaviors of Asian and American consumers. He presented his research to diverse audiences in the U. S., China, Malaysia, South Korea, and Taiwan. He received his B. S. and M. S. in economics from the Zhongnan University of Economics and Law in China, and Ph.D. in consumer economics from the Oregon State University. He was the Take Charge America Professor and Director of the Take Charge America Institute for Consumer Financial Education and Research at the University of Arizona during January 2005-June 2007. Contact: E-mail: xiao@uri.edu Tele: 401-874-2547 Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[38]=new Array("http://www.personalfinancefoundation.org/users/IFDFW_Permission_Use_Chart.pdf","IFDFW_Permission_Use_Chart.xls","","1 A Range of Measurement Use B Location C Item # D Name of Organization and Program Name(s) E Contact Person F Organization Contact Information CEO Money Solutions Pty. Ltd. Level 6, 50 Carrington St. GPO Box 3956 Sydney NSW 2001 Australia Tel: 02-9086 6366 Fax: 02-9086 6355 moneysolutions.com.au President Finerva House #176-C, 2nd Street Gandhipuram, Coimbatore - 641 012 - TN INDIA Tel: +91-422-6505344 Cell: +91-98433-79872 www.Finerva.com Universiti of Putra Malaysia Dept. of Resource Management and Consumer Studies Faculty of Human Ecology 43400 UPM Serdang Selangor Darul Ehsan Malaysia G Use of Measure International Australia 1 Money Solutions Pty. Ltd. Ms. Virginia Dowd Use with new and exisiting cliets 2 International India 2 Finerva Financial Solutions Pvt. Ltd. "Financial Wisdom 4 Indians" Pradeep Yuvaraj Use in a research project 3 International Malaysia 3 Universiti of Putra Malaysia Dr. Jariah Masud Financial Literacy Research 4 A B C D E International West Africa 4 University of the Gambia Dr. Bukhari Sillah 5 F Head of Department Economics & Management Sciences University of the Gambia Kanifing, PO Box 3530 Serrekunda The Gambia, West Africa Tel: 220-437-5522/220-774-0606 Fax: 220-439-5064 bsillah73@yahoo.com G Collect data from national government employees, assess financial progress, and report projected ROI Assess individual coaching sessions; needs assessment; monitoring employee groups; quantify ROI Place on the loading page for Lowe's employees on the Educated Investor Website Arizona 6 5 Azmyth Financial LLC 13835 N. Tatum Blvd, Ste. 9-422, Phoenix AZ 85032 Todd S. Smith, CFP 602-485-3896 www.azmythfinancial.com 6220 Grenwich Drive San Diego, CA 92122 Tel: 858-525-9255 susan_harman@intuit.com CEO Heartland Institute of Financial Education 2851 South Parker Road, Suite 1100 Aurora, CO 80014 Tel: 888-517-7115 Tel: 303-597-0197 Fax: 303-369-3900 www.HeartlandFinancialEducation.co Asst. Prof. of Family Financial Planning, Dept. of Housing & Consumer Economics 262 Dawson Hall Athens, GA 30602 goetz@uga.edu National 7 California 6 Intuit Susan Harman National Colorado 7 Heartland Institute of Financial Education Alan Gappinger Workplace financial education program evaluation 8 National 9 Georgia 8 University of Georgia Joseph Goetz Use in a research project A B C D E National Georgia 9 University of Georgia Robert Nielsen, Ph.D. Ted Futris, Ph.D. 10 Precision Information, LLC National 11 Illinois 10 Joe Saari National South Carolina 11 U.S. Army Rober Risner 12 National 13 Texas 12 H.D. Vest Financial Services Cindy Scott Regional Maryland 13 Choice Finance Corporation John Hodges 14 F Assistant Professor Dept. Housing and Consumer Economics 205 Consumer Research Center House C Athens, GA 30602 Tel: 706-542-8885 rnielsen@uga.edu tfutris@uga.edu http://rnielsen.myweb.ega.edu 203 N. Wabash, Suite 1602 Chicago, IL 60601 Tel: 312-407-0151 Fax: 775-796-1015 joesaari@educatedinvestor.com USAG-Ansbach Storck Barracks Illesheim CMR 416, Box 1 APO,AE 09140 Tel: 467-4555/4764 Fax: 467-4813 Robert.Risner@US.Army.Mil 6333 N. State Hwy 161, 4th Fl Irving, TX 75038 Tel: 972-870-6195 Fax: 972-870-6128 6001 Montrose Road, Suite 704 Rockville, MD 20852 Tel: 301-881-8900 x107 Cell: 301-613-2003 JohnHodges@ChoiceFinance.net www.choicefinance.net/johnhodges.htm G Online survey of couple's financial practices Use on the Educated Investor website for use in the Lowe's and Virtual University projects Determine the financial education needs of military families Financial education course for team members Employee Education Program A B C D E State Colorado 14 TwoMedicine Health and Kyle C. Hanson Financial Fitness Bozeman, Montana 80014 15 State 16 Indiana 15 My First Home Mike Aloia State 17 Kansas 16 Cerebral Palsy Research Foundation Robert Hull State Louisiana 17 EDSA Group, Inc. Bill Pomeroy, CFP 18 F Director Marketing & Communication TwoMedicine Health and Financial Fitness 3008 Gaylord Street Denver, CO 80205 Tel: 406-582-9000 Fax: 720-941-6884 khanson@twomedicinemontana.com www.twomedicinemontana.com 8401 Virginia Street Merrillville, IN 46410 Tel: 888-755-7828 Cell: 219-765-8116 Fax: 888-757-7828 maloia@newstatemtg.com 5111 East 21st Street Wichita, KS 57208-1202 Tel: 316-652-1551 Cell: 316-304-9008 bobh@cprf.org One Oake Square 8280 YMCA Plaza Drive, Bldg #4 Baton Rouge, LA 70810 Tel: 225-291-0343 Fax: 225-291-0419 Bpomeroy@theedsagroup.com www.theedsagroup.com 3101 Kissing Rock Lane Lowell, MI 49331 Tel: 616-897-7424 mark.millis@sbcglobal.net G Collect data from all clients in conjunction with Mayo Behavior Risk Assessment questions Education of first time home buyers State 19 Michigan 18 Reach Consulting Mark Millis Financial services and financial education to individuals with diasabilities To assess the link between health care and financial wellness; to measure progress and the need for financial education. A tool to share with HR Managers, for presentation at workshops for employees A B C State 20 Michigan 19 State Minnesota 20 21 State 22 Mississippi 21 State 23 Mississippi 22 G Employer groups in Michigan in Cygnet Financial Freedom 4139 West Walton Boulevard, Suite D Ted Lakkides conjunction with the House Waterford, MI 48329 Michigan Council on Economic Education University of Minnesota Extension Service and Family Social Science Dept. and Director University of Minnesota Minnesota Extension Collect data from Extension Service and Service's Latino Financial participants in Latino Family Social Science Literacy Program Patricia Olson, Ph.D. financial literacy Dept. & Minnesota 290 McNeal Hall - 1985 Buford Extension Service's Latino Avenue St. Paul, MN 55108 project Financial Literacy Program Tel: 612-624-1786 Fax: 612-625-4227 pdolson@umn.edu extension.umn.edu MoneyEveryDay/index.html PO Box 80084 Starkville, MS 39759 Financial literacy Tel: 662-323-4148 Holland, Jody H. Jody H. Hollad prog. eval. Cell: 601-906-1935 Jholland@nctv.com Jhh206@msstate.edu To use as a pre-test P.O. Box 1188 and post-test to Starksville, MS 39759 Community Counseling determine Jody Holland Tel: 662-323-9261 Svcs. effectiveness of Fax: 601-906-1935 financial literacy Jholland@nctv.com program D E F A B C D University of Missouri Extension E Dr. Cynthia Crawford State 24 Missouri 23 F 353 S. Lafayette Marshall, MO 65340 Tel: 660-886-6908 Fax: 660-886-6327 crawfordc@missouri.edu 4501 Indian School Road, Suite 101 Albuquerque, NM 87110 Tel: 505-254-7767 Fax: 505-254-4722 Lori-O@littlepa.com MAC M5563-011 5606 Carnegie Blvd. Charlotte, NC 28209 Tel: 704-571-4162 Cell: 704-264-5087 Fax: 866-876-9935 3284 North Bend Road, Suite 106 Cincinnati, OH 45239 Tel: 513-481-1829 Fax: 513-481-6444 c.fazackerley@fuge.net State 25 New Mexico 24 Susan C. Little & Asso., P.A. Lori O'Rourke G Financial counseling for individuals and families, pre-post evaluation - financial education classes To use in conjunction with assessment of productivity benefits for employees one year following monthly financial To include on benefit site that focuses on employee health and financial wellbeing/fitness. To assist with money worries and refer for financial education, rasie questions about specific issues to discuss/advise State 26 North Carolina 25 Wells Fargo Home Mortgage Jason Landrum, Marketing Director State 27 Ohio 26 Clare J. Fazackerley, CPA Clare Fazackerley State 28 Pennsylvania 27 Woodbury Financial Services, Inc. 27 Worthington Drive West Grove, PA 19390 Tel: 610-869-4696 Peter Mullen, ChFC Cell: 610-299-8899 Fax: 610-869-5658 psmullen@petermullen.com Financial education A B C D E State Pennsylvania 28 Pennsylvania Office of Financial Education Becky MacDicken 29 F Financial Education Specialist Pennsylvania Office of Financial Education 17 North 2nd Street, Suite 1300 Harrisburg, Pennsylvania 17101 Tel: 717-783-2498 Fax: 717-214-0808 bmacdicken@state.pa.us www.banking.state.pa.us www.moneysbestfriend.com 116 Portsmouth Road Greenwood, SC 29649 Tel: 864-388-8302 Fax: 864-388-8020 jbenton@lander.edu Executive Director The Institute for Financial Literacy University of Houston-Downtown College of Business 1801 Allen Parkway Houston, Texas 77019 Tel: 713-652-0654 Tel: 713-594-2001 Fax: 713-655-1655 bwoehler@ffltx.org www.ffltx.org Family Studies Texas Women's University Denton, TX AmyHouser@mail.twu.edu lchenoweth@twu.edu G Collecting data from all state of Pennsylvania employees State South Carolina 29 Lander University U.S. Army Financial Literary Academy James E. Benton 30 Financial Basic Training Workshop for Army Reserves, use in Personal Finance class at Lander Univ. financial literacy workshops State Texas 30 The Foundation for Financial Literacy Mary Beth Woehler Collecting data online from any visitor to Foundation website as well as employees of participating employers 31 Ann Collier Texas Women's University Dr. Lillian Chenoweth State 32 Texas 31 To use in a research study of objective and subjective measures of financial distress/financial wellbeing. A B C D E State 33 Texas 32 Texas A&M University Nancy Granovsky State 34 State 35 36 12/4/2007 Washington 33 Money Metrics, LLC Robert Pessemier Wisconsin 34 Financial Information & Service Center Alan Prahl F 1111 Research Parkway, Suite 126 College Station, TX 77843-2251 Tel: 979-845-3850 Fax: 979-845-6496 n-granovsky@tamu.edu 4260 190th Ave SE Issaquah, WA 98027 Tel: 425-373-4025 Cell: 425-260-4786 Fax: 206-338-2793 bob@money-metrics.com 921 Midway Road Menasha, WI 54952 Tel: 920-968-6332 aprahl@fisc-cccs.org G Wi$e Up Financial Planning for Generations X and Y Women (face-to-face workshop series) Financial education Financial counseling and education (pretest/post-test)");sQ1[39]=new Array("http://www.personalfinancefoundation.org/about/leonardo.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact About Us Board Members Leonardo Canseco, General Counsel As a CPA, Certified Financial Planner and Attorney, Leonardo A. Canseco has over twenty years of experience in researching and providing creative solutions to complicated business and individual tax cases. He has represented clients involved in tax controversies before the Internal Revenue Service and State/Local tax authorities. Mr. Canseco helped form a coalition that drafted proposed tax legislation leading to the inclusion of retirement planning provisions in Section 665 of the Economic Growth and Tax Relief Reconciliation Act of 2001. Mr. Canseco received his Bachelors of Science Degree in Accounting from University of Maryland, College Park, Maryland. He received a Masters Degree in Taxation from Georgetown University, Washington, DC. Mr. Canseco received his Juris Doctor degree from the University of Baltimore School of Law with concentrations in Business Law and Litigation/Advocacy. He is a Certified Public Accountant (CPA) and Certified Financial Planner (CFP0. Mr. Canseco is a Practitioner Faculty Member at Johns Hopkins University where he teaches Federal Taxation Policy. He is admitted to admitted to the Maryland Court of Appeals and the United States Tax Court. Contact: E-mail: Tele: 301-728-2046 Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[40]=new Array("http://www.personalfinancefoundation.org/about/rita.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact About Us Board Members Rita Burrows, Administrative Manager Rita Burrows is Administrative Manager for the Personal Finance Employee Education Foundation. Rita is a highly respected employee benefits specialist and one of the pioneer members of the defined benefits profession. She is exceptionally well qualified. Rita retired from her position at the Port of Seattle where the main emphasis in her last ten years involved responsibility for Retirement and Deferred Compensation programs. She now resides in The Villages, Florida. Rita says that because of various experiences in her career it became clear to her “that employees at all levels were undereducated in most financial matters.” At the Port of Seattle she convinced management that employees needed more information prior to retirement. With approvals she then conducted retirement planning programs that included spouses and significant others. These covered financial aspects as well as other areas vital to employees planning their retirement years. During her 25-year Port of Seattle career, she developed special programs, publications, and workshops to assist employees to better select and utilize benefit programs. Her most rewarding work involved explaining the importance of employee participation in the deferred compensation program. She found great satisfaction when employees and retirees expressed their appreciation for the guidance they received in creating successful retirement plans. Rita received an Outstanding Achievement Award. Rita attended Cabrillo College in Santa Cruz, California earning an Associate of Arts degree. Her education continued throughout her working years when she took advantage of every workshop and training opportunity related to the fields of employee benefits, retirement, and deferred compensation as well as many other topics. Contact: E-mail: rburrows10@comcast.net Tele: 425-750-9829 Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[41]=new Array("http://www.personalfinancefoundation.org/about/david.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact About Us Board Members Mr. David M. Widdel, Web Master David M. Widdel received his Associates of Science degree in Digital Media from Full Sail in 2000. Since then, he has continued to develop his skills in Interactive Multimedia and Graphic Design. David has years of experience designing and developing e-Learning courses for various Government agencies including, the Bureau of Land Management, Army, Navy, Air Force and Marines. In 2004 he founded his own Interactive Design Company called Über Room Interactive. As the founder of Über Room Interactive, he works part-time as Web Designer, Web Developer, CEO, and Sales Person. He has updated and maintained the Personal Finance Employee Education Foundation website since November 2006. Contact: E-mail: david.widdel@uberroom.com Tele: 407-340-4152 Fax: 407-282-0267 Address: Über Room Interactive 3702 Peppervine Dr. Orlando FL, 32828 http://www.uberroom.com Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[42]=new Array("http://www.personalfinancefoundation.org/users/Donors List.pdf","Donors List","","Contributors, Donors and Underwriters (Organizations and people who have made significant contributions to the Personal Finance Employee Education Foundation) USA Organizations: Ackley & Associates, Kansas City, MO Alabama Association of Family & Consumer Sciences, Normal, AL Capital Strategies, Inc., Indianapolis, IN Center for Financial Well-Being, Brentwood, TN Choice Financial Corporation, Rockville, MD Decker & Associates, Inc., Houston, TX Discover Learning, Ann Arbor, MI The EDSA Group, Baton Rouge, LA Federal Reserve Bank, Atlanta, GA Financial Education, Inc., St. Paul, MN Financial Information & Service Center, Menasha, WS Financial Perspectives Planning Services, Inc., Boston, MA Glenn Enterprises, Midlothian, VA Heartland Institute of Financial Education, Aurora, CO H.D. Vest Financial Services, Irving, TX InCharge Education Foundation, Orlando, FL Institute for Financial Literacy, Houston, TX Institute for Socio-Financial Studies, Middleburg, VA Intuit, San Diego, CA Investment Horizons, Pittsburg, PA Keeping Track, Columbus, OH Lander University, Greenwood, SC LFE Institute, Springfield, MO Merrill Lynch, New York, NY Money Metrics, LLC, Issaquah, WA Money Management International, Houston, TX My First Home, Merrillville, IN Pennsylvania Office of Financial Education, Harrisburg, PA Precision Information, Chicago, IL ProfitSharing/401(k) Council of America, Chicago, IL Purdue University, West Lafayette, IN Reach Consulting, Lowell, MI Speed Equity, Yelm, WA Texas Society of Certified Public Accountants, Dallas, TX TruNorth LifePlanning, Tulsa, OK TwoMedicine Health and Financial Fitness, Denver, CO University of Georgia, Athens, GA United States Army, SC United States Navy Family Services Center, Norfolk, VA University of Arkansas, Fayetteville, AK University of Maryland, College Park, MD University of Mississippi, Starkville, MS University of Minnesota Extension Service, St. Paul, MN University of Rhode Island, Kingston, RI Virginia Tech University, Blacksburg, VA USA Individuals: Carol Anderson, Poulsbo, WA William J. Arnone, New York, NY William Bailey, Fayetteville, AR David Bixler, Indianopolis, IN Don Blandin, Washington, DC Dean Brassington, Norfolk, VA Glenn Carnathan, Mobile, AL Rodney C. Brown, Winston-Salem, NC Judith Cohart, Washington, DC Madeleine d'Ambrosio, New York, NY Virginia Garretson, Roanoke, VA Terry Gorbach, Arkon, OH Sally Haas, Tacoma, WA Steve Herrmann, Chicago, IL Steve Lansing, Orlando, FL Raminder Luther, Scranton, PA William Pomeroy, Baton Rouge, LA Jing Jian Xiao, Kingston, RI Flora Williams, West Lafayette, IN Non-USA Organizations: Australia - Money Solutions Pty. Ltd, Sydney, Australia Canada ­ Osler, Hoskin & Harcourt, Toronto, ON, Canada Canada - The Retirement Centre Inc., Kitchener, ON, Canada Africa - University of The Gambia, Serrekunda, The Gambia, Africa India - Finerva Financial Solutions, Pvt, Coimbator, India Malaysia - University of Putra Malaysia, Selangor, Malaysia");sQ1[43]=new Array("http://www.personalfinancefoundation.org/press/press-releases/press-list-03.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Press Press Releases Foundation Helps Employers Prove Value of Workplace Financial Education Programs, July 10, 2006, PFEEF Click here to download this article (PDF). The newly created Personal Finance Employee Education Foundation, Inc. subsidizes the employer's cost of conducting research on financial education and the employer's return on investment. Dr. Tom Garman, president of the PFEEF announced the formation of the foundation in May 2006. The PFEEF provides a limited funding program exists to subsidize the employer's cost of conducting research on financial education. The non-profit Personal Finance Employee Education Foundation, Inc. is a private foundation established for the non-commercial charitable purpose of serving the public by informing employers on the bottom-line benefits of providing workplace financial education to employees that improves their financial literacy and personal financial behaviors. The establishment of the Personal Finance Employee Education Foundation, Inc. in May 2006 institutionalizes the efforts and expand the impact of a decade long research and publicity effort of an informal national coalition of academics, businesspersons, financial education providers, and foundations. The work of these experts has been to disseminate research findings to employers on the bottom-line benefits of a financially literate workforce. The Foundation aims to reach thousands of employers and millions of employees by substantially leveraging the number of presentations of research findings and persuasive arguments to better inform employers on the multiple values of providing workplace financial education to employees. The PFEEF creates and distributes materials to help motivate employers to offer employees access to basic financial literacy education, communicates its mission with employers in formal and informal ways, and supports research related to promoting workplace financial education. The non-profit Personal Finance Employee Education Foundation, Inc. recommends employers provide employees access to high quality basic financial education that increases financial literacy and changes employees' personal financial behaviors so financial distress decreases and financial well-being improves. Why? Because research demonstrates that this improves the employer's profits as well as the financial lives of employees. The PFEEF speaks well of "Recommended Workplace Financial Education Providers" as the very best organizations in the United States of America that emphasize basic financial literacy information and education that results in improvements in employees' personal financial behaviors, decreases in their financial distress and improvements in employee financial well-being. The PFEEF pays tribute to "Best Practices Employers" that provide the very best workplace financial information and education programs for their employees who often make skillful use of their benefits programs and contribute wisely to their employer-sponsored retirement programs. The PFEEF does not provide workplace financial education or conduct research, although the PFEEF does recommend researchers qualified to assist employers in making the bottom-line business case for high quality workplace financial education. The PFEEF maintains a "National Speakers Bureau" of experts qualified to make effective oral presentations, including one-on-one talks, to employers, financial education providers, human resources professionals, trade and professional associations, and academics. The PFEEF provides a limited funding program for human resource directors, financial education providers and researchers to subsidize the employer's cost of conducting research on financial education and the employer's return on investment. The program will be fully mounted in February 2007. Dr. Garman says this to human resource directors, "If your workplace financial education program is successful, keep it; if not warn the provider to improve results in six months or go hire a provider that will do the job right so you can enjoy the thanks of your employees as well as applause of your boss for the improved bottom-line results." Click here to download this article. (PDF) Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[44]=new Array("http://www.personalfinancefoundation.org/roi/ROI_Feb_2007.pdf","The Return on Investment of Workplace Financial Education -","","Employer's Return-on-Investment Model for Workplace Financial Education and Assistance Programs©1, 2 Greater Employee Awareness of Personal Financial Problems, Concerns and Challenges Greater Employee Awareness of the Value of Employer Benefits Programs New Personal Finance Knowledge, Tools, Resources, and Attitudes Fewer Personal Financial Worries Less stress and personal finance/work conflict Better health Better family life Greater Participation in Employer's Benefits More employees contributing to 401(k) plan Increased in maximum contributions to 401(k) plan More employees contributing to health and dependent care programs Most beneficial health care plan selected More employee after-tax money available to pay down bills, spend, save or invest Improved Work Outcomes Less employee time wasted on money problems Less short-term disability and absenteeism Reduced employee turnover Reduced human resources costs Fewer wage garnishments Reduced health care demand Less substance abuse Less workplace violence and thefts Fewer accident and disability claims Fewer workers' compensation claims Reduced Social Security taxes on125-plans Reduced future legal liability on 401(k) plan Increases in job engagement and productivity Improved Employee Personal Finances Less out-of-pocket, after-tax money spent on health care and dependent care More life insurance coverage for money spent Lower income tax liability More on track for a financially successful retirement Increased Employee Personal Financial Well-Being Improved Employee Work Performance Increased Employer Profits Illustrative Return-on-Investment Calculation for Employer with 2,000 Employees Program Cost of $55 per employee is $110,000 Program Benefits of $330,000 ROI ($330,000/$110,000) = 3 © 2007, E. Thomas Garman, President, Personal Finance Employee Education Foundation; Professor Emeritus and Fellow, Virginia Tech University; 9402 SE 174 Loop, Summerfield, FL 34491 USA; Tele: 352-347-1345; ethomasgarman@yahoo.com; www.PersonalFinanceFoundation.org 1 Workplace financial education and assistance programs include 401(k) education seminars and workshops, pre-retirement education, financial coaching, financial advice, and basic financial education on money and credit management, as well as similar services provided by credit unions, community banks, and non-profit credit counseling organizations. 2 Garman's estimate of the employer's return on investment for workplace financial education and assistance programs is at least 3 to 1; see Garman, "The Business Case...." th");sQ1[45]=new Array("http://www.personalfinancefoundation.org/roi/Prove It Yourself 20052506[1].doc",""Prove-It-Yourself" ","",""Prove-It-Yourself" “Employers, is poor employee financial literacy costing you money?” You betcha, says PFEEF. And YOU can prove it…with one easy-to-take snapshot of your employees. The PFEEF has the “no-cost-to-use” camera (the PFW scale) and you have the employee records. Human Resources executives may use the Personal Financial Well-Being scale to do the research in one day to make the business case for more financial literacy to improve the bottom line. The HR executive and/or the financial education provider already has access to the critical employee personnel data to conduct the appropriate research. This would include records on factors such as absenteeism and job performance rating for the past year. The only other information needed is employee scores on the Personal Financial Well-Being (PFW) scale along with employee identification numbers. This data can be readily collected in a survey in hard copy or online. Once the PFW scores are available, simply take a day to run the numbers: 1. Array the employees by PFW scores from low to high. 2. Group the scores into fifths with 20% of employees in each group. 3. Take the lowest fifth group and obtain absenteeism data (such as the mean number of absences) for those employees. 4. Take the highest fifth group and obtain absenteeism data (such as the mean number of absences) for those employees. 5. Compare the average absenteeism rates for the two groups. 6. Reach a conclusion about how absenteeism and personal financial well-being are related. 7. Consider going to speak with the Chief Financial Officer, but instead consider first looking at similarly grouped employee data for some or all of the following factors: Absenteeism Tardiness Short-term disability Turnover Wage garnishments Health care costs Health status Substance abuse Workplace violence Accidents Disability claims (claims raise premiums) Worker’s compensation claims (claims raise premiums) Participation in 401(k) program to level sufficient to each the full employer match (indicator of no lawsuits) Participation in health care reimbursement program (every employee who participates saves the employer cash in social security taxes not paid to the government Participation in dependent care reimbursement program (every employee who participates saves the employer cash in social security taxes not paid to the government) Participation alternative low-cost consumer-driven health care plan, rather than the employer’s more expensive plan (saving cash money for the employer) With good recordkeeping the above data can be analyzed in one day. 8. Prepare report for management on findings that also recommends providing employees with access to more basic financial education that increases financial literacy and changes employees’ personal financial behaviors so financial distress decreases and financial well-being improves. 9. Consider asking Personal Finance Employee Education Foundation to subsidize travel expenses for HR person to present findings to outside organizations. 10. Consider sharing confidential draft findings with PFEEF who can help you create a return-on-investment formula and a dollar amount of potential savings for your employer. We also may cite your findings anonymously in academic research articles.");sQ1[46]=new Array("http://www.personalfinancefoundation.org/roi/roi-essay.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact ROI Model Essay on Personal Financial Literacy and Happiness E. Thomas Garman Personal financial literacy is at the very core of happiness in life. One can have a loving family, good friends, a satisfying job, and a supportive church. But living life with too many bills and no reserve savings account is stressful. Missing a few paychecks and facing an emergency vehicle repair or hospital bill can make life horribly stressful. These kinds of financial events negatively impact one’s health, relationships and work performance. Financially literacy leads one toward positive financial behaviors such as creating an emergency savings account of $500 to $2,000, paying off credit card balances, and saving for retirement. These actions result in decreased financial distress and increased financial well-being. Financially healthy employees make good benefits selections that save them money as well as save their employers money. When compared to employees with poor financial well-being, financially well employees have higher job performance, less absenteeism and short-term disability, better health, fewer wage garnishments, and less turnover. Click here to download this article (Word). Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[47]=new Array("http://www.personalfinancefoundation.org/research/efd.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Research Employee Financial Distress Negative Health Effects of Financial Stress, Consumer Interest Annual, 2005, O'Neill, Sorhaindo, Xiao, & Garman Read more... Health, Financial Well-being, and Financial Practices of Financially Distressed Consumers, Consumer Interest Annual, 2005, O'Neill, Sorhaindo, Xiao, & Garman Read more... * The Negative Impact of Employee Poor Personal Financial Behaviors on Employers, Financial Counseling and Planning, 1996, Garman, Leech, & Grable Read more... * Recommended Reading Click here for more articles on this topic. Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[48]=new Array("http://www.personalfinancefoundation.org/research/hpf.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Research Health and Personal Finances * Lifestyle Risk Factors, Health Status, and Financial Distress: Framing Interventions Using the Transtheoretical Model of Change, 2007, Proceedings of the Association for Financial Counseling and Planning Eduction, Prawitz, Shatwell, Haynes, Hanson, Hanson, O'Neill, & Garman Read more... * Changes in Health, Negative Financial Events, and Financial Distress/Financial Well-Being for Debt Management Program Clients Financial Counseling and Planning, 2006, Financial Counseling and Planning, O’Neill, Prawitz, Sorhaindo, Kim, & Garman Read more... Financial Fitness and the Mayo Clinic Health Risk Assessment Use of the Personal Financial Well-Being Scale, 2007, Consumer Interest Annual, Shatwell, Haynes, Hanson & Hanson Read more... * Recommended Reading Click here for more articles on this topic. Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[49]=new Array("http://www.personalfinancefoundation.org/research/vte.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Research Value to Employers Workplace financial education program: Does it have an impact on employees' personal finances? Journal of Family and Consumer Sciences (2007), Kim Read more... * Financial Stress, Pay Satisfaction and Workplace Performance, Compensations and Benefits Review, 2004, Kim & Garman Read more... Relationship between Financial Stress and Workplace Absenteeism of Credit Counseling Clients, 2006, Journal of Family Economic Issues, Kim, Sorhaindo, Garman Read more... * Recommended Reading Click here for more articles on this topic. Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[50]=new Array("http://www.personalfinancefoundation.org/research/rp.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Research Retirement Preparation Will DC Automatic Programs Eliminate Need for Education and Advice in the Workplace? 2007, Schaus Read more... Literacy, Trust and 401(k) Savings Behavior, 2007, Center for Retirement Research at Boston College, Agnew, Szykman, Utkus, & Young, Read more... Factors Related to Retirement Confidence: Retirement Preparation and Workplace Financial Education, Financial Counseling and Planning, 2005, Kim, Kwon & Anderson Read more... * Recommended Reading Click here for more articles on this topic. Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[51]=new Array("http://www.personalfinancefoundation.org/research/cch.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Research Credit Counseling Helps * Financial Distress/Financial Well-Being: Do Length of Time Spent in a Debt Management Program and Reduction in Financial Stressor Events Make a Difference? 2007, Consumer Interest Annual, Prawitz, O’Neill, Sorhaindo, Kim, & Garman Read more... * Financial Behaviors of Consumers in Credit Counseling, International Journal of Consumer Studies, 2006, Xiao, Sorhaindo, & Garman. Read more... Effects of Credit Counseling and Debt Management on Financial Stressors and Financial Management Behaviors, (2006). Journal of Family and Consumer Sciences, Kim & Garman Read more... * Recommended Reading Click here for more articles on this topic. Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[52]=new Array("http://www.personalfinancefoundation.org/research/fle.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Research Financial Literacy Education * InCharge Financial Distress/Financial Well-Being Scale: Development, Administration, and Score Interpretation, Financial Counseling and Planning, (2006) Prawitz, Garman, Sorhaindo, O'Neill, Kim, & Drentea Read more... * The Incharge Financial Distress/Financial Well-Being Scale: Establishing Validity and Reliability Proceedings of the Association for Financial Counseling and Planning Education, 2006, Prawitz, Garman, Sorhaindo, O'Neill, Kim, & Drentea Read more... Progress in Measuring Changes in Financial Distress and Financial Well-Being as a Result of Financial Literacy Programs, Consumer Interest Annual, 2007, Garman, MacDicken, Hunt, Shatwell, Haynes, Hanson, Hanson, Olson, & Woehler Read more... * Recommended Reading Click here for more articles on this topic. Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[53]=new Array("http://www.personalfinancefoundation.org/data-collection-procedures.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact About Us Data Collection Procedures Data Collection Suggestions For Employers and Providers 1. Data Collection Online or Using Pencil and Paper Employers and workplace financial program providers may collect data from employees using the Personal Financial Well-Being scale (1) completing the PFW online, or (2) using a pencil and paper format by making copies of the eight questions. The questions take most respondents about three minutes to complete. The results help employers assess the value of their workplace financial programs. 2. Employee Identifying Information A. Collecting PFW data WITHOUT any identifying employee information is still very useful. This approach is suggested because the findings will provide the human resources professional and top management a benchmark of the overall financial well-being of employees. National norms for the general population of adults in the United States have been established to provide data for initial norms to interpret scores. The average mean score for the general population is 5.7 on a 10-point scale with 10 being the highest score. Thirty percent of the people scored between 1 and 4 while 42% scored between 7 and 10 and 28% were at 5 and 6 on the continuum. Some employers view the PFW data on their employees and do nothing with it. Others share the findings with their financial program providers. Some employers suggest to their provider that improvements are needed. Other employers immediately seek to find alternative financial program providers who will do a better job decreasing employees' financial distress and improving their financial well-being. B. Collecting PFW data WITH identifying employee information is the recommended procedure, if company privacy policy permits it. The employee information needed along with the PFW score is a (1) Social Security number, (2) Employee Identification Number, or (3) the last 4 digits of the Social Security Number. (The last method permits matching the PFW scores of perhaps 99 percent of the employees via their full Social Security numbers.) Getting the identifying employee information provides the human resources professional the opportunity to match employee information on demographics (e.g., age, gender, marital status, years with company, income) and job outcomes (e.g., last year's job performance rating and absenteeism). This single data collection (with identifying employee information) also will permit the PFEEF, if desired, to create a projected return-on-investment (ROI) for the employer who implements a quality financial program that is better designed to reduce employees' financial distress and increase personal financial well-being. 3. PFEEF Reports Using the data collected according to PFEEF formatting guidelines, the Foundation can prepare for the employer and/or provider, if desired, a report of the results and a PowerPoint presentation suitable to present to top management. Ask the PFEEF Research Director for guidance in data collection procedures. Approved users of the PFW must have written permission. 4. Projecting and Proving an Employer-Specific Return-on-Investment Employers and providers interested in projecting an employer-specific return-on-investment using cost data provided by the employer and/or proving the genuine ROI of the financial program using company data may contact the PFEEF Director of Research for more information. Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[54]=new Array("http://www.personalfinancefoundation.org/press/press-releases.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Press Press Releases Banking Secretary Says Financial Education Can Pay Off for Business January 7, 2008. Commonwealth of Pennsylvania. Read more... Which Expenses Worry You the Most? July 12, 2007. In Charge Education Foundation. Read more... Financial Well-Being Scale Available to Prove the Effectiveness of Workplace Financial Education Programs, July 25, 2006, PFEEF Read more... Foundation Helps Employers Prove Value of Workplace Financial Education Programs, July 10, 2006, PFEEF Read more... Click here for more articles on this topic. Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[55]=new Array("http://www.personalfinancefoundation.org/press/media-citations.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Press These are some of the hundreds of stories that have cited PFEEF research. Media Citations Source (Readership/Viewers/Listeners) Date Pittsburgh Post Gazette (200,000) 01/08/08 Investors Business Daily (300,000) 11/30/07 Dallas Morning-News (100,000) 09/17/07 TheAdvocate (highly recommended) 09/09/07 Employee Benefits (United Kingdom) 09/07 Employee Benefits News (100,000) 05/02/07 Employee Benefit News 03/02/07 Financial Advisor Magazine 01/04/07 Employee Benefits News (100,000) 02/02/06 Star Tribune (60,000) 12/08/06 Financial Advisor 12/01/06 Central Penn Business Journal (20,000) 05/26/06 Workforce Management Magazine (80,000) 05/08/06 Clark Howard (radio talk show; millions) 03/09/06 Market Wrap With Moe Ansari (radio; 200,000) 03/07/06 Employee Benefit News (100,000) 02/14/06 HR Magazine (150,000) 12/05/05 Miami Herald (200,000) 12/07/05 WGST-AM (Atlanta, 200,000) 10/06/05 USA Today (2.3 million) 10/05/05 Soundoff! (Fort Meade, MD 40,000) 07/14/05 Springfield News Sun (Ohio, 35,000) 07/03/05 401(k)HelpCenter.com (200,000) 05/03/05 Journal of Financial Planning (25,000) 04/05 Daily Record (220,000) 04/08/05 Investment News (110,000) 04/04/05 Workforce Week Management (400,000) 03/27-04/02-05 U.25 (500,000) 03/05 Management Today (Australian; 200,000) 03/05 Work/Life Today (12,000) 02/05 Fidelity Magazine (8.1 million) 01/05 Click here to view the full list. Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[56]=new Array("http://www.personalfinancefoundation.org/features/feature-3.pdf","Final Report: 30 Million Workers in America--One in Four--Are","","FOR IMMEDIATE RELEASE POSTED WEDNESDAY, MARCH 23, 2005 ATTENTION: BUSINESS - WORK/LIFE - PERSONAL FINANCE CONTACT E. Thomas Garman, Advisor, Researcher and Author Fellow and Professor Emeritus, Virginia Tech University 8044 Rural Retreat Court, Orlando, FL 32819 Web: www.EthomasGarman.net Telephone: 407-363-9048 PRESS RELEASE: ORLANDO, FL, Wednesday, March 23, 2005 ­ Financial Distress Among American Workers Final Report: 30 Million Workers in America--One in Four--Are Seriously Financially Distressed and Dissatisfied Causing Negative Impacts on Individuals, Families, and Employers "Thirty million workers in America--one in four--are seriously financially distressed and dissatisfied with their personal financial situations." Leading academic scholars from 10 universities and five business experts in personal finance have issued this unprecedented and definitive joint report of new findings on the levels of financial distress and dissatisfaction among workers in America. Sixteen additional experts from the business world joined to give support to the findings. "It's an ugly situation for employers when more and more of their workers are distressed about their personal finances and running hard just to keep their heads above water financially," says Garman, professor emeritus, Virginia Tech University. Why? The reason is that many workers who struggle with money matters are less productive at their place of employment because of their financial distress. Depending upon their place of employment, 30% to 80% of financially distressed workers spend time at work worrying about personal finances and dealing with financial issues instead of working. Although most working adults are satisfied with their personal finances and are not financially distressed, a substantial minority is having considerable trouble. They are experiencing more than moderate degrees of distress about their personal finances; instead they report "high" to "overwhelming" levels of financial distress. They are dissatisfied with their financial situation and worry about money, debt and bills. They usually are insecure about their personal finances for retirement. They worry about having enough money to live on once they retire. Often, they lack confidence about their abilities to manage personal finances. Many do not even have hope that they might one day be able to catch up financially. People at all income levels in society experience distress about financial matters. A large proportion of those who are financially distressed, 40% to 50%, report that their health is directly impacted negatively by their financial worries and problems. "Health problems caused by financial distress cost employers big money," says Garman. Further, "These findings should motivate employers to offer employees access to resources, counseling and advice to decrease their stress about money matters and improve their financial lives." The authors of this report make note of Federal Reserve Chairman Alan Greenspan's observation in February 2004 that "much of the apparent increase in the household sector's debt ratios over the past decade reflects factors that do not suggest increasing household financial stress" (Source at http://www.federalreserve.gov/boarddocs/ speeches/2004/20040223/default.htm). While the increase in household debt ratios may or may not suggest increasing financial distress, this report does note that financial distress comes from overuse of credit as well as money and spending problems. Furthermore, today there are 30 million workers seriously distressed about their personal financial problems. One co-author from business observes "How can we help this situation if society has not acknowledged there's a problem?" Governments and employers need to recognize, understand and internalize the sizeable nature of the financial distress problem among workers as well as its ramifications, and take appropriate actions. The broader question is what can be done to address the situation? The 4 ½ page summary report is supplemented with an additional 28 pages of key findings and cogent quotes from dozens of studies in Summary of Research Findings on Financial Distress and Dissatisfaction: Dissatisfaction with Financial Situation, Stress about Personal Finances, Living Paycheck-to-Paycheck, Stress about Retirement, Lack of Confidence about Ability to Manage Personal Finances, Health and Stress about Personal Finances are Related, and Distress about Health Care Costs and Bills. The list of references contains 170 research studies, reports, and media stories, many of which are available on the Internet. The statistical data in this report are uncomplicated and easy to read. See http://www.EThomasGarman.net to access the full report. Four recommendations are provided and elaborated upon for those who are financially distressed: (1) Follow the wise old saying to "spend less than you earn"; (2) Make and implement plans to prevent poor money management and reduce financial distress; (3) Determine the best options to relieve financial distress; and (4) Get help through the workplace. Another appendix provides a list of federal government and non-profit organization online resources that can help users build wealth. Contact information for the 15 authoritative co-authors and 15 other personal finance experts is provided in the report. See http://www.EThomasGarman.net to access the full report. End # # #");sQ1[57]=new Array("http://www.personalfinancefoundation.org/features/feature-3full.pdf","30 to 60 Million Americans are Seriously Financially Distressed:","","Financial Distress Among American Workers Final Report: 30 Million Workers in America--One in Four--Are Seriously Financially Distressed and Dissatisfied Causing Negative Impacts on Individuals, Families, and Employersa E. Thomas Garman, Virginia Tech Universityi Virginia W. Junk, University of Idahoii Jinhee Kim, University of Maryland iii Barbara J. O'Neill, Rutgers Universityiv Kathy Prochaska-Cue, Iowa State Universityv Aimee D. Prawitz, Northern Illinois Universityvi Frances C. Lawrence, Louisiana State Universityvii Rui Yao, South Dakota State Universityviii Robert O. Weagley, University of Missouri-Columbia ix Robert L. Weisman, University of Rochester Medical Centerx Glenn Carnathan, Saint Thomas Health Services xi Stacy Schaus, Hewitt Financial Servicesxii Matthew D. Hutcheson, Matthew D. Hutcheson LLC xiii David H. McKinley, McKinley Investment Groupxiv Marvin J. Brook, US Postal Servicexv All are available as press spokespersons With contributions from other personal finance experts (also available as press spokespersons), including:b Michael McAuliffe, David C. Jones, Ray E. Noftsinger, Michael Schiano, David A. Lander, Bernice B. Wilson, Dennis Ackley, Steven S. Shagrin, Al Otto, Thomas R. Watson, Bill Keenan, Brooks Hamilton, David L. Ireland, Kelly L. Reese, and Blanchard D. Warren. March 23, 2005 "More and more families are running harder and harder to stay in the same place or to reduce the amount that they are falling behind."1 In survey after survey, people say that they are financially distressed and dissatisfied with their personal finances. In this report, a national team of academic scholars and other experts conclude that 30 million workers in America--one in four--are seriously distressed and dissatisfied with their personal financial situations. Not only does this have negative consequences for the workers, their families and co-workers, and their employers, it also constitutes a serious social problem. The public and government need to recognize and internalize the sizeable nature of the financial distress problem as well as its ramifications, and take appropriate actions. This report pops the mythical bubble that urges people to ignore these problems or worse denies their existence for some perception of the "greater good." Lander, D. A. (2004). "It `is' the best of times, it `is' the worst of times": A short essay on consumer bankruptcy after the revolution. The American Bankruptcy Law Journal (78)2, 201-220 (quote page 209). 1 This definitive report is based on decades of research and it reports on reviews of over a dozen new research studies. This report takes data from 11 major business sponsored surveys, 10 of which were conducted 2004 by nationally known companies, such as MetLife, Principal Financial, American Express, Cigna, AARP, Caravan, Roper, and Gallup, as well as 10 recent published academic research studies and new not-yetreleased national research findings to be presented on April 9, 2005 in Columbus, Ohio at the national conference of the American Council on Consumer Interests (ConsumerInterests.org). Purposes of the Research This research was undertaken: (1) to identify the scope and severity of the problem of worker financial distress; (2) to seek a developing consensus on the findings, and (3) to present the growing amount of evidence to motivate employers to help employees reduce financial distress. This report serves as the basis of a journal article that is in preparation. Wide Consensus on Conclusions and Recommendations The statistical data in this report are uncomplicated and easy to read. No one disputes the basic statistical facts offered in this report, although some may disagree with their interpretation. The five conclusions and four recommendations offered in this report are widely agreed upon. Media Contact Information for Authors and Other Experts in Personal Finance A number of leading academic scholars and businesspersons who are experts in personal finance have issued this unprecedented joint report on the levels of financial distress and dissatisfaction among workers in America. A number of other experts in personal finance have also agreed to serve as authoritative sources for the media, and their contact information follows as well as contact information for the co-authors. One Appendix Summarizes Research And Another Lists Online Resources There is general agreement on the conclusions described below and summarized in the Appendix of this report. The contents of the Appendix, Summary of Research Findings on Financial Distress and Dissatisfaction, are arranged as follows: Dissatisfaction with Financial Situation, Stress About Personal Finances, Living Paycheck-to-Paycheck, Stress About Retirement, Lack of Confidence About Ability to Manage Personal Finances, Health and Stress About Personal Finances are Related, and Distress About Health Care Costs and Bills. Another Appendix lists a list of federal government and non-profit organization online resources that can help users build wealth. References This report provides a listing of References that includes 170 research studies, reports and media stories, many of which are readily available on the Internet. 2 Conclusions Although most working adults are satisfied with their personal finances and are not financially distressed, a substantial minority is having considerable trouble. 1. Thirty million workers--one in four--are suffering serious financial distress. This report takes data from 11 major business sponsored surveys conducted by nationally known companies, such as MetLife, Principal Financial, American Express, Cigna, AARP, Caravan, Roper, and Gallup, as well as 10 published academic research studies. Most of the research findings were reported within the past 12 months. A review of these studies concludes that 25% of working adults--that's one in four--are seriously financially distressed. This amounts to 30 million workers in America. They are experiencing more than moderate degrees of distress about their personal finances; rather they report high to overwhelming levels of financial distress. Furthermore, they report they are dissatisfied with their personal financial situations. Finally, research reveals that there are many negative consequences of financial distress upon individuals, their families and co-workers, and their employers. 2. People who are financially distressed are often living paycheck-bypaycheck with no money for extras. They are dissatisfied with their financial situation and struggle with money and debt and worry over bills. They usually are insecure about their personal finances for retirement. They worry they will not have enough money to live on once they retire. They often lack confidence about their ability to manage personal finances. Many do not even have hope that they might one day be able to catch up financially. 3. Poor health and financial distress are related. A large proportion of those who are financially distressed, 40% to 50%, report that their health is negatively impacted by their financial worries and problems. Those who are financially distressed often report they are experiencing a variety of unpleasant consequences of mental stress: poor health. They report disagreements with friends, family members and co-workers; restricted social life; and reduced job productivity. Also, they often report they are distressed about health care costs and medical bills. This distress can further unveil or aggravate a depressive or anxiety disorder. Such impairments can affect an employee's coping skills, attention and concentration ability to the point of decreased job attendance, reduced workplace performance and hamper job retention for employers. The relationship between poor health and serious financial distress suggests provocative clues that should be further investigated, particularly by the health care industry, employers, governments, and others involved in paying the costs for medical care. 4. Personal financial problems hurt workers' productivity. Thirty to 80% of financially distressed workers spend time at their place of employment worrying about personal finances and dealing with financial issues instead of working. These people often admit that their concerns about personal finances interfere with their work. They may take time from work to talk with co-workers about personal financial problems, communicate with creditors about past due payments, pay personal bills, balance a 3 checkbook, or talk to a lender about a debt consolidation loan. They may pay bills while at work. Because of their financial distractions, they often report they are unable to carry out their normal responsibilities, have to cut down their workload, and are not able to accomplish as much as usual. This cycle further interrupts employee performance, workplace attendance and poses greater financial burdens compiling stress and financial pressures. Personal financial distress, therefore, negatively impacts employers. 5. Financial problems are not confined to lower income levels. Distress about financial matters is experienced at all income levels in society. It is partly a function of income, particularly among those earning less than an average income. While there is an inverse relationship between income and financial distress, other factors provide a more accurate explanation. The amount of consumer debt is a factor, especially among those with high debt-to-income ratios. Financial distress also is very much a function of lifestyle, predominantly among people who spend almost every dollar they earn or use credit so they can live beyond their means. Varying Degrees of Financial Distress "How much financial distress are we talking about?" A normative perspective on the varying degrees of financial distress can be illustrated with a 10-point scale with the higher numbers indicating increasing distress. See Table 1. Table 1: Normative Labels for Levels of Financial Distress 12345 678910 Zero financial distress Very low financial distress Low or little financial distress Minimal financial distress Average financial distress Moderate financial distress High financial distress Very high financial distress Extremely high financial distress Overwhelming financial distress This report on financial distress is about adults experiencing "serious financial distress" in the 7-to-10-range as shown on the scale in Table 1. Financial Distress Levels by Household Income This report takes data from a variety of secondary and primary sources of data and uses deductive logic to determine that 25% of working adults are experiencing serious financial distress. Some studies (see appendix) have found that 60%, or more, adults are financially distressed. Reports of these higher levels may occur since when one working adult is financially distressed, it may well affect the heads of households, the spouses or 4 unmarried partners, and other adults and children living at home although the latter are usually not surveyed. Table 2 summarizes the research findings of financial distress experienced by different income groups. It shows the authors' estimates of the ranges of percentages of financial distress among the population according to level of household income. These conclusions are based upon a review of more than two-dozen studies cited in the appendix. Note in the table that for all income groups the estimated range of financially distressed employees is 25% to 60%. The highest percentages of financially distressed adults are more frequently found among those with lower household incomes. However, people in all income groups experience serious financial distress because income alone is not the single determinant that influences whether or not people experience financial distress. According to the Current Population Survey of the Bureau of Labor Statistics and U.S. Census Bureau data, it is estimated that there are 120 to 137 million adults in the workforce (full and part-time) in the United States. The 25% means 30 million people are seriously financially distressed. (This calculation uses the conservative workforce estimate [0.25 X 120M], otherwise the number is 34 million [0.25 X 137M].) This is a considerable portion of the U.S. adult population, comprising one in four working adults. Table 2 - Financial Distress Levels by Household Income Household Income Less than $14,999 $15,000 - $24,999 $25,000 - $34,999 $35,000 - $49,999 $50,000 - $74,999 $75,000 - $99,000 $100,000+ All income groups combined Range of Levels of Financial Distress 80% to 90% 70% to 80% 50% to 60% 30% to 60% 30% to 50% 20% to 30% 9% to 25% 25% to 60% The authors of this report make note of Federal Reserve Chairman Alan Greenspan's observation in February 2004 that "much of the apparent increase in the household sector's debt ratios over the past decade reflects factors that do not suggest increasing household financial stress" (Source at http://www.federalreserve.gov/boarddocs/ speeches/2004/20040223/default.htm). This report comments that financial distress comes from overuse of credit as well as money and spending problems. Furthermore, 30 million workers are seriously distressed about their personal financial problems. 5 How can we help this situation if society has not acknowledged there's a problem? Governments and employers need to recognize, understand and internalize the sizeable nature of the financial distress problem among workers as well as its ramifications, and take appropriate actions. The broader question is what can be done to address the situation? Recommendations for the Financially Distressed This report offers four recommendations. 1. Follow the wise saying to "spend less than you earn." Those who succeed financially set goals, live below their means, take on new borrowing cautiously, pay off credit card debts monthly, and save and invest for the future.2 Choosing to live below one's means and saving and investing the difference, particularly when compared to those who spend all and often more than they earn, is a key to how people succeed financially. 2. Make and implement plans to prevent poor money management and reduce financial distress. Consumers need to plan ahead, spend less than they earn, distinguish between needs and wants, be more practical and realistic in making purchases, and comparison-shop. Tracking one's expenses for a month by writing them down will reveal that some extra money would be available if it were not spent on nonessential wants, in contrast to needs. Consumers need to make more smart financial decisions by paying down debt, building a cash reserve, increasing savings, investing for retirement, and reordering their expectations and financial priorities where appropriate. This is accomplished by consciously making tradeoffs between spending on today's wants for a more financially secure future. 3. Determine the best options to relieve financial distress. Eight options are available for people who are distressed about their personal finances: (1) evaluate your financial situation to identify where to cut back on expenses, (2) increase income, (3) target and pay down high-interest debt; (4) obtain a debt-consolidation or home-equity loan and use the proceeds to repay creditors only after learning to monitor expenses; (5) renegotiate credit repayment terms with creditors, (6) return secured assets to creditors; (7) seek budgeting and credit management assistance from a non-profit credit counseling agency, and (8) contact an attorney regarding the possibility of an unsecured debt settlement solution or declaring bankruptcy. 4. Get help through the workplace. Seeking help from one's employer is an option for many financially distressed individuals. Federal Reserve Board Governor Edward M. Gramlich remarked that employers should make financial education for their employees a lifetime responsibility."3 Other experts observe that "Comprehensive 2 3 Howard, C. (2001). Get Clark Smart. Hyperior: New York. Gramlich, E. M. (2004, May 20). Workplace financial education: Remarks by Governor Edward M. Gramlich. Speech to the second meeting of the Financial Literacy and Education Commission, Washington, DC. Taken on May 20, 2004 at http://www.federalreserve.gov/boarddocs/speeches/2004/20040520/default.htm. 6 financial education programs in the workplace provide a wide range of curricula that can better inform and prepare workers to handle their financial challenges, whatever they may be. These programs can go a long way toward helping allay financial stress and improving attitudes, morale and productivity.4" More than half of mid and large employers say they provide employee financial education because "it improves their productivity by reducing financial stress."5 Interested employees should ask their employer about financial education programs offered at the workplace, such as those provided by an independent financial education company, union, credit union, and/or a credit counseling agency. Endnotes Please reference this report in the following manner: Garman, E.T., Junk, V.W., Kim, J., O'Neill, B.J., Prochaska-Cue, K., Prawitz, A.D., Lawrence, F.C., Yao, R., Weagley, R.O., Weisman, R.L., Carnathan, G., Schaus, S., Hutcheson, M.D., McKinley, D.H., Brook, M.J. (2005, March 22). Financial Stress Among American Workers, Final report: 30 million workers in America--One in four--Are seriously financially distressed and dissatisfied causing negative impacts on individuals, families and employers. Independent report from the authors that is available at www.EthomasGarman.net. 1 Media Contact Information for Report Co-Authors i E. Thomas Garman, Author, Researcher and Advisor; Fellow and Professor Emeritus, Virginia Tech University, 8044 Rural Retreat Court, Orlando, FL 32819, USA; Tele: 407-363-9048; Email: tgarman@bellsouth.net; Web: wwwEThomasGarman.net. Dr. Garman directed Virginia Tech's National Institute for Personal Finance Employee Education and directed several awardwinning research studies. He has written many research articles and over 30 books, including Personal Finance and Consumer Economic Issues in America. ii Virginia W. Junk, Ph.D., Professor, University of Idaho, FCS 3183, Moscow, ID 83844- 3183; Tele: 208-885-7264; E-mail: vjunk@uidaho.edu. Junk researches decision making in retirement financial planning and in housing of those age 40 and older, as well as "sandwich generation" issues relating to financial, time and stress management. She teaches personal finance, and is author of 40 publications, including textbook supplements. Jinhee Kim, Ph.D., Assistant Professor and Extension Specialist, University of Maryland, 1204 Mary Mount Hall, College Park, MD 20742-7515; Tele: 301-405-3500; Email: jinkim@umd.edu. Kim has conducted award-winning research on employee financial well-being. She researches financially distressed consumers, financial management behaviors, absenteeism, and job outcomes. iv Barbara O'Neill, Ph.D., CFP®, CRPC, AFC, CHC, CFCS, Extension Specialist in Financial Resource Management, Professor II, Rutgers Cooperative Extension, Cook College Office Building, Room 107, 55 Dudley Road, New Brunswick, NJ 08901, USA; Tele: 732-932-9155, X250; Cell: 973-903-7869; Fax: 732-932-8887; E-mail: oneill@aesop.rutgers.edu; Web: www.rce.rutgers.edu/money2000 and www.investing.rutgers.edu. O'Neill has taught personal Field, R., & Vogt, V.A. (2004, April 1). Employee financial stress & investment advice needs. American Express Retirement Services. Quote page 16. 