FinFit: Teaching Employees Financial Literacy Boosts Your Bottom Line With Charles Lattimer

William:  00:33
Gentlemen, this is William Tincup and you are listening to the RecruitingDaily podcast. Today we have Charles on from FinFit and we’re going to talk about teaching employees financial literacy boosts your bottom line. And 180 years, when I had a bunch of employees, I taught a credit class. These are mostly 20-year-olds, but I taught them a credit class and it was just kind of a fun bit because I was teaching them about how to both establish credit, but also how to go and fix their credit if they had some problems. And so when Charles and I started going back and forth on this topic, I was like, you know what? This brings back old memories, but obviously, they go a bit deeper than a simple credit class that I did 180 years ago. Charles, do us a favor, do the audience a favor and introduce both yourself and FinFit.

Charles:  01:31
Perfect. Thank you so much, William, for having me on today. I’ve been really excited to have this conversation and I’m a big fan of the use case. You do really extraordinary work. So once again, thank you for having me on. Once again, my name is Charles Lattimer. I’m the Vice President of Innovation and Research at FinFit. We are one of the largest oldest, financial wellness companies in the country, but bottom line, some things just simply have not changed since the pandemic. We are still over six out of 10 employees living paycheck to paycheck. One in three employees that turnover does so because of financial stress, and the most daunting statistic that we face and as FinFit, just as an organization, is that over 50% of all employees that need financial help are just too embarrassed to ask for it.

Charles:  02:28
So at FinFit, what we really pride ourselves in is we remove that embarrassment for employees to ask for financial help and we solve their short-term financial problems. And when we do that, we then open up a financial wellness journey, reward employees to increase their savings through payroll, and hopefully sustain their behavior over the long-term with one-on-one financial coaching and access to free banking services. So we really try to open up access to financial wellness to all employees. And then the upshot of that for employers is that we have a positive, dramatic impact on retention. And of course, that helps with recruitment. And so that’s sort of in sum where we are working and where we are innovating in the marketplace.

William:  03:24
Well, there are two things that I love about what you’re doing. One is it eliminates or at least reduces the taboo. We’ve all got, come on. Life happens. No one goes through life unscathed. There’s going to be something. Although my brother’s credit rating has always been perfect, most people go through something. And so you’ve lessened that by not just having it for a few people. It’s like, hey, listen, this is access to everybody. And the other part that I love is it’s personalized. Some people are dealing with student loans and crushing debt there. Some people are dealing with credit card debt. Some people might not know how to save or what to do with savings. And so you look at each person individually and then put them on a plan. Whatever that plan is, it might be to get rid of debt or it might be to save, or it might be their first home or whatever, buying a car or whatever it is, it’s personalized to their needs.

Charles:  04:29
That’s exactly right. One of the things that continuously strikes me is that the problem is so deep that, when you’re really looking at six to seven out of your entire workforce are living paycheck to paycheck. So that any small financial event that hits can be on some level catastrophic, that you really have to meet, to your point William, employees exactly where they are. And then once you do that, we do that by solving short-term financial challenges through an array of different means. But once you do that, we then open up a conversation that typically begins with a financial assessment. And then we design a guided financial journey that’s specific to each one of our members. And we have found that that coupled with rewards and then coupled with all of the infrastructures in terms of having savings accounts and have that connected through payroll, that really is just a magical combination that one gets utilization, but then behavior change over time.

William:  05:47
So take us into, not anyone specific obviously, but just an example of the journey. So let’s bring in a new employee that you go through onboarding, et cetera, and tell us how you start that process and then get them again, to feel open enough to tell you because it is personal finance, so you’re asking them to actually open up the kimono just a bit so that your team can then put them on a journey, but just take us through an example of one of those journeys.