5 The role that financial education companies play in participant behavior in 401(k) plans (2004, November). Ernst & Young LLP Human Capital Practice, 13. 4 iii 7 finance topics to over 24,000 consumers and written over 1,500 newspaper articles. She is the author of Investing On A Shoestring and Saving On A Shoestring and co-author of Money Talk: A Financial Guide For Women. O'Neill researches relationships between financial well-being and health. v Kathy Prochaska-Cue, Associate Professor, University of Nebraska-Lincoln, 137 Mabel Lee Hall, Lincoln NE 68588; Tele: 402-472-5517; E-mail: kprochaska-cue1@unl.edu. An extension family economics educator, Prochaska-Cue has worked with thousands of families one-on-one as a financial counselor, and authored numerous research and financial education publications. vi Aimee D. Prawitz, Associate Professor, School of Family, Consumer, & Nutrition Sciences, Northern Illinois University, DeKalb, IL 60115; Tele; 815-753-6344; E-mail: aprawitz@niu.edu. Prawitz teaches graduate research methods courses, serves as a member of the editorial board of the Journal of Consumer Affairs, and she is the editor of the Journal of Consumer Education. Prawitz researches consumer satisfaction with elderly American's housing choices, attitudes toward credit cards, consumer complaint processes, and financial distress. vii Frances C. Lawrence, Williams Alumni Professor, Louisiana State University, School of Human Ecology, Baton Rouge, LA 70803; Tele: 225-578-1726; E-mail: flawrence@lsu.edu. Lawrence teaches university finance and consumer economics courses at Louisiana State University. Her research related to poverty and college students' money management is nationally recognized. viii Rui Yao, Ph.D., Assistant Professor, South Dakota State University, Box 2275A, Brookings, SD 57007; Tele: 605-688-5009.Yao teaches financial planning and consumer affairs and has conducted research on retirement adequacy. ix Robert O. Weagley, Chair of the Department of Consumer and Family Economics at the University of Missouri - Columbia., University of Missouri; Tele: 573.882-9651; E-mail: weagleyr@missouri.edu. Weagley is a registered investment advisor with Sundvold Capital Management, LLC (www.sundvold.com), an asset management and retirement plan specialty firm. He is Vice President of Marketing and Public Relations for the Academy of Financial Services. x Robert L. Weisman, D.O., Associate Professor, Department of Psychiatry, University of Rochester Medical Center; Strong Ties, 2613 West Henrietta Road, Rochester, NY 14623; Tele: 585-275-0300; E-mail: Robert_Weisman@urmc.rochester.edu. Dr. Weisman has written and lectured on the impact of personal financial stress, depression and workplace performance. xi Glenn Carnathan, Jr., Senior Vice President & Chief Human Resources Officer, Saint Thomas Health Services, 618 Church Street, Suite 520, Nashville, TN 37219; Phone: 615-2846847; E-mail: gcarnath@stthomas.org; Web: www.sths.com. Carnathan is the national leader of a system-wide financial well-being initiative for Ascension Health, Saint Thomas' parent and the largest not-for-profit health system in the United States with over 100,000 employees. Recipient of 2004 HR Excellence Award (based on Malcolm Baldrige National Quality Award criteria) sponsored by the Nashville Area Chamber of Commerce. xii Stacy Schaus, CFP®, Founder, Hewitt Financial Services, Hewitt Associates LLC, Personal Finance Center, 100 Half Day Road, Lincolnshire, IL 60069; Tele: 847-442- 4698; E-mail: stacy.schaus@hewitt.com; Web: www.hewitt.com. Schaus developed the Defined Contribution AllianceTM with investment managers across the country and also built the investment consulting team to support this program. She is an investment-issues committee member with the Profit Sharing Council of America. Schaus has written a number of articles on investing, defined contribution trends, and personal finance issues, 8 has been quoted in major publications, and has appeared as a guest on financial shows aired by CNBC and CNNfn. Matthew D. Hutcheson, M.S., CPC, AIFA®, CRC, MPF®, Owner/CEO, Matthew D. Hutcheson, LLC, 15924 Quarry Road, Lake Oswego, Oregon 97035, USA; Tele: 503-968-9783; E-mail: matt@erisa-fiduciary.com. Hutcheson is an Independent Pension Fiduciary who serves as named fiduciary or committee member for corporations on the NYSE, NASDAQ and the Toronto Stock Exchanges. He also serves as fiduciary or consultant conducting fiduciary audits, reviews and fee studies for privately held employers. Hutcheson is co-founder and Secretary/Treasurer of the ERISA Fiduciary Guild. xiv David H. McKinley, Managing Director, McKinley Investment Group, 2000 Main Street, Wheeling, WV 26003, USA; Tele: 304-230-2400; E-mail: dmckinley@wachoviafinet.com; Web: www.mckinley.wbsec.com; Mr. McKinley has worked in the financial planning and investment management industry since 1990. Prior to forming the McKinley Investment Group, Mr. McKinley was vice president of investments at a national investment firm, an investment analyst with a regional bank and trust's investment department, and assisted in managing the brokerage division of the same firm. He is quite knowledgeable on the topic of financial distressed employees. xv Marvin J. Brook, Manager/Controller Finance, San Francisco Performance Cluster, Northern California Division, United States Postal Service, P.O box 884474, San Francisco, CA 94188-4474; Tele: 415-550-5439; E-mail: marvin.j.brook@usps.gov. Brook develops and delivers financial education programs, including newsletters, videos and workshop presentations. xiii Brook has seen first hand the positive effects on employees when their financial situations improve. 9 Media Contact Information for Other Personal Finance Experts Wanting to Comment on These Research Findings Michael McAuliffe, President and CEO, Family Credit Counseling Service, 4306 Charles Street, Rockford, IL 61108; Tele: 800-994-3328, X-128; E-mail: michael.mcauliffe@familycredit.org; Web: www.familycredit.org/. Michael McAuliffe is a noted expert on personal financial planning and consumer debt and co-founder of Family Credit Counseling Service. He has assisted thousands of individuals and families with credit, debt, and money management problems. Dismayed that most credit counselors would remove the tithe from the budget of those in need, he formed a Non-Profit credit counseling agency based on Biblical teaching. He has contributed to numerous print publications and broadcast outlets. Family Credit Counseling sponsored a national poll on financial distress in December 2004. b David C. Jones, Ph.D., President, Association of Independent Consumer Credit Counseling Agencies, 11350 Random Hills Road, Suite 800, Fairfax, VA 22030; Tele: 703-934-6118; Email: assoc@aiccca.org; Web: aiccca.org. Jones recently retired as President and CEO of a major national credit counseling and consumer education agency. He concentrates his efforts in support of the credit counseling industry, especially consumer education initiatives, and actively assists in the development of effective state and federal consumer protection regulations for the credit counseling industry. b Liz Davidson, CEO and Founder, Financial Finesse, 111 N. Sepulveda Boulevard, Suite 305, Manhattan Beach, CA 90266; Tele: 310-802-6855 or 866-733-2677, x355; E-Mail: media@financialfinesse.com; Web: www.financialfinesse.com/ffinesse/jsp/home.jsp. Davidson founded Financial Finesse in 1999 to address the need for unbiased financial resources for investors to educate themselves on investing and financial planning. Today, Financial Finesse provides unbiased full service financial education for over 350 organizations and their employees. She is passionate about financial education and is a prolific public speaker, and she has been invited to speak at the leading Human Resources and Benefits conferences across the country. b Ray E. Noftsinger, Founder of Harbour Credit Counseling Services, Inc; Financial and Estate Planner, 101 N. Lynnhaven Road, #300, Virginia Beach, VA 23452; Tele: 757-340-2564, x302; E-mail: rayn@40debts.org; Web: www.40debts.org. Noftsinger has been involved in financial planning for all income levels in various specialties. He started Harbour in 1996 with one client and his organization currently assists 15,000 families in elimination of unsecured personal debt. Former President and Board Member Association of Independent Consumer Credit Counseling Agencies. Testified at Department of Justice hearing regarding credit counseling capacity for prebankruptcy certification and education. b Michael Schiano, Vice President of Outreach, InCharge Education Foundation, 2121 Park Center Drive, Orlando, FL 32835; Tele: 407-532-5640; E-mail: mschiano@incharge.org; Web: InChargeFoundation.org. Schiano is a Certified Credit Counselor and author of Spend Your Way to Wealth. He writes the "Ask The DebtBuster" column for Military Money and Young Money magazines. He hosts a nationally syndicated financial improvement radio show heard across the U.S. each day, and he hosts The Military Money Minute broadcast worldwide on the Armed Forces Radio Network. b David A. Lander, Attorney, Thomson Coburn LLP, One US Bank Plaza, St. Louis, MO 63101; Tele: 314-552-6067; E-mail: DLANDER@thompsoncoburn.com. Lander's practice includes representation of secured creditors, mortgagees, unsecured creditors, and debtors and unsecured b 10 creditors' committees. Lander is the historian of the credit counseling industry and a student and teacher of consumer credit issues. b Benice B. Wilson, Ph.D., CFCS. Extension Resource Management Specialist, Alabama Cooperative Extension System, P.O. Box 967, Normal, AL 35762; E-Mail: bbwilson@aces.edu; Tele: 256-372-4969. Wilson develops, implements and evaluates educational projects and programs relative to family and consumer economics, and resource management for families, individuals, youth, and the general public with a focus on urban and nontraditional audiences. b Dennis Ackley, President, Ackley Associates, 612 SE Cumberland Drive, Lees Summit, MO 64063; Tele: 816-695-4808; E-mail: dennisackley@hotmail.com; Web: DennisAckley.com. Ackley has been writing and speaking for more than a dozen years about how the current approach to retirement education does not and cannot work because it ignores essential elements needed to help adults become personally motivated to learn how to define, pursue, and achieve their personal retirement dream. In addition, until retirement education providers are required to have meaningful success measures that are tied directly to the individual's success, more Americans are doomed to fail to achieve their retirement income needs. b Steven S. Shagrin, JD, CFP®, CRPC®, CRC®, CELP, President, Planning For Life, 4657 Logangate Road, Youngstown, OH 44505-1713; Tele: 330-727-0444/888-456-4777; E-mail: Shags@PlanningForLife.info; Web: www.PlanningForLife.info. Shagrin is past president of the International Society for Retirement & Life Planning. Editor of Facts About Retiring in the United States (2001, HW Wilson Co.), and author of forthcoming Managing My Life: Managing My Money, (2005, Publications for Heart and Spirit Inc.) b Al Otto, AIF®, Co-Founder, White Horse Advisors, LLC, 6151 Powers Ferry Road, Suite 400, Atlanta, GA 30339; Tele: 678.322.3020; E-mail: al.otto@whitehorseadvisors.com; Web: www.whitehorseadvisors.com. Otto is a leader in the retirement planning industry and an expert on fees in retirement plans. He has contributed writings and been quoted in publications such as Plan Sponsor Magazine, Employee Benefit News and Employee Benefit Plan Review. Otto recently completed an audio CD entitled "Lost Money In Your Retirement Plan." Thomas R. Watson, President/CEO, Watson Communications International, Inc., 1809 NW Loop 281, Suite 100-160, Longview, TX 75604, USA; Tele: 903-758-0855; E-mail: tom@watson-training.com; Web: www.watson-training.com. Dr. Watson is the author of the soon to be published, The Great American Debt Opportunity: Turning Debt into Wealth. b Bill Keenan, Author, Financial Coach and Radio Host, 1129 Emerson Court, Suite B, Burnsville, MN 55337; Tele: 952-200-9019; E-mail: billk@debtfreeroad.com; Web: www.debtfreeroad.com. As the author of Spend Smart, Creating Wealth with no Room in your Budget, the co-author of Invest in Your Debt and host of Financial Fitness he has helped thousands of families discover how to achieve financial freedom by first becoming debt free. b David L. Ireland, Author and Professional Speaker; Retired Eastman Kodak executive, founder and President of Invest In Your Debt, Inc., 8005 Evadean Circle, Austin, Texas 78745; Tele: 512447-1990; E-Mail: IYD@InvestinyourDebt.com; Web: www.InvestinyourDebt.com. Ireland's Invest in Your Debt book shows that the most effective way to achieve financial freedom is to invest in ones debt and receive a risk-free, tax-free, double-digit return on ones debt investment. He lectures to employees in corporations, students at colleges and people in churches on the perils of and solutions to personal debt. b Brooks Hamilton, JD, Attorney-at-Law and a Master Pension Fiduciary, Brooks Hamilton & Partners, 38 Vista Hermosa, Santa Fe, NM 87506; Tele: 972-839-5260; E-mail: bhamilton@brookshamilton.com; Web: www.brookshamilton.com. Hamilton is Co-founder The b 11 REVERE Coalition, and co-founder and President of the ERISA Fiduciary Guild. Hamilton continues to be appointed as Independent Fiduciary by federal courts to assume fiduciary responsibility for retirement plans whose fiduciaries have failed in their responsibilities. Has appeared on CBS Evening News, CNBC, and in many newspapers throughout the country. b Kelly L. Reese, ChFC®, President, Financial Freedom Society, Inc., 14906 Winding Creek Court, Building A, Tampa, FL 33613; Tele: 813-960-3131; E-mail: elder@ffsi.com. Reese is a Christian Stewardship Counselor and author of The Art of Achieving Financial Freedom. He serves as a member of the board of the Christian Counseling Foundation. b Blanchard D. Warren, Seminar Leader and owner of Debts To Wealth, 5A Johns Avenue, Medfield, MA 02052; Tele: 508-359-4769; E-mail: webmaster@debtstowealth.com; Web: www.debtstowealth.com. Warren teaches a three-hour seminar about a system to eliminate all debt. 12 Appendix: Summary of Research Findings on Financial Distress and Dissatisfaction The contents of this Appendix are arranged as follows: Dissatisfaction with Financial Situation, Stress About Personal Finances, Living Paycheck-to-Paycheck, Stress About Retirement, Lack of Confidence About Ability to Manage Personal Finances, Health and Stress About Personal Finances are Related, and Distress About Health Care Costs and Bills. Dissatisfaction with Financial Situation · Bankrate.com Study. Bankrate.com (2003) conducted a Financial Literacy Study and found that 28% of people reported a lack of satisfaction with their finances. Sixteen percent of those surveyed were "not satisfied at all" with their personal financial situation and 12% were "not too satisfied." Describing their feelings when dealing with their personal finances, 24% in the Bankrate.com study reported they were "frustrated" and 10% were "confused." Asked how regularly they keep an emergency fund of at least 3 months' living expenses, 29% said they rarely or never did. Thirty-seven percent agreed with the statement that they could not afford to put money away for an emergency, with 55% saying they were very or somewhat concerned about an emergency fund. A quarter (24%) agreed with the statement that they would not be able to stick to a budget if they had one. Thirty percent reported they were very concerned or somewhat concerned right now that they are not able to pay their mortgage or rent, 29% were similarly concerned about being able to pay their credit card bills, and 45% were concerned about being able to put away enough for their retirement. · The semi-annual Principal Financial Well-Being Indexsm (The Principal, 2004; Principal Financial Well-Being, 2004) of American workers (at firms with 101,000 employees) reveals that, using a 5-point scale, 3 out of 4 employees (78%) are very concerned about their long-term financial future. Only 26% agreed with the statement "I am extremely happy about my current financial well-being;" 24% were neutral and 50% disagreed. A 2003 Principal study (Principal, 2003) found that half of those who expected a tax refund from the IRS planned to use the money to pay down short-term debt. · In a study of over 16,000 employees who lived in eight geographic regions of the United States employed by a large insurance company (Hira & Itote, 2001), there were substantial numbers of people who were dissatisfied with various aspects of their personal finances. Those reporting being very dissatisfied or dissatisfied on the following satisfaction indicators: ability to get ahead - 25.6%; use of money ­ 22.3%; long-term financial goals ­ 29.7%; meeting unexpected expenses ­ 34.5%; and unpaid balances on credit cards ­ 41.3%. · A number of studies that collected data from various segments of the population found that between 21.3 and 52.6% of respondents describe themselves as "dissatisfied" with their present financial situation. The respondents marked 13 · choices 1 through 4 on a 10-point stair-step scale of satisfaction with one's present financial situation. Those who are satisfied were instructed to mark the higher steps, choices 6 through 10. Those who marked choices 4 and 5 were in the middle range of satisfaction. o Grable & Joo (2003) found 34.7% of faculty and staff working for two universities in two mid-western states were dissatisfied. o Kim (2000) found that 41.5% of white-collar workers in three mid-western states were dissatisfied. o Kratzer, Brunson, Kim, Garman, & Joo (1998) study of well-paid blue-collar manufacturing workers in the south found 21.3% were dissatisfied with their financial situation. o Kim, Bagwell & Garman (1998) found white-collar workers in the corporate headquarters of a New York City advertising firm had a mean score of 5.7 on a 10-point scale where 10 is the highest level of financial satisfaction. o Joo (1998) found 52.6% of clerical workers in an eastern state were dissatisfied. o A 1990 study (Porter; Porter & Garman, 1993) of a random sample of taxpayers in an eastern state using a scale similar to Joo (1998) but with 11points (highest score was best) found that 30.8% marked themselves as dissatisfied marking choices 1 through 5) with their personal financial situation. The mean was 6.5, showing a slight skewness toward positive perceived financial well-being, with a standard deviation of 2.2. o A 2004 study by the InCharge Education Foundation (Sorhaindo & Garman, 2005) found that 28% of a nationally representative sample of working adults reported their overall financial distress/financial well-being was below average. This finding is consistent with other studies on financial satisfaction/dissatisfaction, financial distress and financial well-being. The general population typically reports a slight skewness towards positive scores, or above average, when asked about their financial condition. In other words, on a 10-point scale people typically report average scores of 5.7, 5.9, 6.2, or slightly higher where 10 is the highest or best score. Most working adults are satisfied with the personal finances and are not financially dissatisfied or distressed. Credit counseling clients are one of the most clear-cut populations of financially dissatisfied consumers. These are people who contact a non-profit credit counseling organization seeking assistance and advice in budgeting, credit and money management. Subjective measures, like a 10-point stair-step scale of satisfaction with one's present financial situation are often utilized in research (Festinger, 1957; Garman, 1999; Garman, Camp, Kim, Bagwell, Baffi, & Redican, 1999; Kim, 2000; Kim, Bagwell, & Garman, 1998; Kim, 2000; Kim, Garman & Sorhaindo, 2003; Porter, 1990; Winter & Morris, 1983). Self-reported numbers of these clients show that 75% to 90% expressed some high degree of financial dissatisfaction and distress owing to their personal financial affairs 14 · · · · · (Garman et al, 1999; Garman, 2001). This level of financial dissatisfaction and distress is much higher than in the general population. Garman (2004b) estimates that approximately 3 million people annually (not 9 million as cited in Schmitt, Timmons, and Cady in 2001) contact a non-profit consumer credit counseling service seeking assistance with their budgeting, money and credit problems. Over a six-year time period that amounts to 18 million financially troubled consumers who contacted a credit counseling agency.6 Since financial dissatisfaction does not go away for many of those who contact a consumer credit counseling agency, the authors of this report estimate that it is likely that approximately one-third of those who sought assistance from a credit counseling during the last six years are still struggling financially. Thus, we calculate that 33% of the 18 million financially dissatisfied and distressed who contacted a credit counseling agency in the past six years, or 6 million people, currently remain seriously dissatisfied with their personal financial situation. Bankruptcy represents another substantial group of financially dissatisfied adults. For the calendar year of 2004, about 1.5 million (1,563,145) consumers filed for personal bankruptcy (Bankruptcy Statistics, 2005). Sullivan (2003) notes that the genuine annual bankruptcy figures are really much higher because of jointly filed bankruptcy petitioners. Bankruptcy expert Elizabeth Warren agrees (Garman, 2005, March 17). Based on the 1,563,145 filings in 2004, Warren notes that there were 475,712 cases of joint petitions. That means, notes Warren, that the 2004 multiplier is about 1.304. (In 2001, the multiplier was 1.319 [see Warren, Thorne, & Sullivan, 2001].) Using Warren's multiplier of 1.304 for the number of married couples filing for bankruptcy, the number of adults impacted by bankruptcy in 2004 was 2,038,341 (1.304 X 1,563,145). These experts also observe that bankruptcies really affect a total of about 5 million people annually in households when one counts both the petitioners' spouses as well as their children. Combining data from the American Bankruptcy Institute and previous annual data (Quarterly U.S. Bankruptcy Statistics, 2005) show that there have been 8,678,826 non-business, or personal, bankruptcies for the six-year period between 1999 and 2004. Since consumers cannot declare bankruptcy again for six years, these numbers are mutually exclusive. Applying Warren's proportional estimate of bankruptcies with spouses (1.304) means that over 11 million (11,317,189 = 1.304 X 8,678,826) adults declared bankruptcy during the past six years. Next year more than a million consumers (1,281,360) who declared bankruptcy six years ago in 1990 will be eligible again, and that point has been observed by others (Bankruptcy boomerang, 2003). Since financial dissatisfaction just does not simply disappear for many of those who file bankruptcy, the authors of this report estimate that it is likely that approximately 50% of those who filed for bankruptcy during the last six years are Fewer than 10% of credit counseling clients declare personal bankruptcy (Elliehasuen, Lundquist, & Staten, 2003; Staten, Elliehausen, & Lundquist, 2002). 6 15 still struggling financially and are dissatisfied with their personal financial situations. Thus, we calculate that half of the 11,317,189 adults who filed for bankruptcy in the past six years, or 5.6 million people (11,317,189/0.5), currently remain seriously financially dissatisfied. Stress About Personal Finances · An American Express survey found that 60% of working Americans were experiencing moderate (41%) to high (19%) levels of financial stress. Thirtynine percent were stressed by dealing with debts and 38% were stressed by paying regular bills (2nd American Express, 2004; Field & Vogt, 2004). The stress levels by income groups were: 30% of people with incomes up to $30,000; 22% $30,000-$50,000; 22% $50,000-$75,000; 17% $75,000$100,000; and 9% of those with incomes of $100,000 or more. · In a MetLife Study of Employee Benefit Trends (2003), 69% of employees surveyed were concerned with "having enough money to make ends meet." · A Roper ASW survey for Money magazine found that 6 in 10 respondents say they worry a lot or sometimes about their finances, about twice as many as worry about their self-esteem, jobs, marriage, and friendships (Chatzky, 2003). · A Caravan Saray poll (2004) found nearly three in four adults age 18-64 (72%) say paying current bills (54%) or paying off debt (18%) are usually their main financial concerns each month. · A Consumer Federation of America and Credit Union National Association poll (Consumers say, 2003) found 46% of adults said they were concerned about meeting all their monthly payments on all types of debt other than their mortgage, and half of those, 28%, reported they were very concerned. When asked what they would do with a $5,000 windfall, 46% said they would pay down some debt. · A Family Credit Counseling Service national survey (Research Report: Financial Stress Survey, 2004; Kidd, 2005) of people carrying credit cards asked what they would do with an unexpected $1,000 gift, and three-quarters (73.3%) said they would use it to pay down debt. · Fifty percent of middle-income Americans ($25,000 to $75,000) revealed they were worried about their financial condition, according to a poll by Consumer Federation of America (Middle Americans become, 2003). More than twothirds (69%) of those with incomes under $25,000 reported they were worried about their finances, and they are likely to have too little savings and too little income. · A ComPsych survey (Reality of financial trouble, 2004) of employees' financial health found half (49%) doing poorly: 27% noted "I am one major setback away from financial disaster" and 22% marked "I am worse off than last year, with less savings/income and more debt than before." The remaining half (51%) reported they were the same or better off than before: "I am about 16 · · · · · · · the same as last year, with no changes in savings/income or debt" (23%); "I am better off than last year, with more savings/income and less debt that before" (22%); and "I am in the best financial shape ever, with bountiful reserves and very little debt" (6%). A ComPsych survey of employees found that personal finances cause stress in 36% of employees (ComPsych's Tell-It-Now, 2001). Financial Finesse, a financial education company with approximately 300 different companies as clients and 250,000 employees, regularly received telephone calls from employees seeking assistance. Thirty-nine percent of callers requested assistance with consumer debts and 17% called about budgeting and savings (Garman, 2005, March 22). These numbers were similar to the previous year (Debt, retirement, 2003). A Gallup Organization poll (Moore, 2004) found that 17% of Americans are very or moderately worried about paying the minimum amount due on their credit cards. Twenty-two percent were not too worried, and 46% were not worried at all. A Family Credit Counseling Service national survey (Research Report: Financial Stress Survey, 2004) found that the biggest financial fear of people carrying credit cards was that they'll never get out of debt (32.5%). A WoldWIT and E-Duction survey of 10,000 professional women, it was found that 90% of women who pay more than five bills while at work are moderately or considerably stressed about personal finances (People who pay, 2003). Twenty-seven percent of respondents to a Los Angeles Times survey reported that their personal finances were shaky, and 40% said they had difficulty making car and insurance payments and other installment loans (Atkinson, 2001). Employees who are financially distressed sometimes bring their financial troubles to the workplace with the result being reduced productivity. Researchers have determined that approximately15% of workers are so financially distressed that it negatively impacts the employer's bottom line (Garman, Leech & Grable, 1996). The full extent of the costs is unknown. Living Paycheck-to-Paycheck · The MetLife Study of Employee Benefit Trends (2004) found that 28% of full-time employees report they sometimes have trouble paying their monthly bills, and 42% say they live paycheck to paycheck. The parallel 2003 MetLife Study of Employee Benefit Trends (2003) found that 52% of employees surveyed report they manage their finances by living paycheck-to-paycheck. Among those with a household income of less than $30,000, 87% say they live paycheck-to-paycheck and 65% of those earning $30,000 to $49,999 say the same. Among people who earn $75,000 or more a year, 34% live on the 17 · · · · edge financially (Yip, 2003). More 21- to 30-year-olds than 41 to 50-year-olds live paycheck to paycheck; however, 51% of those nearing or in the traditional retirement age range of 61 to 69 do, too. In a CIGNA survey (2004), 39% of employees feel they are "underwater" financially, stating that they can barely keep up with bills. As a result of these bills, many people reported they had little discretionary income to save for college or retirement. More than two-thirds (68%) of parents with children under age 18 are extremely or very concerned about having enough money for their children's education. A Caravan poll found that nearly three in four adults age 18-64 (72%) said paying current bills (54%) or paying off debt (18%) were usually their main financial concerns each month (Caravan Saray, 2003). Women (78%) were more likely than men (65%) to be focused on paying current bills or debts. In a study of 16,000 employees working for a large insurance company who lived in eight geographic regions of the United States (Hira & Itote, 2001), over half (55.9%) reported that they handled large or unexpected expenses by using credit cards. Other coping mechanisms were borrowing from family or friends (16.4%) or not paying other bills (17.9%). Data on living paycheck-to-paycheck go back a few years. A revealing question on a 1996 poll reported by The Washington Post (Chandler & Morin, 1996) found that 75% of Americans recently faced at least one significant financial problem (e.g., unable to save for future needs, delaying medical care, communications from a collection company). A poll reported that same year in USA Today (Coping, 1996) noted that two-thirds of Americans indicated they had trouble paying bills and worried about money. Stress About Retirement. · The American Express Retirement Services' 2004 National Survey on Financial Stress and Retirement Savings found that 44% were stressed about retirement. The stress levels by income groups were: 30% up to $30,000; 22% $30,000-$50,000; 22% $50,000-$75,0000; 17% $75,000-$100,000; and 9% $100,000 or more (Field & Vogt, 2004). The American Express study found that people's financial stress in 2004 is very similar to what was found in 2002. In 2004, 22% reported that they were either very interested (14%) or somewhat interested (7%) in financial advice on debt consolidation (21% in 2002). · A Hewitt Associates survey of 5,000 employees (Survey Findings: Your Financial, 2005) found that "employees lack very basic knowledge of their 401(k) plans." Half of workers "say they are less than knowledgeable or not knowledgeable about investing." · A MetLife study (With fear of outliving, 2004) found that one out of four employees (25%) have not done any specific retirement planning. Thirty-one percent say they are "on track" for reaching retirement goals, 30% are 18 · · · · · · somewhat behind and 23% are significantly behind. Nearly half (48%) believe they will have to work full- or part-time in retirement. Among employees in the 41-to-60 year age group, only 4% have reached their retirement goals. In this age group, 48% of employees say that outliving their savings as the greatest retirement fear. Confirming findings are in the 2004 MetLife Study of Employee Benefit Trends (2004) of employees as similar numbers report being extremely concerned about outliving their retirement money and only 24% report they are on track for reaching retirement savings goals. A poll by Putnam Investments found that nearly half (46%) of current workers are resigned to accepting that they will struggle financially in retirement (Many workers, 2004), and another 13% believe they cannot amass enough to retire so they are not going to save for retirement at all. In a CIGNA (2004) survey of retirement awareness, 47% said they were either confused, apathetic or felt their retirement planning situation was futile. A Principal Financial Group survey of American workers found the average expected retirement age was 65, although 20% did not plan on retiring (The Principal, 2004). More than half (53%) expected that their standard of living in retirement would decline. Seven in ten (71%) did not have a plan for transitioning retirement savings into a stream of income in retirement. A Thrivent study found that more than half of non-retired Americans had either not yet begun saving for retirement or reported they had saved less than $10,000 (Thrivent Financial, 2004). Sixty-two percent had never estimated how much they needed to save for retirement. Sixty percent of adults were not confident that Social Security would exist when they retire (Caravan Saray, 2004). The percentages lacking confidence varied for different age groups: 55-64 years (30%), 45-54 (55%), 35-44 (70%), 25-34 (76%), and 18-24 (53%). One professional woman summed up the challenge of saving for retirement with the comment that "Life just gets in the way of saving" (Duka, 2004). Lack of Confidence About Ability to Manage Personal Finances · An AARP study (Block, 2004) found that more than a quarter of baby boomers described themselves as worse money managers than their parents. · A Roper Starch Worldwide survey (Stoneman, 1998) found 82% of lowincome adults lacked confidence in their ability to plan for their family's future. Even 64% of those in the highest income group lacked confidence. Health and Stress About Personal Finances are Related · Health is negatively affected by financial stress (Drentea & Lavrakas, 2002; Hendrix, Spencer & Gibson, 1994; Peirce, Frone, Russell & Cooper, 1994). · Financial stress negatively impacts both physical and psychological health (Kim & Garman, 2003; O'Neill, Xiao, Sorhaindo, & Garman, in press). 19 · · · · · · Both the amount of credit card debt and stress regarding overall debt are associated with health (Drentea & Lavarkas, 2000). A poor debt-to-income ratio is associated with poor health. Having more stress about overall debt was associated with worse health. Consumer indebtedness for such things as housing, home entertainment systems, appliances, vehicles, and student loans may be a "chronic strain on an individual's financial well-being, and ultimately emotional well-being" (Drentea & Lavarkas, 2000). Perceived financial security has been found to be a significant predictor of emotional distress (Jackson, 1997). A Family Credit Counseling Service survey (Research Report: Financial Stress Survey, 2004) of a nationally representative sample of 1,590 adults who carry credit cards found that half (50.8%) said that at times they can't sleep because of stresses about personal finances. Over one-third said it was hard to concentrate. Another 29.1% said they sometimes feel sick to their stomachs, and 26.3% reported that they get headaches. Almost one in ten (8.1%) reported they went to a doctor because of their financial distresses. Onequarter reported never having any physical effects. One study (Kim, Garman & Sorhaindo, 2003a 2003b) examined the relationships among credit counseling, financial behaviors, financial stressor events, perceived financial well-being, and health among clients of a large credit counseling organization in a one-year follow-up study over a time period of 18 months. Credit counseling and participation in a debt management program, both designed to improve one's personal finances, reduced financial stress and improved people's perceived financial well-being and health. A study by Bagwell (2000) found more than half (57%) of new credit counseling clients reported their health status being negatively affected by their financial problems. Of those, 52% reported general stress, anxiety and worry, 23% reported headaches, 18% general health problems, 13% sleeping disorders, and 12% stomach problems. An illustrative client comment was "I feel very stressed mainly because I do not see any solution to our financial situation. Headaches, depression and poor diet is [sic] the results of worrying." Another wrote, "Yes, I lose a lot of sleep. I get all these problems on my mind. Feel sick a lot, at times, when I do sleep some it's the first think [sic] on my mind and I feel so depressed, I don't even want to get out of bed." Examples of specific health problems associated with finances that were reported by financially distressed employees (O'Neill, Xiao, Sorhaindo, & Garman, in press) are: "Staying behind on bills made me very nervous." "I can't sleep because of worrying about paying bills." "Caused anxiety and depression to be worse than it was." "Stressed out, overwhelmed with anxiety." "Could not afford to go to doctor when I was sick." 20 · · "Can't afford to eat healthier." "I have high blood pressure from the stress." "Cost of medication." "I have been depressed and gained weight." "Stress, catch sickness easier." A study of a large number of new credit counseling clients found they reported poorer health than the general population (Garman, 2004a). Forty percent of new credit counseling clients report their health has been negatively affected by their financial problems. Three-quarters of this 40% specified the nature of their problem, and the most cited problem was stress followed by sleep disorders. The range of health for credit counseling clients was: very good, 24%; good, 43%; satisfactory, 27%; and poor, 7% (Garman, 2004a). This contrasts with the health reported by the general population by the Gallup Organization (Personal health issues, 2001): Excellent, 29%; good, 49%; only fair, 17%; and poor, 5%. Comparing the responses on the two 4-point continuum scales with the Gallup categories provides the following: Excellent Good Fair Poor Health Health Health Health 29% 49% 17% 5% 24% 43% 27% 7% General Population Credit Counseling Clients · · Encouragingly, 43% report that health improved soon after enrolling in a debt management program of a credit-counseling agency (O'Neill, et al, in press). . The relationship between poor health and serious financial distress suggests provocative clues that should be further investigated, particularly by the health care industry, employers, governments, and others involved in paying the costs for medical care. Distress About Health Care Costs and Bills · "One-half of Americans say they have found medical bills to be a source of financial stress within the past two years (18% major source; 32% minor source." Data are from the 2003 Health Confidence Survey conducted by the Employee Benefit Research Institute and Mathew Greenwald and Associates, Inc., using data from their 1998 through 2003 Health Confidence Surveys (2003 Health Confidence Survey). Data from the most recent Health Confidence Survey (2004 Health Confidence Survey) found one-quarter of people experiencing medical care cost increases reduced retirement savings contributions because of medical costs. One-quarter reports, "They have used up most or all of their savings to pay health bills." · The Employee Benefits Research Institute report titled Financial Stress Related to Health Care Costs (Financial Stress Related, 2003) using 21 · · · information from the 2003 Health Confidence Survey found that more than 4 in 10 (41% ­ up from 35% in 2002) are "not too confident" or "not at all confident" about being able to afford health care in the next 10 years or until age 65 when they become eligible for Medicare. Nearly half (up from 44% in 2002) are "not too" or "not at all" confident in their ability to afford health care once they are eligible for Medicare, without financial hardship. The results of a study on increasing health care costs by American Express Retirement Services (Field & Vogt, 2001) found that "73% of workers responded they were either somewhat or very concerned about how rising health care costs might impact their ability to fund their retirement and other financial goals." Over half say that the impact of rising health care costs has either considerably (15%) or somewhat (38%) increased their financial stress level. A 2003 American Express study (Field & Vogt) again reported that overall health care expense increases were having a measurable impact on the level of personal financial stress, with 54% indicating at least "some" or "considerable" increases in financial stress. 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Staten, M.S., Elliehausen, G., & Lundquist, E.C. (2002). The impact of credit counseling on subsequent borrower credit usage and payment behavior (Monograph No. 36),Washington, D.C.: Georgetown University, Credit Research Center. Stewart, W.F., Ricci, J.A., Chee, E., Morganstein, D., &Lipton, R. (2003). Lost productive time and cost due to common pain conditions in the US workforce. The Journal of the American Medical Association, 290(18), 2443-2454. Stoneman, B. (1998, February). High finance, hard sell. American Demographics, 43-47. Study finds pain at work costs billions (2003, November 18). CNN.com. Taken on November 20, 2003 from http://www.cnn.com/2003/HEALTH/11/11/pain.costs.ap/. Study: Workers in pain don't excel (2003, November 11). Plan Sponsor. com. Taken on November 13, 2003 from http://www.plansponsor.com/pi_type10/?RECORD_ID=23122. Sullivan, T. (2003, November 20). Bankruptcy and consumer credit in America. 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Norton Bankruptcy Law Advisor, Issue # 9A. Warren, E., & Tyagi, A. W. (2003). The Two-Income Trap: Why Middle-Class Mothers and Fathers are Going Broke. NY: Basic Books. Warren, E., & Tyagi, A. W. (2004, February 15). Digging out of debt. Orlando Sentinel, G-1. Weisman, R. (2002). Personal financial stress, depression and workplace performance. Financial stress and workplace performance: Developing employer-credit union partnerships (pp51-65). A Colloquium at the University of Wisconsin-Madison. Madison, WI: Center for Credit Union Innovation and Filene Research Institute. Winter, M., & Morris, E.W. (1983). Used resources, met demands and satisfaction. Paper presented at the annual meeting of NCR-116 (Family Resource Management), Ames: IA. With fear of outliving retirement savings, nearly half of all employees anticipate working during their golden years (2004, February 4). Press release, MetLife. Taken on March 4, 2004 from http://www.metlife.com/applications/corporate/wps/cda/pagegenerator/0,1674,0250. www.myfico.com. Wolk, M. (2004, January 16). The pitfalls of plastic: Credit-dependent Americans pushed to the edge. MSNBC's Eye on the Economy. Zuckerman, M. B. (2004, March 15). America's high anxiety. U.S. News & World Report. Taken on March 30, 2004 from http://www.usnews.com/usnews/opinion/articles/040315/15edit.htm. 30 Internet Resources to Build Wealth Barbara O'Neill, Ph.D., CFP® Extension Specialist in Financial Resource Management March 23, 2005 Below is a list of federal government or non-profit organization online resources that can help users build wealth: America Saves www.americasaves.org Provides information about savings topics such as finding money to save, building wealth through homeownership, and compound interest. Information is also provided about U.S. savings campaigns. American Savings Education Council/Choose to Save Partnership www.asec.org (Click on "Savings Tools") Includes downloadable publications and interactive online tools such as the Ballpark Estimate retirement savings calculation worksheet, the Retirement Personality Profiler, and financial planning calculators. Certified Financial Planner Board of Standards, Inc. (CFP Board) www.cfp-board.org Provides consumer information about financial planning topics and information about how to find a certified financial planner in a particular geographic region. Federal Citizen Information Center www.pueblo.gsa.gov Provides an online source of federal government publications, including both health and personal finance topics. Financial Security in Later Life Web Site www.csrees.usda.gov/fsll (Click on "Tools For Consumers") Cooperative Extension System site includes links to a variety of online financial education resources with a focus on planning for retirement and long-term care. Guidebook to Help Late Savers Prepare for Retirement www.nefe.org/latesavers/index.html Provides a downloadable 51-page booklet that describes over a dozen catch-up strategies for middle-aged late savers who are trying to make up for lost time. Internal Revenue Service Web Site www.irs.gov 31 Provides information on federal income tax topics and downloadable forms and publications. Investing For Your Future www.investing.rutgers.edu Cooperative Extension System basic investing home study course includes 11 units on investment topics, a study guide, monthly investment messages, and links. Investment Company Institute www.ici.org Provides information about mutual fund investing from the industry's trade association. My Money.Gov Web Site www.mymoney.gov Financial Literacy and Education Commission website contains financial information in English and Spanish from a variety of federal government agencies on the following personal finance topics: budgeting and taxes, credit, financial planning, home ownership, home equity, mortgages, paying for education, privacy and fraud, responding to life events, retirement planning, saving and investing, and starting a small business. Users can download these publications from the links provided and can also order a free My Money Toolkit, sent via U.S. mail. National Association of Investors Corporation www.better-investing.org NAIC website provides information about investing in stock and resource materials for investment clubs. National Endowment For Financial Education www.nefe.org NEFE website contains information about NEFE financial education programs and publications for youth and adults. National Foundation for Consumer Credit www.nfcc.org Includes information about credit-related topics and information about how to find a nonprofit credit-counseling agency in a particular geographic region. PowerPay http://extension.usu.edu/cooperative/powerpay/ or http://powerpay.org Utah State University Cooperative Extension website provides a debt reduction calendar and estimated time and cost savings for users who continue to pay the same amount to creditors monthly. When a creditor is repaid, the monthly payment that was previously paid is added to the monthly payment due to a remaining creditor. Users input their 32 personal data (e.g., name of creditors, outstanding balance, monthly payment, and interest rate) for a personalized analysis. Rutgers Cooperative Research and Extension Money and Investing Web Site www.rce.rutgers.edu/money2000 Includes dozens of downloadable personal finance publications, online presentations, self-assessment quizzes, conference summaries, federal marginal tax rate tables, and other financial education resources for consumers. Save For Your Future www.saveforyourfuture.org or www.asec.org/sfyf Website includes publications, posters, and online calculators from a 2003 national campaign to promote retirement savings. U.S. Savings Bonds Web Site www.savingsbonds.gov or www.easysaver.gov Provides information about how to purchase U.S. savings bonds and current rates of return. 33");sQ1[58]=new Array("http://www.personalfinancefoundation.org/Teach to the Test.pdf","Workplace Financial Program Providers Should Teach to the","","Should Workplace Financial Program Providers Teach to the "Test of Financial Health"? Yes! If a financial program is to be successful, it should "teach to the test." The Personal Financial Well-Being (PFW) scale is a valid and reliable measure of "financial health." Both the communications efforts to reach employees and the financial literacy program itself should aim to help employees reduce their financial distress and increase financial well-being, and that is what the PFW measures. Employers may use the PFW (with permission) at no cost. The Personal Finance Employee Education Foundation does not provide financial programs; instead we recommend the best. The Goal of Quality Workplace Financial Programs A workplace financial program that accomplishes the goal to increase employee financial well-being will over time result in more and more employees reporting higher financial well-being. Every year perhaps 10%, 20% or even 30% of employees should be able to self-report higher scores on their perceptions about their personal finances. These employees are those who are more satisfied with their financial well-being and less stressed about financial matters. These are good workers, too. If the measured financial health of employees is not rising over time, the employer should consider firing the primary financial program provider. Alternatively, perhaps the employer could give the provider one year to make improvements in their communications and financial program. The provider can make needed changes, they should, and if they can't they quickly will learn how. After all the financial provider work for the employer and they should deliver what is asked. A quality financial program should have multiple components to truly reach all the employees and provide the best resources to help employees improve their financial lives. Teach to the test: Aim to reduce employees' financial distress and improve their financial well-being. How? Communicate these key messages. The Key Messages of Quality Workplace Financial Programs 1. Emergency Savings. Without $500, $1,000 or $2,000 in emergency savings, depending upon the income of the employee, simply living life and its frequent financial challenges, will continue to regularly wreck that person's finances...every year...forever. Having an emergency savings fund reduces financial distress. 2. Pay Down Bills. Employees who usually make the minimum payment or just a little more will never get out of credit card debt. One who owes $8,000 on credit cards at 18% interest and makes a 3% monthly payment will pay on that debt for 11 years--assuming they never put another charge on the card. Making progress reducing credit card balances reduces financial distress and increases financial well-being. 3. Spending Plan. Most employees do not make a budget or follow one. They have no spending plan. Employees who have some kind of written spending plan--no matter how elementary--are those who have more confidence about their personal finances. Having a spending plan reduces financial distress and increases financial well-being. 4. Benefits Selections. Six in10 employees make their selections among their employer-provided benefits in less than one hour; many take less time. Wisely made benefit choices help employees balance their budgets as well as find money to contribute to their retirement plan, frequently with no change in one's net pay. The result is more saving and better financial well-being. The Result of Providing Employees Quality Financial Programs When effectively communicated these key messages cause employees to live their everyday financial lives with more satisfaction as well as prepare well for a financially successful retirement. Quality Requires a Team of Financial Providers It is impossible for one primary financial provider no matter how excellent to offer employees easy access to all of the financial resources to genuinely help them change their financial lives for the better. It is widely understood that 401(k) education providers are not as successful as they should be since the great majority of employees are not saving enough for retirement. Many employees are living paycheck-to-paycheck and it is not just those with moderate or low incomes. Employers should offer employees the multiple services and products of a team of quality financial program providers who coordinate their services. Communications to employees on the key messages should regularly emphasize the availability of provider services such as credit counseling, credit union, benefits selection education, income tax preparation, speedily paying off a home mortgage, 401(k) education, and financial advice.");sQ1[59]=new Array("http://www.personalfinancefoundation.org/speeches/speeches-nsb.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Speeches National Speakers Bureau Please consider inviting a member of the PFEEF Board of Directors, the Board of Trustees, or Director of Research to make a speech. Click on " About Us" for contact information. Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[60]=new Array("http://www.personalfinancefoundation.org/speeches/Health Benefits Conf Expo 011707 FINAL.ppt","Tom Garman’s Thoughts on Employee Education","","Employee Personal Finances and Health Impact the Employer’s Bottom Line Presented to Health Benefits Conference & Expo Presented by E. Thomas Garman Personal Finance Employee Education Foundation January 17, 2008 Employers Already Know That Smoking is bad for employee health and the company’s bottom line Do Employers Also Know? The same is true of employees who have money worries Employee Personal Finances and the Bottom-line Financially illiterate adults do not manage their personal finances very well… And they do not save and invest enough for a financially successful retirement. THIS contributes to lower productivity as well as higher health care costs Employers Often Recognize These Issues But Do Nothing “You can lead a horse to water, but you can’t make it drink.” Let’s Talk About Employee’s Finances Employer’s Bottom-line USA System of Retirement Income Security The metaphor is a 3-legged stool: Social Security Employer provided pensions Personal savings USA Retirement Finances Defined-Benefit Retirement Pensions (DB Plan = Monthly checks for life) Most USA workers earn Social Security Administration credits during their working years, and retirees are eligible for a SSA defined-benefit pension Average today: $963 per month Aged adults who never worked and those with limited income and resources are eligible for SSA-administered Supplemental Security Income defined-benefit pension Average today: $466 per month Some working employees qualify for and may receive an employer-sponsored defined-benefit pension. Only 17% of today’s retirees get corporate defined-contribution pension Average today $641 per month) USA Retirement Finances Defined-Contribution Retirement Savings Plans (DC Plan = Lump sum at retirement to manage) Employer-sponsored voluntary retirement plans for individually accumulated savings, such as 401(k) and profit-sharing: Only 2 in 3 eligible employees join DB plans Of those who do participate, 7 in 10 are not saving enough for a financially successful retirement (Median balance=$58,000; Fidelity says $32,000) Observation Financing retirement in the USA today is the sole responsibility of the employee Realities of Saving for Retirement (All Are Negatives) Participation and deferral rates in USA retirement savings plans are inadequate Most are not saving enough for retirement Workplace education and advice programs have been less than successful Millions of employees say they cannot afford to save for retirement, and 1 in 4 say credit card debt is a reason Employees do not know how to help themselves Employers do not understand the value of providing their employees easy access to the best mix of quality financial programs “The lack of financial literacy–spending plans, credit management, and savings—is the major reason why employees do not save for retirement” The Financially Unhealthy 30 million American workers— 1 in 4—report they are seriously financially distressed and dissatisfied with their personal finances National Norms for Financial Well-Being on PFW Scale© (Mean=5.7; SD=2.4) (1-4: 30%) High distress (7-10: 42%) Low distress (5-6: 28%) Source: InCharge Education Foundation, National Norms on InCharge Financial Distress/Well-Being Scale© for General Adult Population. 1 Means “Overwhelming Financial Distress/Worst Financial Well-Being”; 10 Means “No Financial Distress/Excellent Financial Well-Being” ©Copyright by InCharge Education Foundation and E. Thomas Garman, 2004-2008. All rights reserved. 30% Are Failing Financially! (Scores of 1-4) 60% of Employees “Live Paycheck-to-Paycheck” And Do Not Save Enough for Retirement Credit card payments ($8K) $200-$300 month Vehicle payments ($15K) $400-$500 month College loan payments ($30K) $400-$600 month Child-care ($5-$12K) $400-$1200 month Mortgage loan payments $ Property taxes $ Homeowner’s insurance $ ½ do NOT budget 30-80% waste time at work on money issues Don’t give employees a raise! Offer help with money management problems. “Employees with money problems are like sharks swimming around the workplace taking bites out of the bottom line” Big Point “Financially unwell employees do not make the best decisions for themselves… or their employers” Not Engaged Passive Confused Anxious What Does Poor Financial Literacy Cost? Research says, “Every time someone on your work team brings his/her money worries to the job, workplace productivity drops” Pay no attention to the elephant! Can you recognize a financially stressed employee? No! Research Proves ALL These Factors are Correlated in the Ways Expected Personal Finances: Financial well-being Financial satisfaction Financial distress Financial stressor events Financial behaviors Credit card debt Credit card delinquencies Job Outcomes: Work satisfaction Pay satisfaction Absenteeism Presenteeism (cutting down on normal activities) Personal financial matters interfering with work Work time used to handle personal finances Health Which Purposefully Decreases Employee Financial Distress and Increases Financial Well-being? Salary increases? No Bonuses? No Most retirement education workshops? No Employee Assistance Programs? No Marriage counseling? No Employee Assistance Programs? No What Reduces Financial Distress and Increases Financial Well-Being? Employers Who Provide Employees Easy Access To Quality: Basic financial education Credit counseling Benefits information/education Credit union Retirement education Financial advice Bring together the basic financial resources to truly help employees. Estimated Annual Costs of Ignoring Financial Illiteracy © Lost productivity $450a Health care costs (poor health) 300b Subtotal = $750 Health care reimbursement (FICA) 92c Dependent care reimburse (FICA) 382d Traditional health plan choice 800e TOTAL $2,000+ ($7,982 - $1,690 = $6,292 - $800) “Employer cost for no action is $750 to $2,000+ per employee!” © Personal Finance Employee Education Foundation, 2008. Research Shows that Health and Personal Finances are Correlated Those with more financial distress report poor health.f Financially distressed employees have worst health than others.g Financially distressed workers (40–50%) report their financial problems cause their health woes.h Positive changes in financial behaviors are related to improved health.i How Can Employers Save $750 - $2,000+? Demand more from your current 401(k) financial education providers Insist they provide a coordinated quality program that emphasizes the basics of personal finance: Spending Plan Credit Management Saving It’s not a matter of money spent on financial education— it’s a matter of effectiveness! Financially Literate Employees Are Engaged With Money Issues Comparison shop Achieve short, medium and long term savings goals Match product selections with savings goals Enjoy average to above average financial well-being Aware Active Confident Motivated Results for Employees From Quality Financial Program Lower financial distress Increased financial well-being Better health Adequate retirement preparation Improved family relationships Gains in job performance Both Gain…When Employers Provide Employees With Quality Financial Programs Employee Employer The Big Point “Employers do not realize they can improve profits –and prove it– by providing employees easy access to quality financial education programs that improve personal financial behaviors” Personal Finance Employee Education Foundation “PFEEF Advocates Best Practices” Provide employers no-cost-to-use tools and expertise to detail the bottom-line benefits of quality financial programs Identify companies whose workplace programs genuinely improve employees’ personal financial behaviors and increase employer profits Use PFW to Benchmark Employee Personal Financial Well-Being Survey employees using the Personal Financial Well-Being (PFW) scale. PFW is 8-item questionnaire that measures financial distress and financial well-being. PFW is a peer-reviewed, published valid and reliable measure (over 20 years in development). Use of PFW is free with permission. PFEEF can help with this effort at no cost. Compare Financial Well-Being With Last Year’s Job Outcomes Survey Personal Financial Well-Being (PFW) of employees, and array scores into 5 groups (20% in each). Compare the mean scores of highest 20% group with lowest 20% on last year’s job outcomes. The differences? Human Resources can decide to do nothing. Or, do something! PFEEF can help with this effort at no cost. PFEEF Projects Employer’s ROI “Estimate What the Employer Can Gain By Demanding More From Financial Providers?” Assign cost values to each job outcome Estimate projected impacts of financial program on job outcomes Add up projected savings Add up projected financial program costs Calculate projected ROI PFEEF can help with this effort at no cost. Prove Financial Program Works or Not (One Year Later) Number of employees with improved PFW scores Aware Active Lower financial distress Increased financial well-being Confident Motivated PFEEF can help with this effort at no cost. Prove ROI to Employers (One Year Later) Number of employees with improved job outcomes Calculate employer’s return on investment (ROI) Review changes in job outcomes Add up the savings Add up