Charles:  06:25
You know, I have a colleague that she says it very appropriately, which is no one wakes up on Friday morning and says, “You know what, I’m going to get financially fit today.” No one does. So where we have been most successful, and we actually have the highest utilization rates of financial wellness benefits in the entire industry, because we do one thing. We keep it real. And we recognize the fact that seven out of 10 of the folks that work for you are going to have a financial challenge sometime this year. And they’re living paycheck to paycheck. So the first thing we do is we help solve that financial challenge, short-term challenge. Historically, we’ve done that through products like early wage access and short-term loans. We’re actually innovating a new employer-funded model called emergency fund accounts, which accomplishes, addressing that same short-term challenge. That’s really where the journey begins. And as soon as that happens, what we’ll typically see is somebody has had a health event. They’re having transportation problems. One of the things with financial wellness is, it sits on that one of the vital spokes on the social determinants of the health wheel. So anything inside of that social determinant of health, whether that’s getting access to food or transportation, or just the basics of life, if you’re living paycheck to paycheck, any hit on that social determinants wheel is going to have a big impact for you.

Charles:  08:07
Now what happens at that moment, and our data shows it really starkly, which is once you help somebody solve that short-term problem, you now have an opportunity to begin a journey of financial wellness over time. So that once you take that assessment, you get on that financial wellness journey, we then have tools, whether it’s a suite of online courses, or you can connect to all of your financial accounts, if you’re unbanked or underbanked, we’re going to help you get access to free banking services. So we have a very holistic suite available depending on what your specific needs are.

Charles:  08:49
One of the things that we do very consistently is decreased debt and increase savings over time. And we do that through that holistic approach. And then finally, what most folks need overtime is just somebody to talk to. They need that one-on-one financial coaching over time, just to ensure that behavior change sticks. Once again, we also measure our success by, at the end of the day, are we helping folks increase their savings? And we typically measure that through a payroll deduction. Are they increasing their savings through payroll deduction, which we view as a real primary success metric?

William:  09:37
One of the things I was going to ask you is how do you all think about success? Because again, everyone needs different things and there’s utilization in different areas. But at one point, if we’ve done this correctly, they are financially fit or fit enough to be able to take on most things that would occur in their life. So is the goal at one point to not be utilized as much or not be utilized in certain ways and maybe utilized more in savings and less in the emergency types of situation? How do you all look at that conceptually?

Charles:  10:15
No, that’s exactly right. Our goal over time is to shift utilization of FinFit products, to obviously more savings-oriented and banking services-oriented and away from the need for emergency funds or to solve those short-term financial challenges. That’s the overall goal, of course. And we do that. Hopefully, every single time we have a touchpoint with one of our members who needs to solve a short-term challenge, the goal is always to change behavior, increase savings through that process so that we mitigate the need for those solutions over time.

William:  11:02
Right. Yeah. You essentially want to put certain things out of business or less utilization in some ways. Where does credit come into place with folks’ journeys?

Charles:  11:17
It is, of course, from an industry standpoint, a big challenge. I think the industry is appropriately focusing on tools now that will increase and improve employee credit. I think that is one of many things to solve. Right now, FinFit is very, very focused on increasing savings as a way of stabilizing employee lives and to begin to really make a significant dent in that living paycheck to paycheck. And one of the things that we’re doing now, we believe that certainly post-pandemic, the conversation’s just really changed out there. Now all of a sudden, we have found an extraordinary appetite from employers wanting to help solve these problems. And so in terms of credit and access to credit, one of the things that we’re really looking at, are there employer-funded models that can help employees avoid needing to utilize, in many circumstances just high-interest credit that can be very damaging to one’s financial life over time.

Charles:  12:41
So like I mentioned earlier, William, we’re just launching a new product called Emergency Fund Accounts. And what Emergency Fund Accounts are they’re employer-funded benefits. It gives access to a hundred percent of the employee population up to $1,500 every single year that they can use for emergencies. Now for employees, there are never any interest or fees associated with accessing those funds. You simply have to replenish them over a four-month period. And then we encourage that replenishment amount to be directed towards an emergency savings account. So once again, trying to build behavior patterns, so that we avoid things like getting employees in credit traps that they can’t get out of.