financial program costs Calculate ROI Key Messages 30% of USA employees are dissatisfied with their personal financial situations (scores of 1-4 that are less than middle [5-6]) (What’s the percentage at your workplace?) Employees complete “Annual Financial Health Checkup” online (8 questions in 4 minutes) PFEEF projects ROI for quality financial program (no cost to employers) Employer hires the best providers to improve employees’ financial decision making Provider/PFEEF may conduct research one year later to prove program works Conclusion About Employee Financial Literacy and Employer Profits It is in the employer’s best interest—more profits—to provide employees easy access to quality financial programs Your To Do List Hire the best preventive health strategist Hire the best providers of basic financial education Count the additional profits Demand performance guarantees from service providers! Thanks! Information/Footnotes Dr. E. Thomas Garman President, Personal Finance Employee Education Foundation Professor Emeritus and Fellow, Virginia Tech University 9402 SE 174th Loop, Summerfield, FL 34491 USA Tele/Fax: 352-347-1345 E-mail: info@pfeef or ethomasgarman@yahoo.com Web: www.PersonalFinanceFoundation.org To examine the PFW scale and research articles about its use, see http://www.afcpe.org/pages/journal_abstract.cfm?journal_id=290&top_id=21 http://www.afcpe.org/pages/journal_abstract.cfm?journal_id=303&top_id=21 New Book: Delivering Financial Literacy Instruction to Adults, Garman & Gappinger, Heartland Institute for Financial Education (303-597-0197) For permission to use the PFW scale, fill out online form Footnotes: a Based on reduced absenteeism and less work time dealing with personal financial concerns. See research and press releases at www.PersonalFinanceFoundation.org b Conservative estimate; research underway c $1,200 contribution to health reimbursement plan ($1,200 X 0.0765) d $5,000 contribution to dependent care reimbursement plan ($5,000 X 0.0765) e Employee stays in high-cost health plan instead of choosing less expensive CDHC policy (consumer driven health care) Information/Footnotes Health footnotes f Bagwell & Kim, 2008; Drentea, 2000; Drentea & Lavrakas, 2000; Garman et al, 2004; Genco et al., 1999; Garman et al., 2007;l Jacobson et al., 1996; Lyons & Yilmazer, 2005; Kim, Sorhaindo, & Garman, 2004; Prawitz et al., 2007; Shatwell et al, 2007. g Kim, Sorhaindo, & Garman, 2003; Prawitz et al, 2007; O’Neill et al, 2005 (2 articles); Sorhaindo & Garman, 2002. h Garman et al, 1999; Kim, Garman, & Sorhaindo, 2003 (AFCPE and ACCI); Kim, Sorhaindo, & Garman, 2004; O’Neill et al, 2006; Weisman, 2002. i Kim, Garman, & Sorhaindo, 2003 (AFCPE and ACCI); O’Neill et al, 2006; O’Neill et al, 2005 (2 articles). ABC Company Projected 1-Year Work Outcomes 1. Projected 1-year changes in work outcomes: 12% will improve job performance rating 16% fewer garnishments 16% will have reduced absenteeism 5% less turnover compared to average 10% will spend less work-time spent on personal finances 8% less short-term disability 9% lower health care costs 21% will contribute to 125-plans 5% fewer accidents/workplace violence 5% fewer thefts 10% fewer workers’ compensation claims 14% increase in contributors to 401(k) plan 2. Next assign costs to each factor and estimate increases in work outcomes. Summary of Projected 2.8 ROI for ABC Company* Program offered to 28,000 employees Program impacts 30% of employees, 8,400, in varying degrees of effectiveness resulting in improved financial behaviors and job outcomes for some Total value of projected improved job outcomes $4,499,000 Projected cost of financial program = $1,600,000 Projected ROI 2.8/1 ($4,499,000/$1,600,000) *These calculations are reasonable estimates, not guarantees. Some numbers are very low estimates and ABC Company’s Human Resources Department has the most accurate cost data. Decreases in accidents, workplace violence, and theft, and reduced fiduciary liability are additional ROI values, and they are not part of this ROI calculation, although they should be included. Projected 2.8 ROI for ABC Company Detail* Program offered to 28,000 employees Program impacts 30% of employees, 8,400, in varying degrees of effectiveness resulting in improved financial behaviors and job outcomes: Garnishments (2,484 X 0.30 = 745 X $600) $ 447,000 Absenteeism (56,000 X 0.30 X 0.10 = 1,680 X $100) 168,000 Short-term disability (1,259 X 0.30 X $100) 37,000 Turnover (28,000 X 0.0025% = 140 X $6,000) 840,000 Health care costs (28,000 X 0.30 X 0.10 = 840 X $400) 336,000 Workers’ compensation claims ($32M X 0.005) 1,600,000 Health care spending plan (1,353 X 1 X $1,000 X 0.0765) 10,000 (cash) Dependent care spending plan (259 X 1 X 1,000 X 0.0765) 19,000 (cash) Job performance rating (28,000 X 0.30 X 0.05 = 420 X $2,100) 882,000 Work-time on finances (28,000 X 0.30 X 0.05 = 420 X $167) 70,000 Total value of projected improved job outcomes $4,409,000 Cost of financial program = $1,600,000 ROI 2.8/1 ($4,409,000/$1,600,000) *These calculations are reasonable estimates, not guarantees. Some numbers are very low estimates and ABC Company’s Human Resources Department has the most accurate data. Additional ROI values from decreases in accidents, workplace violence, and theft, and reduced fiduciary liability are not included in this ROI calculation.");sQ1[61]=new Array("http://www.personalfinancefoundation.org/speeches/speech-03-3.ppt","Tom Garman’s Thoughts on Employee Education","","“Financial Education in the Workplace: New Thinking” “Workplace Financial Literacy Summit” Texas Society of CPAs Federal Reserve Bank, Dallas, TX September 21, 2007 E. Thomas Garman President, Personal Finance Employee Education Foundation Professor Emeritus and Fellow, Virginia Tech University ©Personal Finance Employee Education Foundation, Inc., 2007. USA System of Retirement Income Security The metaphor is a 3-legged stool: Social Security Employer provided pensions Personal savings USA Retirement Finances Defined-Benefit Retirement Pensions (DB Plan = Monthly checks for life) Most USA workers earn Social Security Administration credits during their working years, and retirees are eligible for a SSA defined-benefit pension Example: $1,000/month Aged adults who never worked and those with limited income and resources are eligible for SSA-administered Supplemental Security Income defined-benefit pension Example: $300 to $600/month Some working employees qualify for and may receive an employer-sponsored defined-benefit pension. In 1981, 112,000 plans covered 37% of workers; now 31,000 plans cover <20% Example: $800/month USA Retirement Finances Defined-Contribution Retirement Savings Plans (DC Plan = Lump sum at retirement to manage) Employer-sponsored voluntary retirement plans for individually accumulated savings, such as 401(k) and profit-sharing: Only half of workers are employed by companies that offer a defined-contribution plan Only 2 in 3 eligible employees join Of those who do participate, 7 in 10 are not saving enough for a financially successful retirement (median balance is $58,000) Observation Financing retirement in the USA today is the sole responsibility of the employee Realities of Saving for Retirement (All Are Negatives) Participation and deferral rates in USA retirement savings plans are inadequate Most are not saving enough for retirement Workplace education and advice programs have been less than successful Millions of employees say they cannot afford to save for retirement, and 1 in 4 say credit card debt is a reason Employees do not know what they don’t know Employers and employees do not understand the value of paying for good help — effective workplace financial programs “The lack of financial literacy–spending plans, credit management, and savings—is the major reason why employees do not save for retirement” The Financially Unhealthy 30 million American workers— 1 in 4—report they are seriously financially distressed and dissatisfied with their personal finances National Norms for Financial Well-Being on PFW Scale© (Mean=5.7; SD=2.4) (1-4: 30%) High distress (7-10: 42%) Low distress (5-6: 28%) Source: InCharge Education Foundation, National Norms on InCharge Financial Distress/Well-Being Scale© for General Adult Population. 1 Means “Overwhelming Financial Distress/Worst Financial Well-Being”; 10 Means “No Financial Distress/Excellent Financial Well-Being” ©Copyright by InCharge Education Foundation and E. Thomas Garman, 2004-2007. All rights reserved. National Norms: 30% Are Failing Financially With Scores of 1-4 Big Point “Financially unwell employees do not make the best decisions for themselves… or their employers” Not Engaged Passive Confused Anxious What Does Poor Financial Literacy Cost? Research says, “Every time someone on your work team brings his/her money worries to the job, workplace productivity drops” Pay no attention to the elephant! Can you recognize a financially stressed employee? No! “Employees with money problems are like sharks swimming around the workplace taking bites out of the bottom line” Research Proves ALL These Factors are Correlated in the Ways Expected Personal Finances: Financial well-being Financial satisfaction Financial distress Financial stressor events Financial behaviors Credit card debt Credit card delinquencies Job Outcomes: Work satisfaction Pay satisfaction Absenteeism Presenteeism (cutting down on normal activities) Personal financial matters interfering with work Work time used to handle personal finances Health What Does Not Decrease Financial Distress? Salary increases Bonuses Attending 401(k) retirement planning seminars and workshops Pastoral counseling Employee Assistance Programs Which Purposefully Decreases Employee Financial Distress and Increases Financial Well-being? Marriage counseling? No Employee Assistance Programs? No Retirement Education Programs? No Credit Counseling? Yes What Else Can Decrease Financial Distress/Improve Financial Well-Being? Provide employees easy access to: Basic financial education Benefits education Credit union Financial advice Estimated Annual Costs of Ignoring Financial Illiteracy © Lost productivity $450a Health care costs (poor health) 300b Subtotal = $750 Health care reimbursement (FICA) 92c Dependent care reimburse (FICA) 382d Traditional health plan choice 800e TOTAL $2,000+ “Employer cost for no action is $750 to $2,000+ per employee!” © Personal Finance Employee Education Foundation, Inc. 2007. How Can Employers Save $750 - $2,000? Demand more from your current 401(k) financial education providers Insist they provide a quality program that emphasizes the basics of personal finance: Spending Plan Credit Management Saving Financially Literate Employees Are Engaged With Money Issues Comparison shop Achieve short, medium and long term savings goals Match product selections with savings goals Enjoy average to above average financial well-being Aware Active Confident Motivated Results for Employees From Quality Financial Program Lower financial distress Increased financial well-being Better health Adequate retirement preparation Improved family relationships Gains in job performance Both Gain…When Employers Provide Employees With Quality Financial Programs Employee Employer Big Point “Employers do not realize they can improve profits –and prove it– by providing employees easy access to quality financial education programs to improve personal financial behaviors” Personal Finance Employee Education Foundation “PFEEF Advocates Best Practices” Provide employers no-cost-to-use tools and expertise to detail the bottom-line benefits of quality financial programs Identify companies whose workplace programs genuinely improve employees’ personal financial behaviors and increase employer profits Use PFW to Benchmark Employee Personal Financial Well-Being Survey employees using the Personal Financial Well-Being (PFW) scale. PFW is 8-item questionnaire that measures financial distress and financial well-being. PFW is a peer-reviewed valid and reliable measure (over 20 years in development). Use of PFW is free with permission. Financial Well-Being and Last Year’s Job Outcomes Survey Personal Financial Well-Being (PFW) of employees, and array scores into 5 groups (20% in each). Compare the mean scores of highest 20% group with lowest 20% on last year’s job outcomes. What are the differences? Human Resources can decide to do nothing. Or, do something! Project Employer’s ROI “Estimate What the Employer Can Gain By Demanding More From Financial Providers?” HR assigns cost values to each job outcome. Estimates projected impacts of financial program on job outcomes. Adds up projected savings. Adds up projected financial program costs. Calculates projected ROI. PFEEF can help with this effort at no cost Prove Financial Program Works (One Year Later) Number of employees with improved personal financial behaviors Aware Active Lower financial distress Increased financial well-being Confident Motivated PFEEF can help with this effort at no cost Prove Value to Employers (One Year Later) Number of employees with improved job outcomes Calculate employer’s return on investment (ROI) Review changes in job outcomes Add up the savings Add up financial program costs Calculate real ROI PFEEF can help with this effort at no cost Many Employers Recognize Problem But Do Nothing “You can lead a horse to water, but you can’t make it drink.” Key Messages 30% of USA employees are dissatisfied with their personal financial situations (scores of 1-4 that are less than middle [5-6]) (What’s the percentage at your workplace?) Employer uses PFW to survey employee financial well-being to establish baseline information Checks company data to project return on investment for improving employee financial well-being Hires the best providers to improve employees’ financial decision making Researches one year later to prove the real bottom-line results Conclusions on Financial Literacy and Workplace Productivity 1. Financially illiterate adults do not manage their personal finances very well and they do not save and invest enough for a financially successful retirement 2. It is in the employer’s best interest—more profits—to provide employees easy access to quality financial programs Why Offer Employees Quality Financial Programs? Legal – “insurance” against litigation (ERISA and SOX liability and CFO nightmare) Bottom-line benefits – better productivity and retention Human resources – attract, retain, reward, motivate the right employees Benefits – facilitates benefit plan changes and behavioral changes Culture – links the program to the values the company wants to instill in employees Social/Moral – it is right thing to do as stewards of employee well-being *Delivering Financial Literacy Instruction to Adults, Garman & Gappinger, 2008, taken from Ernst & Young’s Bill Arnone’s comments on pages 31-35 (Heartland Institute of Financial Education [303-597-0197]) In Closing I leave you with the immortal words of the great baseball player, Yogi Berra, of the New York Yankees, who often fractured the English language with his truisms like: “If you don’t know where you are going, you will end up somewhere else” Thanks! Information/Footnotes Dr. E. Thomas Garman Professor Emeritus and Fellow, Virginia Tech University President, Personal Finance Employee Education Foundation 9402 SE 174th Loop, Summerfield, FL 34491 USA Tele/Fax: 352-347-1345 E-mail: ethomasgarman@yahoo.com Web: www.personalfinancefoundation.org To examine the PFW scale and read research articles about its use, see http://www.afcpe.org/pages/journal_abstract.cfm?journal_id=290&top_id=21 http://www.afcpe.org/pages/journal_abstract.cfm?journal_id=303&top_id=21 New Book: Delivering Financial Literacy Instruction to Adults, Garman & Gappinger, Heartland Institute for Financial Education (303-597-0197) For permission to use the PFW scale, fill out form on website Footnotes: a Based on reduced absenteeism and less work time dealing with personal financial concerns. See research and press releases at www.PersonalFinanceFoundation.org b Conservative estimate; research underway c $1,200 contribution to health reimbursement plan ($1,200 X 0.0765) d $5,000 contribution to dependent care reimbursement plan ($5,000 X 0.0765) e Employee stays in high-cost health plan instead of choosing less expensive CDHC policy (consumer driven health care) ABC Company Projected 1-Year Work Outcomes 1. Projected 1-year changes in work outcomes: 12% will improve job performance rating 16% fewer garnishments 16% will have reduced absenteeism 5% less turnover compared to average 10% will spend less work-time spent on personal finances 8% less short-term disability 9% lower health care costs 21% will contribute to 125-plans 5% fewer accidents/workplace violence 5% fewer thefts 10% fewer workers’ compensation claims 14% increase in contributors to 401(k) plan 2. Next assign costs to each factor and estimate increases in work outcomes. Summary of Projected 2.8 ROI for ABC Company* Program offered to 28,000 employees Program impacts 30% of employees, 8,400, in varying degrees of effectiveness resulting in improved financial behaviors and job outcomes for some Total value of projected improved job outcomes $4,499,000 Projected cost of financial program = $1,600,000 Projected ROI 2.8/1 ($4,499,000/$1,600,000) *These calculations are reasonable estimates, not guarantees. Some numbers are very low estimates and ABC Company’s Human Resources Department has the most accurate cost data. Decreases in accidents, workplace violence, and theft, and reduced fiduciary liability are additional ROI values, and they are not part of this ROI calculation, although they should be included. Projected 2.8 ROI for ABC Company Detail* Program offered to 28,000 employees Program impacts 30% of employees, 8,400, in varying degrees of effectiveness resulting in improved financial behaviors and job outcomes: Garnishments (2,484 X 0.30 = 745 X $600) $ 447,000 Absenteeism (56,000 X 0.30 X 0.10 = 1,680 X $100) 168,000 Short-term disability (1,259 X 0.30 X $100) 37,000 Turnover (28,000 X 0.0025% = 140 X $6,000) 840,000 Health care costs (28,000 X 0.30 X 0.10 = 840 X $400) 336,000 Workers’ compensation claims ($32M X 0.005) 1,600,000 Health care spending plan (1,353 X 1 X $1,000 X 0.0765) 10,000 (cash) Dependent care spending plan (259 X 1 X 1,000 X 0.0765) 19,000 (cash) Job performance rating (28,000 X 0.30 X 0.05 = 420 X $2,100) 882,000 Work-time on finances (28,000 X 0.30 X 0.05 = 420 X $167) 70,000 Total value of projected improved job outcomes $4,409,000 Cost of financial program = $1,600,000 ROI 2.8/1 ($4,409,000/$1,600,000) *These calculations are reasonable estimates, not guarantees. Some numbers are very low estimates and ABC Company’s Human Resources Department has the most accurate data. Additional ROI values from decreases in accidents, workplace violence, and theft, and reduced fiduciary liability are not included in this ROI calculation.");sQ1[62]=new Array("http://www.personalfinancefoundation.org/speeches/speech-01-.ppt","Slide 1","","Fiduciary Adviser a Holistic Solution Don Atherton, CEBS, CFP® President, Integrated Benefits Solutions, Inc. (713) 706-3600 don.atherton@ibslinks.com E. Thomas Garman President, Personal Finance Employee Education Foundation (352) 347-1345 ethomasgarman@yahoo.com ISCEBS Employee Benefit Symposium 2007 Discussion Overview Today’s retirement savings realities Workplace financial literacy How financial literacy and advice programs can increase ROI PPA fiduciary advisory models Today’s Retirement Realities A career represents the sum of multiple employer experiences 401(k) plans are the primary retirement savings vehicle Poor 401(k) plan participation Inadequate salary deferral rates Investment underperformance Today’s Retirement Realities Longer life expectancy Increasing financial insecurity Greater need for long term care Elimination of retiree medical benefits Retirement education alone has failed Employees want help and need holistic personalized planning Compounding Elements Negative consumer savings rate Increasing consumer debt Complex income and estate tax laws High cost to educate children Potential need to financially assist parents Compounding Elements Complex health and welfare plans Increasing cost of health care Expansive voluntary benefit plans 1 in 4 workers report they are in serious financial distress Financial Well-Being (7-10: 42%) (1-4: 30%) (5-6: 28%) Source: InCharge Education Foundation, National Norms on InCharge Financial Distress/Well-Being Scale© for General Adult Population. 1 Means “Overwhelming Financial Distress/Worst Financial Well-Being”; 10 Means “No Financial Distress/Excellent Financial Well-Being” ©Copyright by InCharge Education Foundation and E. Thomas Garman, 2004-2007. All rights reserved. Factors Correlated as Expected Personal Financial: Financial well-being Financial satisfaction Financial distress Financial stressor events Job Outcomes: Work satisfaction Pay satisfaction Absenteeism Presenteeism Factors Correlated as Expected Personal Finances: Financial behaviors Job Outcomes: Personal matters interfering with work Work time used to handle personal finances Increased health plan cost Credit card debt Credit card delinquencies Workplace Financial Literacy Millions of employees say they cannot afford to save for retirement; 1 in 4 say credit card debt is a reason Employees do not know what they don’t know Employers and employees do not understand the value of effective workplace financial programs Successful Program Example Results from InCharge Education Foundation 18-Month Panel Study (2003-2005) of 7,000 credit counseling clients Credit counseling provides one-on-one money and credit management suggestions, a debt management program, and education “Financial Stress Today” Level of Financial Stress “Severe” to “Overwhelming” “High” to “Overwhelming” 2005: Data shown for “bottom 4” responses (the negative end,1-4 on a ten point scale) 2003: data shown for “bottom 2” responses (the negative end,1-2 on a five point scale) Impact of Credit Counseling (on Health and Family Problems) Health Family *Choices were “Yes” or ”No”. This chart is based on question 14 “Since you joined InCharge, has your health improved?” And question 15 “Since you joined InCharge, have your family relationships improved?” “Feel That Concerns About Personal Finances Interfere With Work” Financial Concerns Interfere “Sometimes” to “Very Often” 2003 2005 Based on Question 21 in the 2005 survey. This chart represents the percentage of responses from the bottom half of each scale (2003 and 2005). Time Lost At Work* (Average Number of Days) * Note: Time spent not working for any reason Incidence of Spending Time at Work on Personal Finances Respondents Reporting Time Not Working 2003 2005 Based on question 22 in 2005, question 25 in 2003. Responses shown are the bottom half of the scales (sometimes to very often), 2003 and 2005. Hours Per Month Spent on Personal Finances at Work Hours Per Month 2003 2005 Note: In 2005, Q22 asked panelists to estimate Average Hours per month spent not working due to financial concerns. Main Personal Financial Activities Done During Work Hours Percent Who Engaged in This Behavior Changes over the Past 18 Months. Estimated Costs of Ignoring Financial Illiteracy © Lost productivity $450a Health care costs (poor health) 300b Subtotal = $750 Health care reimbursement (FICA) 92c Dep care reimbursement (FICA) 382d Traditional health plan choice 800e TOTAL = $2,000+ “Annual Employer cost for not taking action can be $2,000+ per employee!” © Personal Finance Employee Education Foundation, Inc. 2007. What Does NOT Decrease Financial Distress? Salary increases Bonuses Attending 401(k) retirement planning seminars and workshops Pastoral counseling Employee Assistance Programs Attainable Results Lower financial distress Increased financial well-being Better health Adequate retirement preparation Improved family relationships Gains in job performance Financially Literate Employees are Engaged With Money Issues Comparison shop (including healthcare) Achieve short, medium and long term savings goals Match product selections with savings goals Enjoy average to above average financial well-being Quality Financial Programs Results For Employees Lower financial distress Increased financial well-being Adequate retirement preparation Improved family relationships Gains in job performance For Employers Higher productivity Lower absenteeism Better presenteeism Lower turnover Better employee health More profits Recommended Actions Financial Literacy Implement financial education program which emphasizes the basics of personal finance Provide easy access to non-profit credit counseling 401(k) Plan Recommended Actions Adopt 401(k) Plan automatic enrollment Utilize Qualified Default Investment Alternative (QDIA) Incorporate automatic annual deferral increases Engage a “fiduciary adviser” to provide holistic financial planning Automatic Enrollment Effective January 1, 2008 PPA preempts state laws Allows for negative elections minimum of 3% 90 day penalty fee reversal period Annual increase 1% per year maximum of 6% PPA - 2006 Qualified Default Investment Alternatives Balance Fund Lifecycle Fund Managed Account Auto-enrollment safe harbor match Formula 100% for the first one percent 50% for the next five percent Vesting – two year cliff Eliminates ADP and ACP testing requirement Participant Level Advice Pre - PPA Fiduciary Level compensation Sponsor liable for investment advice PPA Co-fiduciary Variable or level Compensation Sponsor not liable for investment advice Sponsor Fiduciary Relief Gained by: Prudently select Fiduciary Adviser Use of eligible investment advice arrangement Providing employees notice of conflicts and other key disclosures Determining that compensation paid to the fiduciary adviser or its’ affiliates is reasonable and as favorable to the plan as available in the market Performing independent annual audits Types of Fiduciary Adviser Conflicted Typically Product provider Varied compensation Computer model advice Un-Conflicted Typically Independent Adviser Level compensation Personalized advice Conflicted - Fiduciary Adviser Variable compensation dependent upon investment choices / transactions Advice exclusively driven by a computer model Interpretation provided by call center representatives Challenge to deliver holistic solution Conflicted - Computer Model Valid and developed independently Based on generally accepted investment theories Uses relevant participant information Applies objective criteria to define appropriate asset allocation for investments under the plan Unbiased evaluation of all investment options offered by the fiduciary adviser or its related affiliates Un-conflicted – Fiduciary Adviser Level compensation for all plan investments and transactions Personalized independent planning Delivered in person or through a call center Supports holistic financial planning all employee benefit plans personal savings, insurance, or other assets Un-conflicted Fiduciary Adviser Prudent Selection Advisers’ regulatory history Quality of results for existing clients Knowledge of the subject Potential conflicts of interest Clearly defined service to be provided Adviser Fees At least as favorable as in the market Paid by the plan, the employee, from forfeitures, the employer or any combination Based on: fixed cost per employee basis points of all plan assets basis points of employees’ account balance of employees utilizing service annual fee paid by employer Estimated Costs of Ignoring Financial Illiteracy © Lost productivity $450a Health care costs (poor health) 300b Subtotal = $750 Health care reimbursement (FICA) 92c Dep care reimbursement (FICA) 382d Traditional health plan choice 800e TOTAL = $2,000+ “Annual Employer cost for no action can be $2,000+ per employee!” © Personal Finance Employee Education Foundation, Inc. 2007. “The lack of financial literacy–spending plans, credit management, and savings—is the major reason why employees do not save for retirement” Conclusions on Financial Literacy and Workplace Productivity 1. Financially illiterate adults do not manage their personal finances very well and they do not save and invest enough for a financially successful retirement 2. It is in the employer’s best interest—more profits—to provide employees easy access to quality financial programs Personal Finance Employee Education Foundation “PFEEF Advocates Best Practices” Provides employers no-cost-to-use tools and expertise to detail the bottom-line benefits of quality financial programs Identifies companies whose workplace programs genuinely improve employees’ personal financial behaviors and increase employer profits Use PFW to Assess Employee Personal Financial Well-Being Survey employees using the Personal Financial Well-Being (PFW) scale. PFW is 8-item questionnaire that measures financial distress and financial well-being. PFW is a peer-reviewed valid and reliable measure (over 20 years in development). Use of PFW is free with permission. In Closing We leave you with the immortal words of the great baseball player, Yogi Berra, of the New York Yankees, who often fractured the English language with his truisms like: “If you don’t know where you are going, you will end up somewhere else.” Information/Footnotes E. Thomas Garman President, Personal Finance Employee Education Foundation Professor Emeritus and Fellow, Virginia Tech University 9402 SE 174th Loop, Summerfield, FL 34491 USA Tele/Fax: 352-347-1345 E-mail: ethomasgarman@yahoo.com Web: www.personalfinancefoundation.org To examine the PFW scale and read research articles about its use, see http://www.afcpe.org/pages/journal_abstract.cfm?journal_id=290&top_id=21 http://www.afcpe.org/pages/journal_abstract.cfm?journal_id=303&top_id=21 New Book: Delivering Financial Literacy Instruction to Adults, Garman & Gappinger, Heartland Institute for Financial Education (303-597-0197) For permission to use the PFW scale, contact Dr. Garman Footnotes: a Based on reduced absenteeism and less work time dealing with personal financial concerns. See research and press releases at www.PersonalFinanceFoundation.org b Conservative estimate; research underway c $1,200 contribution to health reimbursement plan ($1,200 X 0.0765) d $5,000 contribution to dependent care reimbursement plan ($5,000 X 0.0765) e Employee stays in high-cost health plan instead of choosing less expensive CDHC policy (consumer driven health care) Information/Footnotes Don Atherton, MBA, CEBS, CFP®, CLU, AIF® Integrated Benefits Solutions, Inc. 650 North Sam Houston Parkway East, Suite 553 Houston, Texas 77060 713-706-3600 don.atherton@ibslinks.com ABC Company Projected 1-Year Changes 1. Projected 1-year changes in work outcomes: 12% will improve job performance rating 16% fewer garnishments 16% will have reduced absenteeism 5% less turnover compared to average 10% will spend less work-time spent on personal finances 8% less short-term disability 9% lower health care costs 21% will contribute to 125-plans 5% fewer accidents/workplace violence 5% fewer thefts 10% fewer workers’ compensation claims 14% increase in contributors to 401(k) plan 2. Next assign costs to each factor and estimate increases in work outcomes. Summary of Projected 2.8 ROI for ABC Company* Program offered to 28,000 employees Program impacts 30% of employees, 8,400, in varying degrees of effectiveness resulting in improved financial behaviors and job outcomes for some Total value of projected improved job outcomes $4,499,000 Projected cost of financial program = $1,600,000 Projected ROI 2.8/1 ($4,499,000/$1,600,000) *These calculations are reasonable estimates, not guarantees. Some numbers are very low estimates and ABC Company’s Human Resources Department has the most accurate cost data. Decreases in accidents, workplace violence, and theft, and reduced fiduciary liability are additional ROI values, and they are not part of this ROI calculation, although they should be included.");sQ1[63]=new Array("http://www.personalfinancefoundation.org/speeches/speech-07-7.ppt","Tom Garman’s Thoughts on Employee Education","","“Employers Can Profit by Meeting the Educational Desires of Financially Distressed Credit Counseling Clients ” Financial Counseling Network Fall Financial Conference Orlando, FL – August 29, 2007 E. Thomas Garman President, Personal Finance Employee Education Foundation Professor Emeritus and Fellow, Virginia Tech University ©Personal Finance Employee Education Foundation, Inc., 2007. USA System of Retirement Income Security The metaphor is a 3-legged stool: Social Security Employer provided pensions Personal savings USA Retirement Finances Defined-Benefit Retirement Pensions (DB Plan = Monthly checks for life) Most USA workers earn Social Security Administration credits during their working years, and retirees are eligible for a SSA defined-benefit pension Example: $1,000/month Aged adults who never worked and those with limited income and resources are eligible for SSA-administered Supplemental Security Income defined-benefit pension Example: $300 to $600/month Some working employees qualify for and may receive an employer-sponsored defined-benefit pension. In 1981, 112,000 plans covered 37% of workers; now 31,000 plans cover <20% Example: $800/month USA Retirement Finances Defined-Contribution Retirement Savings Plans (DC Plan = Lump sum at retirement to manage) Employer-sponsored voluntary retirement plans for individually accumulated savings, such as 401(k) and profit-sharing: Only half of workers are employed by companies that offer a defined-contribution plan Only 2 in 3 eligible employees join Of those who do participate, 7 in 10 are not saving enough for a financially successful retirement (median balance is $58,000) Observation Financing retirement in the USA today is the sole responsibility of the employee Realities of Saving for Retirement (All Are Negatives) Participation and deferral rates in USA retirement savings plans are inadequate Most are not saving enough for retirement Workplace education and advice programs have been less than successful Millions of employees say they cannot afford to save for retirement, and 1 in 4 say credit card debt is a reason Employees do not know what they don’t know Employers and employees do not understand the value of paying for good help — effective workplace financial programs “The lack of financial literacy–spending plans, credit management, and savings—is the major reason why employees do not save for retirement” Life Activities or Experiences That Apply to You Right Now* Questions Percent Coping with a financial crisis or trying to reduce my debt 49 Paying for my children’s education 22 Saving for/purchasing a home 22 NET (ANY OF THE THREE) 67 *The Concours Group-Age Wave- Harris Interactive, The New Employer/Employee Equation, 2005. The Financially Unhealthy 30 million American workers— 1 in 4—report they are seriously financially distressed and dissatisfied with their personal finances National Norms for Financial Well-Being on IFDFW Scale© (Mean=5.7; SD=2.4) (1-4: 30%) (5-6: 28%) (7-10: 42%) (1-4: 30%) (5-6: 28%) (7-10: 42%) Source: InCharge Education Foundation, National Norms on InCharge Financial Distress/Well-Being Scale© for General Adult Population. 