William:  13:33
That’s right. And some of the predatory lending and some of the other things that are out there that they would have access to, but it’s hard to break that cycle. And I love that behaviorally, you’re not only changing the outcome and helping them with their journey, but you’re behaviorally teaching them. No one learned personal finance in high school. You’re taught by your parents or by someone in your family or close friends, et cetera, or you just learn through mistakes, like most Americans.

Charles:  14:01
One of the interesting things about financial wellness, too, and financial literacy in general is it’s more basic arithmetic than it is high-level calculus, for most of us. And in many ways, it’s really two parts of knowledge and eight parts action. Right. And what I’m constantly amazed by when looking, just at that very specific insight, is that financial literacy for me is an action-based journey. And I’m amazed at when you can get an employee, and the data shows this, to simply start a financial wellness journey, there’s an immediate positive impact on their stress reduction. It’s immediate. And so just the very act of putting some control around your life and implementing some real basic arithmetic behind your financial life and the simple act of doing something has a huge impact. Huge.

William:  15:05
Well, it’s interesting because we link it back to retention. So for you and your customers of FinFit, if they’re on this journey, then can see results. They can see things, the changing, they can see behaviors changing, but ultimately they’re happier. Employee satisfaction goes up, their happiness goes up, their stress goes down. And that leads to more of a deeper relationship with the company, which helps, I’m assuming, of course, but it helps with the retention of talent.

Charles:  15:43
Oh, sure. I just wrapped up with my team a three-year study. It’s the longest with, I think the largest study on financial wellness and the impact on retention ever conducted. We took a randomly sampled group of our members that had been termed over a three-year period and studied their financial engagement and their financial wellness benefit, but also their behavior changes over time and did their engagement in their financial wellness and behavior change with finances, did that have any impact on retention? And there’s an absolute correlation and the data was just really exciting. We just launched this study, just published it. And what we show very consistently across all industries is a 20% to 30% increase in retention for salary and hourly employees. And we can directly associate that with financial wellness.

Charles:  16:49
Now one of the interesting things that we often get asked is well, is somebody in there, are you just measuring retention for folks who are using their employee benefits, which they’re just more likely to have that affinity towards the company or be a more stable employee? Well, it’s actually the exact opposite for us, because with FinFit, by the very nature of us solving short-term financial challenges, the part of the employee population is naturally gravitated towards that solution is also the part of your employee population that’s most vulnerable to turn over. So we actually have retention impact on the most vulnerable and coping parts of the employee population. And we proved that out through this three-year research study and all of that has obviously to do with stress reduction and has positive impacts on productivity and decreasing absenteeism and presenteeism.

William:  17:54
Charles, is that report public anywhere?

Charles:  17:58
It is. As a matter of fact, what we do is we actually customize that for potential clients and clients to see lookalike results that we get, that we’ve achieved with existing clients in their particular industry vertical. Just as an offer to all the listeners today, if you connect with me on LinkedIn and just mention Tincup and the use case podcast, I’d be more than happy to have our team actually conduct one of those customized benchmark analyses for any of your listeners.

William:  18:40
Oh, that’s fantastic. Did you notice, and it was when you looked at the data, did you see anything in terms of generational or gender? Did you see anything pop out that basically said, okay, well, again, this generation, whatever it is has crushing student debt? This generation is living beyond their means? Or whatever, having trouble getting their first home? Did you see anything coming out of the report that stood out to you that said, okay, some of these things are cyclical and some of these things are really specific to a generation or to an age group, et cetera?