1 Means “Overwhelming Financial Distress/Worst Financial Well-Being”; 10 Means “No Financial Distress/Excellent Financial Well-Being” ©Copyright by InCharge Education Foundation and E. Thomas Garman, 2004-2007. All rights reserved. National Norms: 30% Are Failing Financially With Scores of 1-4 Big Point “Financially unwell employees do not make the best decisions for themselves… or their employers” Not Engaged Passive Confused Anxious “Employees with money problems are like sharks swimming around the workplace taking bites out of the bottom line” Employers Already Know That Smoking is bad for employee health and the company’s bottom line Do Employers Also Know? The same is true of employees who have money worries What Does Poor Financial Literacy Cost? Research says, “Every time someone on your work team brings his/her money worries to the job, workplace productivity drops” Pay no attention to the elephant! Can you recognize a financially stressed employee? No! 60+ Research Studies Prove ALL These Factors are Correlated in the Ways Expected Personal Finances: Financial well-being Financial satisfaction Financial distress Financial stressor events Financial behaviors Credit card debt Credit card delinquencies Job Outcomes: Work satisfaction Pay satisfaction Absenteeism Presenteeism (cutting down on normal activities) Personal financial matters interfering with work Work time used to handle personal finances Health 60+ Research Studies Prove Quality Financial Programs Lead To For Employees Lower financial distress Increased financial well-being Adequate retirement preparation Improved family relationships Gains in job performance For Employers Higher productivity Lower absenteeism Better presenteeism Lower turnover Better employee health More profits Estimated Annual Costs of Ignoring Financial Illiteracy © Lost productivity $450a Health care costs (poor health) 300b Subtotal = $750 Health care reimbursement (FICA) 92c Dependent care reimburse (FICA) 382d Traditional health plan choice 800e TOTAL $2,000+ “Employer cost for no action is $750 to $2,000+ per employee!” © Personal Finance Employee Education Foundation, Inc. 2007. How Can Employers Get These Results? Demand more from your current 401(k) financial education provider Insist they provide a quality program that emphasizes the basics of personal finance: Spending Plan Credit Management Saving National Survey of Non-Finance Counseling Professionals* (Psychological counseling is often provided as an employee benefit) 70% indicated that financial issues frequently arose in counseling sessions. 82% said budgeting and cash flow management are the most common financial issue related to marital conflict or divorce. *Wiggins, “Are You Listening?” The Standard (Association for Financial Counseling and Planning Education), July 2007, 9. Employees with financial problems should not seek financial advice from these professionals Hire Credit Counseling as a Financial Program Offered as a Employee Benefit Which financial program purposefully decreases employee financial distress and increases financial well-being? Marriage counseling? Employee Assistance Programs? Retirement Education Programs? Credit Counseling! Put an “Employer’s Only” link on your website! Educational Desires of Financially Distressed Employees* (Credit Counseling Clients) Desired Financial Education Topics Percent Budgeting/Money Management 48 Saving for Future Needs 48 Saving for Retirement 37 Lowering Monthly Credit Payments 31 Understanding IRA and 401(k) Plans 24 Reducing Income Taxes 21 Avoiding Costly Financial Mistakes 20 Understanding Credit Scores 19 *Bailey, Sorhaindo, Garman, “Educational Desires of Credit Counseling Clients,” Financial Counseling and Planning (14:1), 2003, 51-56. Active Versus Inactive Credit Counseling Clients* (18 months later) Both groups showed improvements in good financial management behaviors fewer financially stressful events Active clients exhibited greater change than the inactive group *Kim & Garman, “Effects of Credit Counseling and Debt Management on Financial Stressors and Financial Management Behaviors,” Journal of Family and Consumer Sciences, 2006. Length of Time Spent in a Debt Management Program* “During the past 6 months how often have you experienced the following?” (9 financial stressor events were listed) Those reporting a reduction in the frequency occurrences of - negative bill-paying events exhaustion of liquid assets had higher PFW scores Those with longer participation in a DMP had higher PFW scores (lower financial distress/ higher financial well-being) *Prawitz, O’Neill, Sorhaindo, Kim, & Garman, “Financial Distress/Financial Well-Being: Do Length of Time Spent in a Debt Management Program and Reduction in Financial Distress Events Make a Difference?” Consumer Interest Annual, 2007. Subsequent Borrower Behavior of Former Credit Counseling Clients* Substantial reductions in debt and account usage Positive changes in credit profile and credit worthiness performance Greatest benefits obtained by those borrowers who had the least ability to handle credit prior to counseling *Ellihausen, Lunquest, & Statten, “The Impact of Credit Counseling on Subsequent Borrow Behavior,” The Journal of Consumer Affairs, 2007. Financial Behaviors of Credit Counseling Clients* Those who have significantly more “positive financial behaviors” than other clients report: More secure retirement Better family relationships Higher score on self-evaluation of financial behaviors *Xiao, Sorhaindo, Garman, “Financial Behaviours of Consumers in Credit Counseling,” International Journal of Consumer Studies (29), 2005, 24-38. Results for Employees From Quality Financial Program (Based on published peer-reviewed research) Lower financial distress Increased financial well-being Better health Adequate retirement preparation Improved family relationships Gains in job performance Financially Literate Employees Are Engaged With Money Issues Comparison shop Achieve short, medium and long term savings goals Match product selections with savings goals Enjoy average to above average financial well-being Aware Active Confident Motivated Big Point “Employers do not realize they can improve profits –and prove it– by providing employees easy access to quality financial education programs to improve personal financial behaviors” Both Gain…When Employers Provide Employees With Quality Financial Programs Benefits of financial programs become evident when the employer benchmarks the levels of employee financial well-being. Employee Employer Personal Finance Employee Education Foundation “PFEEF Advocates Best Practices” Provides employers no-cost-to-use tools and expertise to detail the bottom-line benefits of quality financial programs Promotes providers whose workplace programs genuinely improve employees’ personal financial behaviors and increase employer profits Use PFW to Assess Employee Personal Financial Well-Being Survey employees using the Personal Financial Well-Being (PFW) scale. PFW is 8-item questionnaire that measures financial distress and financial well-being. PFW is a peer-reviewed valid and reliable measure (over 20 years in development). Use of PFW is free with permission. Benchmark Employee Financial Well-Being Survey Personal Financial Well-Being (PFW) of employees, and array scores into 5 groups (20% in each). Compare the mean scores of highest 20% group with lowest 20% on last year’s job outcomes. What are the differences? Human Resources can decide to do nothing. Or, do something! Calculate Employer’s Projected ROI “Estimate What the Employer Can Gain By Demanding More From Financial Provider?” HR assigns cost values to each job outcome. Estimates projected impacts of financial program on job outcomes. Adds up projected savings. Adds up projected financial program costs. Calculates projected ROI. PFEEF can help prove this at no cost Prove Financial Program Works (One Year Later) Number of employees with improved personal financial behaviors who report Aware Active Lower financial distress Increased financial well-being Confident Motivated PFEEF can help prove this at no cost Prove Value to Employers (One Year Later) Number of employees with improved job outcomes Calculate employer’s return on investment (ROI) Review changes in job outcomes Add up the savings Add up financial program costs Calculate real ROI PFEEF can help prove this at no cost Employer Who Recognizes Problem, But Does Nothing “You can lead a horse to water, but you can’t make it drink.” Key Messages 30% of USA employees are dissatisfied with their personal financial situations (scores of 1-4 that are less than middle [5-6]) (What’s the percentage at your workplace?) Employer uses PFW to survey employee financial well-being to establish baseline information Checks company data to project return on investment for improving employee financial well-being Hires the best provider to improve employees’ financial decision making Researches one year later to prove the real bottom-line results Conclusions on Financial Literacy and Workplace Productivity 1. Financially illiterate adults do not manage their personal finances very well and they do not save and invest enough for a financially successful retirement 2. It is in the employer’s best interest—more profits—to provide employees easy access to quality financial programs Why Offer Employees Quality Financial Programs? Ernst &Young’s William Arnone Says*: Legal – “insurance” against litigation (ERISA and SOX liability and CFO nightmare) Bottom-line benefits – better productivity and retention Human resources – attract, retain, reward, motivate the right employees Benefits – facilitates benefit plan changes and behavioral changes Culture – links the program to the values the company wants to instill in employees Social/Moral – it is right thing to do as stewards of employee well-being *Delivering Financial Literacy Instruction to Adults, 2008 (Garman and Gappinger, Heartland Institute of Financial Education [303-597-0197]) In Closing I leave you with the immortal words of the great baseball player, Yogi Berra, of the New York Yankees, who often fractured the English language with his truisms like: “If you don’t know where you are going, you will end up somewhere else” Thanks! Information/Footnotes Dr. E. Thomas Garman President, Personal Finance Employee Education Foundation Professor Emeritus and Fellow, Virginia Tech University 9402 SE 174th Loop, Summerfield, FL 34491 USA Tele/Fax: 352-347-1345 E-mail: ethomasgarman@yahoo.com Web: www.personalfinancefoundation.org To examine the PFW scale and read research articles about its use, see http://www.afcpe.org/pages/journal_abstract.cfm?journal_id=290&top_id=21 http://www.afcpe.org/pages/journal_abstract.cfm?journal_id=303&top_id=21 New Book: Delivering Financial Literacy Instruction to Adults, Garman & Gappinger, Heartland Institute for Financial Education (303-597-0197) For permission to use the PFW scale, contact Dr. Garman Footnotes: a Based on reduced absenteeism and less work time dealing with personal financial concerns. See research and press releases at www.PersonalFinanceFoundation.org b Conservative estimate; research underway c $1,200 contribution to health reimbursement plan ($1,200 X 0.0765) d $5,000 contribution to dependent care reimbursement plan ($5,000 X 0.0765) e Employee stays in high-cost health plan instead of choosing less expensive CDHC policy (consumer driven health care) ABC Company Projected 1-Year Changes 1. Projected 1-year changes in work outcomes: 12% will improve job performance rating 16% fewer garnishments 16% will have reduced absenteeism 5% less turnover compared to average 10% will spend less work-time spent on personal finances 8% less short-term disability 9% lower health care costs 21% will contribute to 125-plans 5% fewer accidents/workplace violence 5% fewer thefts 10% fewer workers’ compensation claims 14% increase in contributors to 401(k) plan 2. Next assign costs to each factor and estimate increases in work outcomes. Summary of Projected 2.8 ROI for ABC Company* Program offered to 28,000 employees Program impacts 30% of employees, 8,400, in varying degrees of effectiveness resulting in improved financial behaviors and job outcomes for some Total value of projected improved job outcomes $4,499,000 Projected cost of financial program = $1,600,000 Projected ROI 2.8/1 ($4,499,000/$1,600,000) *These calculations are reasonable estimates, not guarantees. Some numbers are very low estimates and ABC Company’s Human Resources Department has the most accurate cost data. Decreases in accidents, workplace violence, and theft, and reduced fiduciary liability are additional ROI values, and they are not part of this ROI calculation, although they should be included. Appendix: Detail on Projected 2.8 ROI for ABC Company* Program offered to 28,000 employees Program impacts 30% of employees, 8,400, in varying degrees of effectiveness resulting in improved financial behaviors and job outcomes: Garnishments (2,484 X 0.30 = 745 X $600) $ 447,000 Absenteeism (56,000 X 0.30 X 0.10 = 1,680 X $100) 168,000 Short-term disability (1,259 X 0.30 X $100) 37,000 Turnover (28,000 X 0.0025% = 140 X $6,000) 840,000 Health care costs (28,000 X 0.30 X 0.10 = 840 X $400) 336,000 Workers’ compensation claims ($32M X 0.005) 1,600,000 Health care spending plan (1,353 X 1 X $1,000 X 0.0765) 10,000 (cash) Dependent care spending plan (259 X 1 X 1,000 X 0.0765) 19,000 (cash) Job performance rating (28,000 X 0.30 X 0.05 = 420 X $2,100) 882,000 Work-time on finances (28,000 X 0.30 X 0.05 = 420 X $167) 70,000 Total value of projected improved job outcomes $4,409,000 Cost of financial program = $1,600,000 ROI 2.8/1 ($4,409,000/$1,600,000) *These calculations are reasonable estimates, not guarantees. Some numbers are very low estimates and ABC Company’s Human Resources Department has the most accurate data. Additional ROI values from decreases in accidents, workplace violence, and theft, and reduced fiduciary liability are not included in this ROI calculation.");sQ1[64]=new Array("http://www.personalfinancefoundation.org/speeches/speech-01.ppt","Tom Garman’s Thoughts on Employee Education","","“Financial Literacy and Workplace Productivity” Georgia Consortium for Financial Literacy Federal Reserve Bank of Atlanta Atlanta, Georgia - April 26, 2007 Presented by E. Thomas Garman Professor Emeritus and Fellow, Virginia Tech University ©Personal Finance Employee Education Foundation, Inc., 2007. USA System of Retirement Income Security The metaphor is a 3-legged stool: Social Security Employer provided pensions Personal savings USA Retirement Finances Defined-Benefit Retirement Pensions (DB Plan = Monthly checks for life) Most USA workers earn Social Security Administration credits during their working years, and retirees are eligible for a SSA defined-benefit pension. Example: $1,000/month Aged adults who never worked and those with limited income and resources are eligible for SSA-administered Supplemental Security Income defined-benefit pension. Example: $300 to $600/month Some working employees qualify for and may receive an employer-sponsored defined-benefit pension. In 1981, 112,000 plans covered 37% of workers; now 31,000 plans cover <20% Example: $800/month USA Retirement Finances Defined-Contribution Retirement Savings Plans (DC Plan = Lump sum at retirement to manage) Employer-sponsored voluntary retirement plans for individually accumulated savings, such as 401(k) and profit-sharing: Only half of workers are employed by companies that offer a defined-contribution plan. Only 2 in 3 eligible employees join. Of those who do participate, 7 in 10 are not saving enough for a financially successful retirement (median balance is $58,000). Observation Financing retirement in the USA is fast becoming the sole responsibility of the employee. Realities of Saving for Retirement Participation and deferral rates in USA retirement savings plans are inadequate. 7 in 10 are not prepared for retirement. Workplace education and advice programs have been less than successful. Millions of employees say they cannot afford to save for retirement. Employees do not know what they don’t know. Employers and employees do not understand the value of paying for good help — effective workplace financial programs. A Major Reason for the Problem 30 million American workers— 1 in 4—report they are seriously financially distressed and dissatisfied with their personal finances. National Norms for Financial Well-Being on IFDFW Scale© (Mean=5.7; SD=2.4) (1-4: 30%) (5-6: 28%) (7-10: 42%) (1-4: 30%) (5-6: 28%) (7-10: 42%) Source: InCharge Education Foundation, National Norms on InCharge Financial Distress/Well-Being Scale© for General Adult Population. 1 Means “Overwhelming Financial Distress/Worst Financial Well-Being”; 10 Means “No Financial Distress/Excellent Financial Well-Being” ©Copyright by InCharge Education Foundation and E. Thomas Garman, 2004-2007. All rights reserved. National Norms: 30% Are Failing Financially With Scores of 1-4 Big Point “Financially unwell employees do not make the best decisions for themselves… or their employers.” Not Engaged Passive Confused Anxious “Employees with money problems are like sharks swimming around the workplace taking bites out of the bottom line.” What Does Poor Financial Literacy Cost? Research says, “Every time someone on your work team brings his/her money worries to the job, workplace productivity drops” Pay no attention to the elephant! Can you recognize a financially stressed employee? No! Employer Who Recognizes Problem, But Does Nothing Research Proves ALL These Factors are Correlated in the Ways Expected Personal Finances: Financial well-being Financial satisfaction Financial distress Financial stressor events Financial behaviors Credit card debt Credit card delinquencies Job Outcomes: Work satisfaction Pay satisfaction Absenteeism Presenteeism (cutting down on normal activities) Personal financial matters interfering with work Work time used to handle personal finances Health Big Point “Employers do not realize they can improve profits –and prove it– by providing employees easy access to quality financial education programs to improve personal financial behaviors” Quality Workplace Financial Programs Rescue Employees and Employers One Who is Financially Literate…is Engaged in Money Issues Comparison shops Achieves short, medium and long term savings goals Matches product selections with savings goals Enjoys average to above average financial well-being Aware Active Confident Motivated Better Financial Behaviors Result in Desirable Work Outcomes Less work time dealing with money matters Fewer wage garnishments Less absenteeism and short-term disability Reduced turnover Fewer workers’ compensation claims Increased engagement with job Better job performance/productivity ratings Reduced health care demand Reduced Social Security taxes on 125 plans Fewer accidents Reduced legal liability on 401(k) plan Estimated Annual Costs of Ignoring Financial Illiteracy © Lost productivity $450a Health care costs (poor health) 300b Subtotal = $750 Health care reimbursement (FICA) 92c Dependent care reimburse (FICA) 382d Traditional health plan choice 800e TOTAL $2,000+ “Employer cost for no action is $750 to $2,000+ per employee!” © Personal Finance Employee Education Foundation, Inc. 2007. Personal Finance Employee Education Foundation “Helps top management —one at a time— use company data to understand the bottom- line wisdom of workplace financial programs.” Both Gain…When Employers Provide Employees With Quality Financial Programs So, Prove It Prove the financial program works. Prove the employer’s return on investment (ROI). Benefits of financial programs become evident when the employer benchmarks the levels of employee financial well-being before and after implementing a financial program. Employee Employer Benchmark Employee Personal Financial Well-Being Survey employees using the Personal Financial Well-Being (PFW) scale. PFW is 8-item questionnaire that measures financial distress and financial well-being. PFW is a valid and reliable measure. Usage of PFW is free with permission. How to Benchmark and Project the Employer’s ROI Survey Personal Financial Well-Being (PFW) of employees, and array scores into 5 groups (20% in each). Compare group mean scores of highest 20% with lowest 20% on last year’s job outcomes. What are the differences? Assign cost values to each job outcome. Conservatively estimate projected impacts of financial program on job outcomes. Add up projected savings. Add up projected financial program costs. Calculate projected ROI. ABC Company Projected 1-Year Changes 1. Projected 1-year changes in work outcomes: 12% will improve job performance rating 16% fewer garnishments 16% will have reduced absenteeism 5% less turnover compared to average 10% will spend less work-time spent on personal finances 8% less short-term disability 9% lower health care costs 21% will contribute to 125-plans 5% fewer accidents/workplace violence 5% fewer thefts 10% fewer workers’ compensation claims 14% increase in contributors to 401(k) plan 2. Next assign costs to each factor and estimate increases in work outcomes. Summary of Projected 2.8 ROI for ABC Company* Program offered to 28,000 employees Program impacts 30% of employees, 8,400, in varying degrees of effectiveness resulting in improved financial behaviors and job outcomes for some Total value of projected improved job outcomes $4,499,000 Projected cost of financial program = $1,600,000 Projected ROI 2.8/1 ($4,499,000/$1,600,000) *These calculations are reasonable estimates, not guarantees. Some numbers are very low estimates and ABC Company’s Human Resources Department has the most accurate cost data. Decreases in accidents, workplace violence, and theft, and reduced fiduciary liability are additional ROI values, and they are not part of this ROI calculation, although they should be included. Mount Quality Financial Program Deliver to all employees and focus on impacting those with low financial well-being. Emphasize the basics of personal finance: Money Management Credit Management Spending and Saving How to Calculate the Real ROI (One Year Later) Review changes in job outcomes. Add up the savings. Add up financial program costs. Calculate real ROI. Key Messages 30% of USA employees are dissatisfied with their personal financial situations (scores of 1-4 that are less than middle [5-6]). (What’s the percentage at your workplace?) Employer uses PFW to survey employee financial well-being to establish baseline information. Checks company data to project return on investment for improving employee financial well-being. Hires the best provider to improve employees’ financial decision making. Surveys PFW one year later to prove the real bottom-line results. Conclusions on Retirement and Poor Personal Finances 1. Financially illiterate adults do not manage their personal finances very well and they do not save and invest enough for a financially successful retirement. 2. It is in the employer’s best interest—more profits—to provide employees easy access to quality financial programs. In Closing I leave you with the immortal words of the great baseball player, Yogi Berra, of the New York Yankees, who often fractured the English language with his truisms like: “If you don’t know where you are going, you will end up somewhere else.” Thanks! Information/Footnotes Dr. E. Thomas Garman Professor Emeritus and Fellow, Virginia Tech University President, Personal Finance Employee Education Foundation 9402 SE 174th Loop, Summerfield, FL 34491 USA Tele/Fax: 352-347-1345 E-mail: ethomasgarman@yahoo.com Web: www.personalfinancefoundation.org To examine the PFW scale and read research articles about its use, see http://www.afcpe.org/pages/journal_abstract.cfm?journal_id=290&top_id=21 http://www.afcpe.org/pages/journal_abstract.cfm?journal_id=303&top_id=21 For permission to use the PFW scale, contact Dr. Garman Footnotes: a Based on reduced absenteeism and less work time dealing with personal financial concerns. See research and press releases at www.PersonalFinanceFoundation.org b Conservative estimate; research underway c $1,200 contribution to health reimbursement plan ($1,200 X 0.0765) d $5,000 contribution to dependent care reimbursement plan ($5,000 X 0.0765) e Employee stays in high-cost health plan instead of choosing less expensive CDHC policy (consumer driven health care) Appendix: Detail on Projected 2.8 ROI for ABC Company* Program offered to 28,000 employees Program impacts 30% of employees, 8,400, in varying degrees of effectiveness resulting in improved financial behaviors and job outcomes: Garnishments (2,484 X 0.30 = 745 X $600) $ 447,000 Absenteeism (56,000 X 0.30 X 0.10 = 1,680 X $100) 168,000 Short-term disability (1,259 X 0.30 X $100) 37,000 Turnover (28,000 X 0.0025% = 140 X $6,000) 840,000 Health care costs (28,000 X 0.30 X 0.10 = 840 X $400) 336,000 Workers’ compensation claims ($32M X 0.005) 1,600,000 Health care spending plan (1,353 X 1 X $1,000 X 0.0765) 10,000 (cash) Dependent care spending plan (259 X 1 X 1,000 X 0.0765) 19,000 (cash) Job performance rating (28,000 X 0.30 X 0.05 = 420 X $2,100) 882,000 Work-time on finances (28,000 X 0.30 X 0.05 = 420 X $167) 70,000 Total value of projected improved job outcomes $4,409,000 Cost of financial program = $1,600,000 ROI 2.8/1 ($4,409,000/$1,600,000) *These calculations are reasonable estimates, not guarantees. Some numbers are very low estimates and ABC Company’s Human Resources Department has the most accurate data. Additional ROI values from decreases in accidents, workplace violence, and theft, and reduced fiduciary liability are not included in this ROI calculation.");sQ1[65]=new Array("http://www.personalfinancefoundation.org/speeches/speech-04.ppt","PowerPoint Presentation","","Driving Better Participant Outcomes: Taking the Holistic Approach to Advising Employees E. Thomas Garman Panelists: Daryl Thompson, Grant Slade, Kelly Mullin, and Scott Coopersmith Presented at P&I East Coast Defined Contribution Conference 2006 February 28, 2006 The PGA National Resort & Spa Palm Beach Gardens, FL After All These Years… Employers have not been successful at getting employees to take ownership of the retirement planning task Employees are still not prepared to carry the retirement planning responsibility passed to them by their employers While employers realize that communication, education and advice are “their job,” they still do not know how to best help employees Let’s Be Frank… Participation and deferral rates remain inadequate Education and advice programs have failed Employees do not know what they don’t know Getting good help costs money and most employers and employees do not understand the value of help Meanwhile, employers know many are not prepared for retirement. This is a correct assessment! National Norms for Financial Well-Being on IFDFW Scale© (Mean=5.7; SD=2.4) (1-4: 30%) (5-6: 28%) (7-10: 42%) (1-4: 30%) (5-6: 28%) (7-10: 42%) Source: InCharge Education Foundation, National Norms on InCharge Financial Distress/Well-Being Scale© for General Adult Population. 1 Means “Overwhelming Financial Distress/Worst Financial Well-Being”; 10 Means “No Financial Distress/Excellent Financial Well-Being” ©Copyright by InCharge Education Foundation and E. Thomas Garman, 2004-2006. All rights reserved. Big Point “Financially illiterate employees do not make the best decisions for themselves or their employer” Annual Per Employee Costs of Ignoring Financial Illiteracy © Lost productivity $450a 401(k) Participation-Non/low (FICA) 0b Health care reimburse (FICA) 76c Dependent care reimburse (FICA) 382d Health care costs (poor health) 300e Traditional health plan choice 800f TOTAL $2,000+ “Employer cost for no action is $450 to $2,000+!” © E. Thomas Garman, Personal Finance Employee Education Foundation, 2006. A Holistic View of the Problem A holistic view today means the employer recognizes and deals with all aspects of an employee’s personal finances rather than focusing on exclusive portions, such as a 401(k) plan. Some Holistic Employer Considerations ERISA Sarbanes-Oxley And thinking more about doing what is morally right for employees—have them be better off financially when they leave you than when they started with you Thus, the “problem” is bigger than what first appears…AND it is an opportunity to profit Holistic Conclusions for Employers Nationally 30% of employees are dissatisfied with their personal financial situations (scores of only 1-4 that are less than middle [5-6]) By measuring employee financial well-being employers can establish useful baseline information Identifying steps to take to increase financial literacy is required Result: Both measuring and taking action on education-advice provides genuine legal protection for employers Employer’s Holistic Solution Organizational commitment to employee financial literacy…perhaps a campaign… for the bottom line Financial Literacy Recognize that financial literacy is not just about acquiring personal finance knowledge The most important part of financial literacy is to apply the knowledge by practicing good financial behaviors People cannot build assets without good financial literacy Employer’s Solutions Fix employer weak spots: choices to participate in 401(k) plan, level of deferral, participation in reimbursement plans, health care choices Communicate to ALL employees to combat financial illiteracy Provide education A N D advice Help employees consider all benefits as well as assets and resources of spouse/significant other, real estate, other investments, Social Security, future income generating resources, and healthcare costs Employer’s Outcomes Documented efforts provide substantial genuine protections under ERISA and Sarbanes/Oxley Employees are more engaged at the workplace providing improved job productivity and revenue Lower human resources administration costs Employer’s Outcomes Reduced health care costs More FICA “cash money on the table” for employers to keep A positive ROI on every dollar invested in improving employee financial well-being Questions Posed to Progressive Plan Sponsors and/or Providers Define “education” and “advice.” Where can education and advice be best used independently and in tandem? Why is this the employer’s problem and how is it in the employer’s best interest to educate and advise? Questions Posed to Progressive Plan Sponsors and/or Providers How should employers provide holistic education AND advice rather than just explain employer benefits? What results can a powerful program be expected to generate? Footnotes a See research and press releases at www.ethomasgarman.net b $1,200 contribution to 401(k) has no FICA implications c $1,000 contribution to health reimbursement plan ($1,000 X 0.0765) d $5,000 contribution to child care reimbursement plan ($5,000 X 0.0765) e Very conservative estimate; research underway f Employee chooses higher-cost employer health plan Contact Information E. Thomas Garman, Author, Advisor and Distinguished Fellow; Professor Emeritus and Fellow, Virginia Tech University; 9402 SE 174th Loop, Summerfield, FL 34491; Tele/Fax: 352-347-1345; E-mail: ethomasgarman@yahoo.com; Web: www.ethomasgarman.net Scott Coopersmith, Vice President, Diversified Investment Advisors, Tele: 914-697-8588; E-mail: coopers@divinvest.com; Web: www.divinvest.com Kelly Mullin, Vice President, Merrill Lynch, 1400 Merrill Lynch Drive, Pennington, NJ 08534; Tele: 609-274-6207; E-mail: kelly_mullin@ml.com; Web: www.ml.com Grant Slade, Vice President of Marketing and Business Development, Myfinancialadvice.com, 3005 Center Green Drive, Ste. 115, Boulder, CO 80301; Tele: 720-942-0910; E-mail: grant@slade.net; Web: www.myfinancialadvice.com Daryl Thompson, Independent Consultant, The EDSA Group, One Oak Square, 8280 YMCA Plaza Drive, #4, Baton Rouge, LA 70810; Tele: 800-942-2777; E-mail: dthompson@theedsagroup.com; Web: www.theedsagroup.com");sQ1[66]=new Array("http://www.personalfinancefoundation.org/speeches/speech-05.ppt","National Norming Data for Financial Well-Being and Financial Distress and the InCharge Financial Distress Scale ","","National Norming Data for Financial Well-Being and Financial Distress Benoit Sorhaindo, InCharge Institute of America Jinhee Kim, University of Maryland Barbara O’Neill, Rutgers University Aimee D. Prawitz, Northern Illinois University E. Thomas Garman, Virginia Tech University Presented on November 17, 2005 in Scottsdale, Arizona the 22nd Annual Conference of the Association for Financial Counseling and Planning Education The leaders at the InCharge Education Foundation believe that anyone’s efforts to improve personal financial well-being and/or reduce financial distress have to be validly and reliability measured before attempting to pronounce that the information, education, counseling, advice, or other intervention "worked." The IFDFW has been developed to be one such measure. Organization of Presentation Introduction/Explanation Need for a financial distress/ financial well-being scale Purposes of the study Literature review Methodology Results Conclusions National norms Closing observations Two IFDFW Subscales Suggested uses of the IFDFW scale Preface Ex ante Need exists for FDFW scale Nearly 20 years in the making Built on several conceptual models Derived from 58 descriptive concepts Three-phase national Delphi study of personal finance experts’ rankings 20+ published academic studies Six national InCharge research studies including three national norming data collections Preface (cont’d) Ex post Each question met 12 validity and reliability criteria Scale selection and each anchor term met 5 criteria Strong statistical findings (0.956 Cronbach Alpha) IFDFW scale has predictive validity for six variables including health, job outcomes, and family relationships Need for a Financial Distress/ Financial Well-Being Scale Key deterrent to psychological well-being is economic distress Growing interest in financial education in USA to improve knowledge and behaviors Limited evidence, often anecdotal, shows that some interventions decrease financial distress and improve financial well-being Accurate and reliable subjective measures of financial distress and financial well-being do not exist If measure existed, levels can be assessed before and after purposeful interventions Purposes of the Study To create an InCharge Financial Distress/Financial Well-Being scale To report national norms of financial distress/financial well-being using the IFDFW Literature Review Conceptual models of overall well-being Overall well-being and personal finances Financial strain Conceptual models of financial well-being Financial well-being and financial behaviors Objective measures of financial well-being Subjective measures of financial well-being Financial distress Literature Review Financial distress and health Financial distress and job outcomes Levels of financial satisfaction, dissatisfaction and happiness Levels of financial distress and over-indebtedness Financial distress and personal bankruptcy Financial distress and credit counseling Methodology History of scale development (Cantril – NIFPEE –InCharge) Six data collections 2000 Panel Study of Financially Distressed 2001 Follow-up Study of Financially Distressed 18 Months Later 2003 Large Panel Study of Financially Distressed 2004 Omnibus Telephone Survey of the General Population 2004 Mail Survey of the General Population 2004 Mail Survey of Initially Financially Distressed Adults Beta Version of IFDFW Scale More than a dozen steps to develop the IFDFW Methodology Review of Over 10 Conceptual Models of Overall Well-being/Quality of Life Andrews & Withey Andrews & Withey Campbell Campbell, Converse & Rodgers Cantril Davis Diener Festiger Frisch, Cornell, Villanueva, & Retzlaff Frisch Olson, McCubbin, Barnes, Larsen, Muxen, & Wilson Methodology Review of Over 30 Conceptual Frameworks and Related Academic Research Studies Beutler & Mason Davis & Helmick Davis & Schumm Deacon & Firebaugh Festinger Fitzsimmons Hira, Bauer & Hafstrom Foster & Metsen Garman Godwin & Carroll Godwin Shinn Strumpel Wilhelm, Iams & Rudd Varcoe & Fridrich, Walson & Fitzsimmons Williams Williams Williams Winter & Morris Hafstrom Hafstrom & Dunsing Hira Jeries & Allen Joo Kim Lawrence, Carter & Verma Lown & Cook Porter Porter & Garman Prochaska-Cue Methodology Review of Over 10 General Population Surveys on Financial Stress/Financial Well-Being Caravan Saray (2004) Gallup (2004) ComPsych (2004) Putnam Investments (2004) Thrivent (2004) AARP (2004) Principal Financial (2004) American Express (2004) MetLife (2004) CIGNA (2004) Roper (2003) Methodology List Relevant Personal Finance Concepts, Attributes and Objects Over 50 concepts were judged relevant to aspects, conditions, or dimensions of personal financial distress and financial well-being Solicited suggestions from more than 50 personal finance college professors and more than 40 personal finance experts in business Methodology List Evolved to 58 Personal Finance Concepts that Describe Aspects of FDFW Concepts are illustrations of certain salient life experiences, behaviors, concerns, perceptions, and personal judgments regarding the common personal finance topics of money, credit, and economic resources Methodology Judge Each Concept Against Three Criteria Concept and its anchor terms describe distinct aspects of FDFW Likelihood that concept would occur in a substantive proportion of the population Concept would occur with adults whether or not they utilized credit cards and installment loans/leases Methodology 20 Concepts (1-10 of 20 Alphabetized Below) Ability to handle $1,000 financial emergency Ability to manage money Assessment of quality of personal financial behaviors Availability of savings to pay for 3 months’ living expenses Availability of money to go out for entertainment Availability of money to pay for minor emergency Confidence about a plan to reach financial goals Confidence about long-term financial future Confidence about being on-track for a financially successful retirement Feelings about level of financial stress today Methodology 20 Concepts (11-20 of 20 Alphabetized Below) Feelings about one’s current financial condition How good or bad finances are likely to be a year from now How well off financially Knowledge of personal finances Living today on a paycheck-to-paycheck basis Satisfaction with present financial condition Secure about one’s personal finances for retirement Spend some time at work on personal financial concerns Stressed about one’s personal finances in general Worry about being able to meet normal monthly living expenses Methodology Identify National Panel of Personal Finance Experts Of the 800+ members in the Association for Financial Counseling and Planning Education, 110 AFCPE members were initially identified who were long-term members, served on boards of directors or committees, made research or best practices presentations at conferences, written educational materials in personal finance, and/or otherwise known as leaders in personal finance Criteria reapplied and list was pared to 52 personal finance experts, and 45 participated Methodology Describe National Panel of Personal Finance Experts (Overlapping Characteristics of 45 Respondents) 31 women and 14 men 30 with doctoral degrees 10 extension specialists and agents 16 academic teaching professors 2 with foundations 5 retirement specialists 7 military financial counselors and financial aid specialists 6 from credit counseling 8 for-profit businesspersons 3 retired persons Methodology Presentation of Concepts to Experts in 3-Phase Delphi Study (95+% continuous participation in all phases) Concepts presented solely as concepts, not in a question format No scales or anchor terms were presented Experts ranked concepts as those deemed important for use in a scale Methodology Top-10 Rankings of the Third Phase of Delphi Study (In Descending Order; “1” is Highest Rank) Ability to handle $1,000 financial emergency Ability to manage money Availability of money to pay for minor emergency Feelings about level of financial stress today Feelings about one’s current financial condition Knowledge of personal finances Living today on a paycheck-to-paycheck basis Satisfaction with present financial condition Stressed about one’s personal finances in general Worry about being able to meet normal monthly living expenses Methodology Review and Apply Criteria for Scaling and Anchor Terms Scale selection criteria: Internally consistent, obtain intensity or strong feelings toward item, provide clear opposing contrasts, increase range of scores to more faithfully reflect individual differences in the attribute Anchor terms on 10-point scales: Four terms or descriptors placed below the numbers “1,” “10,” “4,” and “7” below a 10-point line; no words under center numbers “5” and “6” Content and construct validity: Enhanced by administration to multiple nationally representative samples of adults as well as multiple samples of financially distressed consumers; review of research; surveys of experts; attention to clarity, readability, appearance, and question sequencing Methodology Decide on Items for IFDFW Scale Review six questions from Beta version using data from 2004 Mail Survey of the General Population (N=1,300; 65% return rate on sample nationally representative population of 2,000) Factor analysis, Cronbach Alpha, scree plot, and principal component statistical analyses were promising Methodology Decide on Items for IFDFW Scale Review results again on clarity, comprehension, and content validity from three focus groups Review the questions associated with the top-10 Delphi rankings of personal finance experts using data from 1,300 respondents in the 2004 Mail Survey of the General Population Factor analysis, Cronbach Alpha, scree plot, and principal component statistical analyses were quite promising, yielding a single factor and a very high Cronbach Alpha Methodology Decide on Items for IFDFW Scale Each of the remaining 17 concepts were considered as potential contributors Reapplied the 12-item validity and reliability criteria established for IFDFW scale questions Three Delphi ranked concepts deleted because they were lowest three ranked in that study and each was redundant with other concept/questions The deletions slightly reduced the final 8-question IFDFW Cronbach Alpha to a still quite robust 0.956 and a single factor Methodology Decide on Items 3 Deletions From Delphi Rankings (“1” is Highest Rank) Worry about being able……………. 1.47 Paycheck-to-paycheck basis……… 2.24 Feelings financial condition..……… 3.06 Financial stressed general…………. 3.23 Financial stress today……………….. 3.27 Satisfaction financial condition…… 3.38 $1,000 financial emergency………. 4.00 Money for minor emergency……… 4.18 Personal finance knowledge………. 4.27 Manage money………………………… 4.62 Methodology Decide on Items 1 Addition to IFDFW 8. How often does this happen to you? You want to go out to eat, go to a movie or do something else and don’t because you can’t afford to? Methodology Correlations of the 8 Questions on IFDFW© (General Population) Methodology Factor Analysis (General Population) Methodology Component Matrix on the 8 Questions of the IFDFW (General Population) Preliminary Conclusions The InCharge Financial Distress/Financial Well-Being scale is a valid and reliable measure The 8-question self-report IFDFW scale subjectively measures a multi-dimensional construct of financial distress/financial well-being by assessing some combination of the variables of financial well-being, financial distress, financial strain, and financial satisfaction National Norms The following several slides present selected demographic information about the general population and basic norms for the IFDFW The data was collected in summer 2004 from two national samples National Norms: General Population (Mean=5.7; SD=2.4) (1-4: 30%) (7-10: 42%) Source: InCharge Education Foundation, National Norms on InCharge Financial Distress/Well-Being Scale for General Adult Population. 1 Means “Overwhelming Financial Distress/Worst Financial Well-Being”; 10 Means “No Financial Distress/Excellent Financial Well-Being” National Norms: General Population (1 Means “Overwhelming Financial Distress/Worst Financial Well-Being”; 10 Means “No Financial Distress/Excellent Financial Well-Being”) General population Mean=5.7; SD=2.4 Employed population Mean=5.7; SD=2.4 Financially distressed population Mean=3.4; SD=1.6 National Norms: Scores for Individual IFDFW Scale Questions General Population Versus Financially Distressed Population Two IFDFW Subscales: “InCharge Financial Distress Scale” and “InCharge Financial Well-Being Scale” Financial Distress (4 questions) Mean: 5.65 Standard Deviation: 2.23 Cronbach Alpha: Financial Well-Being (4 questions) Mean: 5.80 Standard Deviation: 2.76 Cronbach Alpha: 0.95 0.91 National Norms: Employment General Population National Norms: Household Income General Population National Norms: Education General Population National Norms: Gender General Population National Norms: Marital Status General Population Monitoring US Personal Financial Wellness The next several slides present the results of the ICEF quarterly survey of the national population to measure financial distress/financial wellness. In addition to the 2004 results measurements for the first three quarters of 2005 are shown. Monitoring US Personal Financial Wellness Monitoring US Personal Financial Wellness Monitoring US Personal Financial Wellness Closing Observations The 8-question IFDFW ostensibly measures the single construct of financial distress/financial well-being The IFDFW, in effect, assesses financial health Four questions aim to obtain a sense of one’s present state of financial well-being Four questions aim to obtain a sense of one’s reaction to his or her present state of financial well-being Average financial wellness of US consumers increased for the period considered: 2004/05 Suggested Uses of the IFDFW Scale and Norms Explain perceived financial distress and financial well-being Track changes, advances, and progress that individuals, families, and the general population make in their financial condition over time Compare IFDFW scores against the InCharge norms for the general population, employed population, and financially distressed population Create IFDFW norms for population segments Measure levels of severity of FDFW Increase understanding of consumers who are seriously financially distressed and have very low financial well-being Suggested Uses of the IFDFW Scale and Norms Screen large groups of people to determine if they are seriously financially distressed and have very low financial well-being Determine the educational needs of individuals and groups Identify and/or predict which consumers may need various types of appropriately targeted assistance, interventions and referrals (e.g., mental health counseling, employee assistance program counseling, marriage counseling, pastoral counseling, credit counseling, debt consolidation, bankruptcy, financial planning) Suggested Uses of the IFDFW Scale and Norms Compare treatments designed to reduce financial distress and improve financial well-being Compare measures of subjective and objective FDFW Provide insights into objective measures of FDFW Predict which consumers are likely to report poor health, poor family relationships, and poor job outcomes Assess productivity benefits to employers for employees who improve their FDFW Suggested Uses of the IFDFW Scale and Norms Compare means and standard deviations of findings with results of other studies Allow more generalizations about probabilistic relationships and other variables Formulate and test hypotheses Test causality in longitudinal research Contact Information Benoit Sorhaindo, Director of Research, InCharge Education Foundation, Inc., 2101 Park Center Drive, Suite 310, Orlando, FL 32835; Tele: 407-532-5704. Fax: 407-532-5750 Email: bsorhain@incharge.org Web: www.InCharge.org E. Thomas Garman, Author, Researcher and Advisor; Fellow and Professor Emeritus, Virginia Tech University, 8044 Rural Retreat Court, Orlando, FL 32819; Tele/Fax: 407-363-9048 Email:tgarman@bellsouth.net Web: www.EThomasGarman.net");sQ1[67]=new Array("http://www.personalfinancefoundation.org/speeches/speech-09.html","Personal Finance Employee Education Foundation","","Home About Us ROI Model Research Press Contact Speeches Workplace Financial Education: What Does the United States Federal Reserve Board Believe?, 2004, Financial Literacy and Education Commission, Washington, D.C., Gramlich Remarks by Governor Edward M. Gramlich At the second meeting of the Financial Literacy and Education Commission, Washington, D.C. May 20, 2004 Workplace Financial Education The Federal Reserve System has a long history as a promoter and provider of consumer education. An increasingly complex global financial system requires consumers to have a strong working knowledge of financial concepts. To highlight the importance of financial education and to make people aware of the multitude of financial education resources that are available to them, the Federal Reserve System launched a national public campaign that began in May 2003. But before we launched a public campaign, we began putting together a serious program of workplace education for our own Board employees. In November 2002, we sponsored a roundtable with fifteen to twenty employers that we identified as having active workplace education programs. Attendees, representing Reserve Banks, private corporations, and government agencies, discussed goals, plans, and how to get started. This group suggested some key features that we built into our own program. One was to make financial education a lifetime responsibility, for us and our employees. Another was to keep information current, relevant, and responsive to changing conditions. A third was to provide information through a range of vehicles. From this session we gathered information on best practices and formed an internal task force to plan, coordinate, and evaluate these efforts. The task force developed ongoing objectives for the program that include: increasing employees' understanding of how Board-sponsored benefit programs can contribute to short- and long-term financial well-being, improving employees' knowledge of basic financial concepts and improving their capability to make personal finance decisions, encouraging employees to adopt financial management behaviors that will help them increase their short- and long-term savings and better manage or eliminate debt, and evaluating the impact of workplace financial education on participation in Board benefit programs and financial behavior through appropriate metrics. To carry out our objectives, we use a variety of methods. We host lunch-time seminars, offer morning or afternoon programs, and place articles and educational materials on our internal electronic newsletter. We are also developing an internal web site designed to improve employees' knowledge of finance, benefits, health, and career development issues. Our programs and educational materials cover a variety of topics. "Making Sense of Your Credit Report" provides information on the factors that can positively or negatively affect a credit report. "College Savings: Making Education Your Financial Goal" discusses education as a financial goal and presents information on Coverdell Education Savings Accounts, U.S. Savings Bonds, and Qualified Tuition Programs as types of savings vehicles for achieving that goal. Programs on estate planning and retirement are offered, as well as seminars on financial planning and advanced investment. Many of these programs are geared to those employees who have been in the workforce for many years. However, understanding that many of our young people don't receive formal course work in financial matters, we designed a program that is more meaningful to new professionals. This program, which is designed for those young people just entering the workforce, discusses the importance of starting to save at a young age, homeownership, advanced education, and avoiding debt. Workplace education benefits both the employer and employee. For the employee, more knowledge, one hopes, will result in better financial decisions and overall financial well-being. Employees who are taking maximum advantage of the benefits available to them will more likely have greater job satisfaction, which may result in lower turnover. For the employer, research studies have shown that employees who are financially healthy are more productive. They are absent less often, spend less time at the workplace dealing with financial crises, and earn higher job performance ratings. We commend the Commission for recognizing workplace education as an integral component in formulating a national financial education strategy. Key Questions Speeches Best Providers Best Resources Provider Brochure Employer Brochure Exemplary Employers Donor Information PFW Scale Information Copyright 2006, 2007, 2008 Privacy &nbsp| &nbsp Site Map &nbsp| &nbsp Terms of Use");sQ1[68]=new Array("http://www.personalfinancefoundation.org/speeches/speech-10.ppt","Slide 1","","Super Literacy: From Bamboozlement to Engagement— The Bottom Line for Funds and Employers Dr. Thomas Garman November 11, 2004 Contents What is financial literacy? Why does it matter? What does poor financial literacy cost? What is effective financial education? Who should take the lead? What are the outcomes? Final messages What is Financial Literacy? “The ability to make informed judgments and to take effective decisions regarding the use and management of money” CLTF Being a good money manager means…. I understand financial products and how to use them to achieve my goals and monitor my progress I know I am doing okay How many good money managers do you know? What are the Results of Good Financial Literacy? Concepts, principles and knowledge test scores for school children; however, for adults… Good money managers have a high level of ‘Financial Well-being’ They have the 3 Cs Attitudes, Behaviours, Control, and Confidence to succeed financially The best financial education makes this happen, and note that this is not product education Four Easy Literacy Questions? “How confident were you at age 25 to invest $5,000 for retirement 35 years later?” (Confident or not?) “Can you choose to be financially secure?” (Disagree or agree?) “Does the financial health of your members/employees drive the financial health of your business?” (Disagree or agree?) In fact, good member/employee financial well-being drives employer profits and Super Fund success. One Who is Not Financially Literate… Makes poor spending choices Overly indebted Postpones saving Suffers financial stress Is bamboozled Has multiple super accounts Education ONLY about products contributes to financial illiteracy. Why? It makes people… Not Engaged Passive Anxious Confused One Who is Financially Literate…is Engaged in Money Issues Comparison shops Achieves short, medium and long term savings goals Product selections match savings goals Enjoys average to above average financial well-being The custodian on my floor who makes US$16,000 has high financial well-being Aware Active Confident Motivated Why Financial Literacy Matters 88% report they have only basic financial skills; 60% lack confidence to make a financial decision; 46% are anxious about it (Money Solutions) 48% unaware of choice of fund (ACNielsen) 2 generations of working adults have low literacy (CFLTF) Average age of Australian nurses is 46 years; it’s 48 for teachers. They did not learn personal finance in schools, thus they are in desperate need for workplace financial literacy education. Why Financial Literacy Matters The costs and responsibilities of choice concerns both funds and employers Employees will make choices when they join and leave an employer (20% pa) Choice will cost funds/employers money spent on education, more than current estimates However, some people still will make poor choices Current ‘product education’ emphasis has had little impact on savings Thus, financial literacy is a community issue Key Questions How literate are your members/ employees? (How literate are YOU?) Can they assess their money management choices? Can they make the ‘right’ financial decisions? Human Resources Director’s recent workshops on only 3 choices resulted in confusion because the employees were not provided education to understand the choice information before them Are they ready for choice? What Does Poor Literacy Cost? Financial stress is a major source of relationship tension Stress adversely impacts health, job errors, workplace accidents Lower national savings because those with low financial well-being cannot save $10 - $20 per payslip Results in higher burden on public purse What does Poor Literacy Cost? Australian Research… 2/3 lack funds to meet retirement goals (ANOP) 50% are not saving for retirement (FPA) Cost of mistakes is high: for someone earning $36,000 per annum, up to $790,000 is potentially lost lifetime wealth (CFLT) Baby Boomers under-prepared (ANOP) Singles and women are even less prepared (ANOP) 31% of families with children in financial difficulty (CBA Smart Savings Survey 2003) What does Poor Literacy Cost? US Retirement Savings 1 in 5 adult workers are overly indebted and financially distressed 75% do not save or do not save enough “For many American workers, their VISA balance is larger than their 401(k) balance” “Many American owe more on the SUV parked in their driveway and on their MasterCard than their balance in their 401(k) account (median 401(k)=US$55,000)” What does Poor Literacy Cost? Tom’s research says: “Every time someone on your work team brings his/her money worries to the job, workplace productivity drops” Pay no attention to the elephant Can you recognise a financially stressed employee? No! Poor Financial Literacy: US NAVY 43% problem paying bills; officers 45% Bad checks – 174,000 Wages garnished – 108,000 Bankruptcies- 4,300 Security revocations – 60% Non-deployment - 28% Teleconference: ADF has similar issues US $1B Key Question What does poor financial literacy cost your organisation? The total cost of poor financial literacy for all Australians could run into the billions Poor financial literacy is very hard on individuals and families Lost productivity is a big issue TODAY What is Effective Education? Aims to improve ‘financial well-being’ by building the right attitudes, behaviours, control, and confidence (The ABCs) Provides a blend of education, guidance, coaching, and advice to reinforce learning and motivate to take next steps (Guidance and coaching is not in the US model; hats off to good Australian financial educators) Empowers people to believe ‘I can do this’ Money skills are learned habits, like driving a car (My mom taught/coached me to drive) Most people learn best by doing, not reading What is Effective Education? Learning framework/structure should- Build knowledge, involvement, confidence, motivation, and action Offer an on-going process to change savings habits Be personal (to one’s money experience and to one’s investment experience) and relevant (at MY teachable moment; Tommy saves $2,000 a year for only 10 years starting at age 21, but twin Timmy does not begin until age 31 and he will never catch up) Be interactive Should be scaleable, accessible, and affordable (Please note that this is not just product knowledge education) Effective Education Includes? Interactive Learning sparks curiosity 1-on-1 Guidance changes behaviors Scaleable Education Complex Advice Single Issue Advice Financial Advice Most people need this 80% 50% Some people need this 20% Key Questions How much are you spending on financial education today? Does it engage your members/employees? Is it delivering results? Do you know what quality education should achieve? Do you know how to measure success? Funds and Employers Should Take the Lead Super decisions and most learning occurs in the workplace Both are major beneficiaries of a literate population Both offer the most relevant places where education can be provided continuously Why Should Funds Take the Lead? Choice - Opens the market to more competition Gives members the power to make good or poor choices (Funds want members to be well-informed) Creates opportunities and risks for every fund (Fidelity and other US companies are expanding their workplace financial education efforts because they now recognize they risk losing US$500,000 or US$1,000,000, or more, from too many long-time members who move their money to funds that offer more a engaging, personalized and empowering financial education program) Financial success for funds is based on growth in both funds under management and members Why Should Employers Take the Lead? Choice - Will be exercised at work Will be confusing for many Will require additional resources Will create the risk of litigation Why Should Funds and Employers Work Together? Become the “fund of choice” and “employer of choice” Share the cost of quality education Measure the outcomes If your education provider is not delivering, sack them! Key Questions What can your organisation do TODAY to deliver quality financial education effectively to your members and employees? What organisations can you collaborate with to improve member/employee financial well-being? Fund Outcomes Members Retention and attraction Higher voluntary contributions More funds under management Lower benefit protection costs Better asset allocation decisions More satisfied members Achieve long-term savings objectives Make better use of other member benefits Employer Outcomes Research (Tom’s and others) shows that financial well-being has little to do with income or age. Research shows that as financial well-being rises, these factors definitely improve for many employees (holding income and education constant) Stress about money issues Health and work life (FWB predicts 25% of health) Pay satisfaction Job performance rating Intention to quit employer Retirement savings contributions The fact is that financial well-being definitely predicts these job outcomes Australian Financial Well-being Scale The Australian Financial Well-being Scale measures one’s subjective financial well-being It comes from researching people’s ‘poor’ and ‘good’ financial behaviors AFWBS – Made up of 10 questions on the ABCs of financial well-being (attitudes, behaviors, control, and confidence) Stands on the shoulders of 20 years of US research Developed in cooperation with University of Melbourne professor of tests and measurements AFWBS assesses one’s “Financial Health” much like a doctor checks one’s temperature, blood pressure and heartbeat AFWBS 10 questions ask: How satisfied, How well off? How do you feel? ‘It’s all about me!’ Am I in control? Am I on track financially? Australian Financial Well-being Scale (Insert slightly skewed distribution here; insert two 20% boxes below toward left and right sides of distribution; insert words “Take a snapshot of employees’ financial well-being and then look at last year’s absenteeism and job performance ratings for those employees with good FWB [upper 20%] and poor FWB [lower 20%], and take those results to executives”; place a ‘US 5.7’ at appropriate point in distribution) 20% 20% Employer Outcomes These are the outcomes that can be expected from good financial well-being Cost Savings Absenteeism and sick days Workers’ compensation claims Turnover Accidents and errors Disciplinary actions Revenue Gains Less work time spent on finances More presenteeism (Present, but not focused; Talent2 November 2004 study of 1,000 Australian found 20% waste at least one full day of work each week) More productive key personnel Retention of ‘best’ employees Employer Outcomes US employers can expect $450 in job outcomes from each employee who slightly improves financial behaviours and financial well-being (Tom’s research) Based on a program cost of $150, this is a ROI of 3:1 A similar return might be expected in Australia WHY? Because work outcomes are directly related to financial well-being The Financial Well-being Scale Allows YOU to… Benchmark how your employees are doing financially – today Get baseline data now using the Australian Financial Well-being Scale? Apply Quality Financial Education Ask later on if and how much– Financial behaviours and well-being have improved Work outcomes improved Calculate the ROI – WHY? PTO Employer and Fund Outcomes “Our goal at Monsanto is to have employees who are so financially astute and so financially secure that they work for us because they want to not because they have to.” (CEO response to why employees, spouses and significant others are given 6-8 hours per year to learn financial education on company time) ?Schlumberger ? United Parcel Service ? Weyerhaeuser ? IBM ? Mobil ? US Department of Defense ? TIAA-CREF ? Chrysler Take Action! Choose a financial education provider who does it the “right way” and shows a commitment to measuring the results Benchmark the levels of financial well-being before and after implementing a program Calculate the ROI on work outcomes Explain the bottom-line argument to CFO and other executives Key Questions Do you understand what money skills your members/employees need? What is the strategic benefit? Do you want to be a fund/employer of choice? How can you measure what you implement? Final Messages Australian research shows that financial literacy is low and has substantial hidden costs Quality financial education can deliver a substantial payback Funds and employers have the responsibility and opportunity to address the issue TODAY Final Messages Changing people’s money behaviors, habits and skills creates more confident, self-reliant and productive members and employees When people understand what they need and why, they are empowered to save for the future (They create their own utopia of financial well-being) Who will be the early adopters and champion financial education? In Closing I leave Super Funds, their members, employers, and their employees with the immortal words of the great US baseball player, Yogi Berra, of the New York Yankees, who often fractured the English language with his truisms like: ‘If you don’t know where you are going, you will end up somewhere else.” Thanks!");sQ1[69]=new Array("http://www.personalfinancefoundation.org/speeches/speech-11.pdf","Microsoft Word - Arnone3-11-04edit.doc","","Educating Pension Plan Participants William J. Arnone Ernst & Young LLP Prepared for presentation at the 2004 Pension Research Council Symposium, April 26-27, 2004 Reinventing the Retirement Paradigm All findings, interpretations, and conclusions of this paper represent the views of the author(s) and not those of the Wharton School or the Pension Research Council. The Council will publish a revised version of the conference papers; see http://prc.wharton.upenn.edu/prc/prc.html. Copyright 2004 © Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved. Educating Pension Plan Participants William J. Arnone Abstract This paper discusses the use of educational programs by large employers to help employees make informed decisions in connection with their retirement plans. It examines the history and types of programs offered, their scope and objectives. It also explores whether there is adequate evidence that these programs increase the efficacy of retirement savings. The first section provides a definition of employer-sponsored participant education programs. The second section describes the history of, and variations in, such programs and suggests an optimal program. The third section reviews studies on the impact of such programs on participant behavior and suggests a model for future program evaluations and research. Educating Pension Plan Participants William J. Arnone What is Employer-sponsored Participant Education? As noted by Olivia Mitchell and Sylvester Schieber: "(P)ension education is becoming increasingly important to sponsors of DC (defined contribution) plans. Participants vary according to the types of information they need and can process regarding investment risk, return and related issues. Examining alternative approaches to pension education reveals that the way pension education is presented can have a large impact on pension plan members' investment behavior." (Olivia S. Mitchell and Sylvester J. Schieber, eds., Living with Defined Contribution Pension Plans, Philadelphia: Pension Research Council and University of Pennsylvania Press, 1998: 11) A practical definition of employer-sponsored participant education is a program that helps employees develop skills to make informed decisions and take action to improve their financial well-being. This definition incorporates the following key elements: Helps individuals based on their status as employees of an organization Provides recipients with skill development, which may include either new competencies or the enhancement of existing competencies Enables participants to make decisions about issues Provides a basis of accurate, unbiased information for such decisions Is action-oriented and thereby attempts to affect behavior Seeks the long-term result of improved financial well-being What Types of Programs Have Employers Provided? 2 Employer-sponsored participant education programs are an outgrowth of pre-retirement planning programs that were offered by many large (i.e., at least 1,000 employees) employers in the 1980s. Pre-retirement planning programs were typically limited to employees who were within a few years of being able to retire under their employer's defined benefit pension plan. The primary goal of these programs was to help participants identify their basic retirement decisions and start planning for a relatively imminent departure from the workforce. The focus of pre-retirement planning programs was on projecting income sources in retirement (e.g., pension plans, savings plans, Social Security, personal investments, part-time employment), matching these to projected income needs, and deciding on a retirement date that seemed workable. The emphasis was on the financial side of retirement in general and on plan distribution options in particular. Some programs included small doses of non-financial concerns, such as health, housing, life adjustments, and other financial issues, such as estate planning. Employers that offered pre-retirement planning seminars to employees, who were often able to participate with their spouses, reported that the most common reaction by participants was two-fold: first, that the seminar was one of the best "benefits" ever provided to them as employees; and second, that the employer should have provided a program much earlier in the employee's career when planning horizons were much longer. The subsequent stimulus for employer-sponsored education for employees at younger ages was due to the enormous shift in retirement funding from defined benefit to defined contribution plans that took root in the 1980s. As 401(k) and similar DC plans became more prevalent and prominent, employees assumed more responsibility for making retirement financing decisions and living with the lifelong consequences. Some leading employers recognized the need to equip employees with tools and resources to meet this new responsibility. 3 Employee success in achieving financial security became part of the business of the human resource function, especially as its strategic focus turned to recruiting, retaining and motivating a committed, productive workforce and optimizing the deployment of human capital to enhance shareholder value. While the scope of some employer educational efforts was broad and accompanied a lifeevents approach to benefits communications, most employer-sponsored education was narrowly focused on investing in company-sponsored 401(k) or other DC plans. Participant investment education did not, however, achieve mainstream status until the U.S. Department of Labor issued guidelines under Section 404 (c) of ERISA. These guidelines, issued in 1992, clarified the "sufficient information" requirement for a plan sponsor to claim 404 (c) protection against participant claims due to investment losses in participant-directed accounts. In 1993, for example, the Institute for International Research sponsored a conference on "Designing and Implementing Investment Education Programs for 401(k) Plan Participants" in what was billed as "the first forum dealing with the most critical issue facing human resource, employee benefits and trust investment professionals." In 1995, the U.S. Department of Labor launched a "national pension education program aimed at drawing the attention of American workers to the importance of taking personal responsibility for their retirement security." (Former Assistant Secretary of Labor Olena Berg, quoted in B. Douglas Bernheim, "Financial Literacy, Education and Retirement Saving," in Olivia S. Mitchell and Sylvester J. Schieber, eds., Living with Defined Contribution Pension Plans, Philadelphia: Pension Research Council and University of Pennsylvania Press, 1998: 38) At the time of this campaign, the theme of which was "Save! Your Retirement Clock is Ticking," there were estimates that 88 percent of large employers offered some form of financial 4 education, more than two-thirds of which added these programs after 1990. (Pensions and Investments. "Employees Getting More: Investment Education, Planning Help on the Increase." January 23, 1995: 74, cited by Bernheim: 39) In 1996, the Department of Labor gave further impetus to participant education when it issued Interpretive Bulletin 96-1, which distinguished such education from investment advice under ERISA. At that time, plan sponsors were extremely reluctant to cross the line and provide investment advice due to concerns over potential fiduciary liability. Today, however, some employers have concluded that the risk of offering advice is less than the risk of not offering it. Surveys have been all over the lot when it comes to estimates of how many employers offer such advice. According to the Profit Sharing Council of America, 22 percent of its 141 member companies made investment advice available to plan participants in 2002. (Profit Sharing Council of America, February 2002) Investment advice approaches fall into one of three categories. Advice Directly from Plan Providers with Disclosures. The Retirement Security Advice Act, sponsored by Rep. John Boehner (R-Ohio), has passed the House of Representatives in each of the past three years. Although it has had the ongoing support of the Bush Administration, it has been unable to pass the Senate. Under this bill, a plan sponsor may authorize a plan provider to take on the role of investment advisor under ERISA. The advisor may be a provider or manager of plan investment funds, but must disclose to participants relevant fees and potential conflicts of interest. The provider would be able to give advice directly to participants without using independent sources of advice. Advice from Plan Providers Using Independent Sources. The U.S. Department of Labor issued advisory opinion 2001-09A in December 2001 to SunAmerica, allowing a financial institution to 5 offer advice to plan participants, but only if the source of the advice is independent of the institution as plan provider. This opinion also allows participants to delegate investment decisions to professional advisors who in effect take over the management of their 401(k) accounts. The opinion defines "independent" as receiving no more than 5 percent of revenues from a source related to the financial institution. Advice from Independent Sources Only. The Independent Investment Advice Act, introduced by Sen. Jeff Bingaman (D-New Mexico), would protect plan sponsors who offer investment advice from liability, but only if the advice is given by independent firms that do not provide or manage plan funds. Similar legislation introduced by Sens. Edward Kennedy (D-Mass.) and John Kerry (D-Mass.) reflects this approach. Until further action by Congress or the Labor Department, many plan sponsors have concerns about the extent to which they might be liable for losses with respect to investment advice they make available to participants. The most recent federal initiative to promote financial education has come from the U.S. Treasury Department's Office of Financial Education (OFE). In January 2004, it released the first issue of its on-line, quarterly newsletter, "The Treasury Financial Education Messenger." The inaugural issue contains a message from Treasury Secretary John Snow stressing the importance of financial education and highlighting eight elements of a successful financial education program. (U.S. Department of the Treasury, Office of Financial Education, Washington, D.C, 2004) Employee financial education programs have by and large been vaguely defined. Most surveys have accepted employer statements that they have such programs without subjecting such statements to independent scrutiny. For example, a Towers Perrin TP Track survey of 122 6 companies reported in August 2002 found that 33 percent educated their employees "constantly" about investments. Other respondents limited educational activities to plan enrollment periods (32 percent) or to employee requests (24 %). (Towers Perrin TP Track survey, reported in Plan Sponsor.com, August 2002) Typical program deliverables include: Generic print (e.g., newsletters, guides, workbooks) Personalized print (e.g., individual benefit statements, retirement projections) Group learning (e.g., live workshops/seminars, on-line sessions) Individual learning (e.g., CDs, videotapes, audiotapes, Web-based self-study modules) Telephone counseling Face-to-face counseling Web-based tools Few employers have made these programs such a priority that they established positions in their human resource or benefit functions that were devoted in whole or in part to education. One employer who did so was Xerox, which created the position of "Manager, Benefits Education." (Barocas, Victor S., The Conference Board. "Benefit Communications: Enhancing the Employer's Investment, 1993: 14) Using an optimal definition ­ an employer-paid program available throughout the year during working hours and including education that is both custom-tailored to the employer's specific benefit plans and individualized to each employee ­ I estimate, based on 25 years of experience consulting with employers on this topic, that no more than 20 percent of large employers can legitimately claim that they have such a program. The vast majority of 7 participants in 401(k) plans remain in effect on their own when it comes to obtaining financial planning assistance. What Impact Have Such Programs Had on Participant Behavior? Meaningful evaluations of employee financial education activities should ideally establish what is to be measured as part of the research and planning phase of a program, occur throughout the program at certain milestones, assess changes in the actual impact of various educational activities over time, and utilize both quantitative and qualitative measures. Few if any programs have thus far been subject to this level of evaluation. As noted by B. Douglas Bernheim: "Much of the evidence on the effects of retirement education in the workplace is derived from qualitative surveys and case studies." (B. Douglas Bernheim, "Financial Literacy, Education and Retirement Saving," in Olivia S. Mitchell and Sylvester J. Schieber, eds., Living with Defined Contribution Pension Plans, Philadelphia: Pension Research Council and University of Pennsylvania Press, 1998: 57) The few reported studies that have attempted to provide quantitative evidence of the effects of such education lack "detailed descriptions of program structure and content." (Bernheim: 57) Furthermore, virtually all reported studies are based on participant statements of satisfaction with program deliverables, typically captured in questionnaires immediately following their participation, and expressions of intent to take action. No reported attempts have been made thus far to track actual changes in participant behavior as a result of participation in employer-sponsored education programs. A successful program needs a baseline of data from which to measure progress. In view of technological advances in plan recordkeeping, more data on employee 401(k) and other benefit plan activities are now available to identify patterns that may have serious long-term 8 retirement security consequences. Such data will be more meaningful if supplemented with qualitative assessments of different employee population segments. Sources of segmentation data are surveys, individual interviews and focus groups. Employees may be segmented in many different ways, including demographic cuts (e.g., age, years of service, gender, income, education), job (e.g., business unit, location, function, pay level), financial sophistication (e.g., basic financial literacy, interest in money management, investment savvy, retirement confidence) and learning styles (e.g., self-study vs. instructor-led, group learning vs. individual counseling, live vs. Web-based, text vs. graphics). Overall, plan sponsors do not appear to be satisfied with their current employee financial education programs. According to a January 2004 survey by investment education provider ICC Plan Solutions, only 11.9 percent of plan sponsors said they were satisfied with their current programs, while 73.8 percent said that their participants needed help with basic investing knowledge. Employers are also seeing evidence of increasing financial difficulties on the part of their employees through such vehicles as employee assistance programs. For example, according to a February 2004 release by ComPsych, a Chicago-based employee assistance provider covering about 25 million people worldwide, 40 percent of all work-life calls made by workers were related to financial help, up from 26 percent a year earlier, Plan sponsors today seem most concerned with five patterns of participant behavior that run the risk of jeopardizing their future financial well-being. These are: Non-participation in plans Low rates of plan contributions Questionable investment allocations 9 Loans Distributions upon termination Participation According to Fidelity Investments, the average participation rate in large 401(k) plans is approximately 70 percent. (Fidelity Investments, "Building Futures," Report IV, 2003) Recent studies have indicated a downward trend in participation rates. For example, Hewitt Associates reported that average plan participation in 2002 was 68.2 percent, which represented a decline of 2.8 percent across comparable plans. (Hewitt Associates. "How Well Are Employees Saving and Investing in 401(k) Plans," 2002) A study using the Federal Reserve Board's 1998 Survey of Consumer Finances examined the factors that influence an employee's decision to participate in a 401(k) and how much to contribute to the plan. The authors found that, in addition to being positively associated with a worker's age, income, education, and length of service, participation was greater among employees whose planning horizon was four years or more. They interpreted this result to suggest that educating employees on the importance of planning for retirement could raise savings rates. This research indicated that the amounts employees contributed were positively related to employee income and wealth, long planning horizons, employer matching contributions, and the ability to borrow from the plan. (Alicia H. Munnell, A. Sunden, & C. Taylor, "What Determines 401(k) Participation and Contributions?" Working Paper 2000-12, Center for Retirement Research, Boston College, Chestnut Hill, MA, December 2000) There have been attempts to measure the impact of employee education on plan participation. Clark and Schieber (Clark, Robert L. and Schieber, Sylvester J., "Rates and Contribution Levels in 401(k) Plans," in Olivia S. Mitchell and Sylvester J. Schieber, eds., Living 10 with Defined Contribution Pension Plans, Philadelphia: Pension Research Council and University of Pennsylvania Press, 1998) considered various levels of plan communications, all of which involved the provision of written information (e.g., enrollment forms, statements of account balances, generic newsletters, custom-tailored materials). They found that "increasing the quality of communications significantly increases participation rates." For example, providing generic materials in addition to forms and statements increased the probability of participation by 15 percentage points. Using custom-tailored information increased the probability by another 21 percentage points over only providing forms and statements. To isolate the impact of such materials, the match rate was held constant. Indeed, one of their most important findings was that "improving communications concerning the plan has nearly as significant effect on the probability of participation as does increasing the match rate." They also found that "workers make current participation decisions based on education programs that were put in place by the firm at an earlier date." A key determinant of impact is frequency. According to Bernheim: "While the provision of low-frequency education raises participation rates on average by 13 percentage points, highfrequency education increases this rate on average by 25 points." (Bernheim, op. cit., p. 63) More recently, a study was conducted of one-hour financial education seminars provided by TIAA-CREF at educational institutions and other nonprofit organizations. As reported by Clark and d'Ambrosio, the study was based on surveys given to participants at the start, immediately after and three months following seminars. The first round of surveys covered 270 respondents. The primary behavioral focus of the study was on the impact of the seminar on participants' retirement goals, particularly their planned retirement age. The first round results found that nearly 10 percent stated that they had increased their retirement age and that nearly 18 11 percent decreased their retirement income objective. In addition, according to the study, "a high proportion of seminar participants indicate that they plan on being more active in determining their retirement savings." (Clark, Robert L. and Madeleine B. d'Ambrosio, "Financial Education and Retirement Savings," Society of Actuaries, San Francisco, CA, June 2002) Contributions According to the Profit Sharing Council of America's 46th Annual Survey of Profit Sharing and 401(k) Plans, 401(k) deferrals averaged 5.2 percent in 2002. Hewitt Associates, however, reported that the average contribution rate in 2002 was 7.8 percent. Even the higher rate, however, represents an inadequate contribution rate, especially by those participants for whom their 401(k) plan is the primary retirement funding vehicle and their only form of longterm savings. According to a January 2004 study by Prudential Financial, only 31 percent of today's workers report contributing the maximum allowed to their company's 401(k) plans. Low plan contribution rates include failure to at least gain the full employer match on the one hand and limiting contributions only to matched dollars on the other. Clark and Schieber also found that certain types of participant communications had a considerable positive impact on contribution rates. Specifically tailored plan information resulted in an increase in the annual contribution rate by two percentage points. Investments Many plan participants appear to be engaged in questionable investment behavior ranging from problematic asset allocation and failure to rebalance funds periodically to specific fund selections that indicate nondiversification of retirement assets in general and overconcentrations in employer stock in particular. 12 According to Fidelity Investments, one quarter of participants hold only one investment option in their 401(k) plan. (Fidelity Investments, op.cit.) According to Hewitt Associates, 41 percent of plan participants held only one or two funds in 2002. (Hewitt Associates, op. cit.) There is also some evidence of choice overload in plans leading to dubious participant decisions, including non-participation. (Iyengar, Sheena S., Wei Jang and Gur Huberman, "How Much Choice is Too Much: Contributions to 401(k) Retirement Plans," Pension Research Council, 2003) According to the Employee Benefit Research Institute, over 8 million 401(k) participants hold more than 20 percent of their plan assets in company stock. (VanDerhei, Jack, EBRI, "The Role of Company Stock in 401(k) Plans," February, 13, 2002.) Hewitt has reported that company stock averaged 41.8 percent of balances among participants holding any company stock. (Hewitt Associates, op. cit.) Investment advice providers have only recently begun to report on internal evaluations of participant use of their programs. The International Society of Certified Employee Benefit Specialists surveyed employers who provided advice to their employees and reported that 18% of participants shifted asset allocations as a result of their use of on-line advice services. Overall, however, 70 percent of employers either did not measure the impact or did not know. (International Society of Certified Employee Benefit Specialists, "New Kid on the Block: Financial Planning as an Employee Benefit," reported in Employee Benefit Plan Review, February 2002). None report using independent third party assessments. Loans A loan provision is a common feature in most 401(k) plans and approximately 20 percent of plan participants have outstanding loans at any one point in time. Few participants understand 13 the true cost of loans and their negative impact on long-term retirement funding. No reported program evaluations have focused on this aspect of participant behavior. Distributions Many participants cash out lump sums upon termination of employment, instead of deferring distributions or rolling them over to individual retirement accounts or other employer plans. As a result, there is widespread "leakage" of retirement funds. No reported program evaluations have focused on this aspect of participant behavior. A Future Model? Working with the Employee Benefit Research Institute (EBRI), a large client of Ernst & Young's employee financial education practice is in the process of an evaluation that will track actual employee 401(k) plan behavior and correlate changes in such behavior to employee participation in live workshops on saving, investing and retirement planning, employee viewing of a videotaped workshop, and employee use of an on-line modelling tool provided by another firm. The sample size will be approximately 25,000 participants. Specific participant behaviors being studied are changes in: participation in the employer's 401(k) plan; 401(k) plan contribution rates; and plan investment selections. This type of quantitative evaluation of actual behavioral change by an independent third party may serve as a model for future program evaluations. 14 References Barocas, Victor S. 1993. The Conference Board. "Benefit Communications: Enhancing the Employer's Investment". Bernheim, Douglas. 1998. "Financial Literacy, Education and Retirement Saving." In Living with Defined Contribution Pension Plans, Olivia S. Mitchell and Sylvester J. Schieber, eds. Philadelphia: University of Pennsylvania Press: 38-68. Clark, Robert L. and d'Ambrosio, Madeleine B. 2002. "Financial Education and Retirement Savings," Society of Actuaries, San Francisco, CA, June. Clark, Robert L. and Schieber, Sylvester J. 1998. "Rates and Contribution Levels in 401(k) Plans." In Living with Defined Contribution Pension Plans, Olivia S. Mitchell and Sylvester J. Schieber, eds. Philadelphia: University of Pennsylvania Press: 69-97. Fidelity Investments. 2003. "Building Futures," Report IV, Boston, MA., December. Hewitt Associates. 2002. "How Well Are Employees Saving and Investing in 401(k) Plans," Lincolnshire, IL. Institute for International Research. 1993. "Designing and Implementing Investment Education Programs for 401(k) Plan Participants." New York. International Society of Certified Employee Benefit Specialists. 2002. "New Kid on the Block: Financial Planning as an Employee Benefit," reported in Employee Benefit Plan Review, February. Iyengar, Sheena S., Wei Jiang and Gur Huberman. Forthcoming. "How Much Choice is Too Much: Contributions to 401(k) Retirement Plans." In Pension Design and Structure: New Lessons from Behavioral Finance, Olivia Mitchell and Stephen Utkus, eds. Oxford: Oxford Univ. Press: 83-96. 15 Munnell, Alicia H., Annika Sunden, and C. Taylor. 2000. "What Determines 401(k) Participation and Contributions?" Working Paper 2000-12, Center for Retirement Research, Boston College, Chestnut Hill, MA, December. Pensions and Investments. 1995. "Employees Getting More: Investment Education, Planning Help on the Increase." January 23. Plan Sponsor.com. 2002. "Did You Know? Investmen