Charles:  19:23
I tell you, if something is really stark and struck me was how democratic the problem is. This just hits everybody and the challenge is both diverse and multi-generational. I am surprised that the breakdown of those folks living paycheck to paycheck is almost equally split between hourly and salary. So there is some sort of underlying behavioral challenges that’s just a part of the human experience that we’re addressing, that really, and in many ways, I think I mentioned earlier, the new data coming out that millennials making more than a hundred thousand dollars a year are still, 60% of those folks are still saying that they’re living paycheck to paycheck. These are really systemic behavioral challenges that have to be solved incrementally, over time, in bite-sized bits of behavior change, using, one of the things that we do is allow all of our members to connect all their financial accounts. And then we give them success nudges and insights if they’re going off the road in any negative way, and we also reinforce them when they’re making positive financial decisions.

Charles:  21:04
And it really requires that level of immediacy, real-time support over time to have behavior change. And you’ve got to solve somebody has financial problems, or they’re in such a flight or fight mode that they simply are frozen. If you imagine, somebody is living paycheck to paycheck, and you’re in open enrollment and say, “Hey, by the way, we want you to save another $1,500 or $2,000 this year through an emergency savings account,” 60%, 70% of your workforce is going to pass on that because just the mindset that they can’t afford it. [crosstalk 00:21:44] facing that challenge and barrier.

William:  21:46
Yeah, they’d love to do it. They just don’t think that they can do it. And it’s like, well, if you save $10 or $20, I think one of the things you nailed it at the very beginning of the show is literacy, that we all need, all of us, everybody. You have Ph.D. in economics. Fantastic. Everyone needs a refresher on literacy when it comes to finance. And again, I love how you broke it down and said, listen, we’re not going to use calculus. We’re not doing trigonometry here. This is just basic and fundamental math. You have so much income that comes in and you have so many expenses that go out. And again, it’s unforeseen, you mentioned health and transportation, it’s the things that happen in life. Both transmissions on both of your cars go out the same week. You weren’t prepared for that. Who is, by the way? But you’ve got to be able to have a mechanism or mechanisms plural to then be able to deal with the unforeseen. And so I think the way that y’all attack literacy helps everybody. So everybody that you touch gets smarter about these things. And over time, they can then incorporate the things that they can teach other people, too. So there’s a ripple effect that they can help other people with literacy and financial literacy.

William:  23:15
I did want to ask a question and whether or not it’s on the roadmap now, or whether or not you get questions about it now, or do you see it in the future, but I was thinking about partners and spouses and wives and husbands, and the other parts of our family. So if I’m a customer of FinFit and you’re helping me with my journey, which is fantastic, what about my wife? What can I do there? How do you interact that?

Charles:  23:45
Hey, we’re a big tent party. We want everybody involved, seriously. Financial wellness really is for most people, not a solo event. It is a team sport. You need spouses and you need your children involved. And certainly in today’s time where there’s a significant part of the aging population, a lot of times that that includes parents and grandparents involved in those conversations as well. We live in a time where financial wellness is interconnected, not only with our family but in some ways also with our friends as well. But we do make a significant portion of all of our offerings available to spouses and children and family because we realize that if you really want to solve behavioral challenges over time, you need everybody’s involvement. And what ends up happening, William, is that it’s almost financial wellness, it’s very akin to having, you can see the patterns very similar to what you experience in healthcare. Typically folks who are living a pseudo healthy life, or no big problems, they’re typically not showing up for their annual physicals.

Charles:  25:15
Now all of a sudden somebody has a big health event, whether that’s something as minor as bad blood work coming back, or as major as a heart attack. Now all of a sudden you’ve got somebody’s attention and you have their family’s attention, too. And that’s a moment where we can really open up a dialogue to help those folks over time. And to your point, we can’t do that in a vacuum just with that person who’s having that health event. A lot of times it needs to include children and spouses and parents.

William:  25:47
Again, you’re going to have thousands of these, but what’s your favorite customer story of where they might’ve been reticent, or maybe even a bit critical to go down this path. I can say it just because I’ve lived it, that it’s like, well, we’re kind of stepping over that personal/professional line a little bit, but with good reason, to help them with all the things that they need help with what. You don’t need to use company names or anything like that, but just what’s your favorite customer story?

Charles:  26:24
Well, our favorite, a couple come to mind. One is we work with a company that is in the manufacturing space, predominantly hourly, with over 50,000 employees. And one of the things that we’ve seen over time and what I love, we have access to probably the most amount of financial wellness data in the world given the fact that most of our companies are payroll connected. So we can see these really specific trends happening. And with that particular company, what we saw was, we were solving short-term financial challenges for employees and using that as a catalyst to change behavior. And to your earlier point, William, what we saw was, over time, both engagement increased and utilization increased, the need to lean on those products that were solving short-term challenges, for example, in early wage access, early wage access can be a really powerful tool, but if it’s misused, it can have unintended negative consequences. It can create an adversarial relationship with one’s paycheck.

Charles:  27:50
And so to watch an entire employee population be transformed over time of moving away from those products and more towards into a savings mindset and savings culture, that’s where I get most excited. And then of course that lives on the individual level as well, where you have a front desk manager who is a single parent, has a transportation issue and needs to solve their financial wellness problem today, and yet also in the future as well so they don’t end up back in this vicious cycle of needing help. And so when you can have impact on an employee’s life in that direct way, where you say, hey, let’s get today’s challenge solved, but then let’s motivate a journey for you to change behavior over the time, and let’s get you on a savings path so that when this happens the next time, you’re prepared for it.

Charles:  29:02
And then to see the confidence that happens with an individual when the next time when that comes, they don’t have to ask for help. And just that level of confidence, and then the sharing of that individual success with their peers and with us, those are the fulfilling things that I get to personally experience and make FinFit just a really special company to work for.

William:  29:27
I love that. Okay. So on the way out, y’all have evolved as literacy has changed and as employees need different things, new things, you’ve obviously got products in development. Let’s just go a couple of years forward. Where do you think financial literacy, where do you think y’all need to take this, where your customer is going to take you ultimately with financial literacy?

Charles:  29:55
Yeah. With financial literacy, like I said, it’s an action sport. The fundamentals of financial literacy, I could probably, and you could as well, William, sit down and probably in an hour hit the 90% of the fundamentals that are have the, they get 90% of the impact. Where I really see the industry headed is how do we support that knowledge and understanding, which is pretty straightforward to communicate, with incremental action steps that change behavior and support that literacy over time. Exciting news this week. It was just, Financial Health Network just announced emergency fund accounts as a innovation for their leaders lab that will be researching the and validating that innovation in the marketplace over the next couple of years. So when you asked me over the next couple of years what I’m hoping to see is hoping to validate the employer-funded model in helping with financial challenges and to support incremental behavior change into emergency savings accounts. Because once you do that, you decrease stress, increase productivity, you have a huge upside in terms of retention, the impact on recruitment’s positive. And then the more we do that, I believe the more employers are going to be willing to help and play a more active role in solving financial wellness for their employee populations. That’s where I’m hoping the next two years leads us.

William:  31:47
What’s great about it is they’ll see it as a mechanism, as a tool, like a lot of these things. They’ll see it as a tool to help their employee population. I love that it’s not just for a select group of people, which 20 years ago it would have been for the high performers or high potentials or some select group of people. Y’all democratize that. And then I love that and it’s for everybody. And we didn’t really touch on it this time, but maybe next time, we’ll talk about it from a recruiting perspective on how to bring people in. This is just a great way to bring people into something that not every company has. Every company should. But Charles, thank you so much for your time today. Thank you for breaking this down and I’ve really enjoyed it.

Charles:  32:36
I’ve really enjoyed it too. William. Thank you. So for hosting me today.

William:  32:40
Absolutely. And thanks for everyone listening to the RecruitingDaily podcast. Until next time.