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Behavioral Insights for Wellness Program Design Jonathan Zinman Professor of Economics, Dartmouth College Scientific Director, U.S . Household Finance Initiative. HelloWallet Webinar. June 11, 2014. Dr. Jonathan Zinman. Key high-level assumptions . Employee wellness matters

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Hellowallet webinar

Behavioral Insights for

Wellness Program Design

Jonathan Zinman

Professor of Economics, Dartmouth College

Scientific Director, U.S. Household Finance Initiative

HelloWalletWebinar

June 11, 2014


Hellowallet webinar

Dr. Jonathan Zinman


Hellowallet webinar

Key high-level assumptions

  • Employee wellness matters

  • Economics of employee decisions around wellness is complex

    • Countless daily decisions that cumulate

    • Infrequent but very high-stakes decisions

  • Psychology of employee decisions around wellness is complex: http://www.dartmouth.edu/~jzinman/Papers/Behavioral_Design_101.pptx

  • Outside markets for wellness solutions suspect

  • Employer wellness benefit design matters


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Key takeaways

  • There is low-hanging fruit!

  • Apply insights from behavioral economics (BE) to do better job of connecting employees with existing offerings

    • Use communications, on-ramps, and menus

    • Few additional resources needed

  • Prescription is method, not a recipe

    • Develop using BE insights and institutional knowledge

    • Test using gold-standard AB/RCT methods

    • Measure and learn

    • Tweak or re-design, and test again


Today s plan background

Today’s Plan & Background


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Plan for today, background

  • Show how this method works, using real and hypothetical examples

  • Today’s talk based on experiences working on over a dozen marketing, messaging, and onboarding projects

    • Companies of various sizes (mostly financial institutions)

    • U.S. and abroad

    • Handful of completed projects

    • Many more underway

  • More details

    • http://www.dartmouth.edu/~jzinman/

    • http://www.poverty-action.org/ushouseholdfinance


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Plan for today, background

  • Focus on financial wellness

    • Happy to field questions about health, etc. later

  • Focus on immediate source of stress/distractions

    • Lack of rainy-day savings

    • Debt load and repayment problems

    • Lack of plan, or engagement with one

    • (401k’s part of the problem here rather than a solution?)

  • Why these focii?...


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Background: symptoms

  • Many/most of your employees may be financially fragile:

  • Lots of borrowing (overborrowing?)

  • Mortgage crisis

  • Bubbling student loan crisis?

  • More credit card debt than any economic model can explain

  • Share of consumers with subprime credit: 56.4%1

    • More payday loans -> worse job performance (Carrell and Zinman)

  • Many without savings (undersaving?)

  • Households with insufficient liquid assets to subsist for three months at the poverty line in absence of income: 43.9%2

  • Households reporting no saving in the previous year: 48%3

  • Many pay premia for financial services (overpaying?)4

    • Assets (e.g., mutual funds)

    • Loans

    • Advice


  • Messaging solutions with two examples

    Messaging solutions,with two examples


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    Rainy day savings solutions:

    smarter messaging

    • Pain point for employees– low financial resiliency

    • Pain point for employers– no direct offering. But do offer…

      • Crisis hotline

      • Financial planner

      • Online financial education

      • Payroll/prepaid card with savings bucket

    • Approach: messaging, marketing, and/or process changes around these offerings


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    Messaging for rainy day savings

    • “If you make… deposits, you will receive [small yield incentive]”

    • “If you miss a deposit, you will lose [small yield incentive]”

    • “If you make… deposits, you will receive [small yield incentive] that you can use to reach your saving goal of [client’s goal]”

    • “If you miss a deposit, you will lose [small yield incentive] that you could use to reach your saving goal of [client’s goal]”

    • Results:

    • 1 and 2 push

    • 3 and 4 push

    • 3 and 4 >> 1 and 2

    • Test 1. Which works better at encouraging regular savings deposits?


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    Messaging for financial resiliency

    • Test 2. Which works better at controlling discretionary spending among a sample of active HelloWallet users?

    • Email every Friday re: the budget for that weekend

    • Same as #1, but every other week

    • Same as #1, but don’t start until 4 weeks after enrollment

    • Results:

    • 3 > 2 > 1


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    Messaging design, why it’s hard

    • Many design elements, thousands of possible permutations:

    • Content

    • Amount of content

    • Timing

    • Frequency

    • Duration

    • Customization

    • What matters, and works best, depends critically on context

    • And context itself is a many-splendored beast!

    • Project underway to do work like this with dozens of companies worldwide. You can join us!

    • email [email protected] now!


    Messaging process changes with three examples

    Messaging + Process Changes, with three examples


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    Example 1. Rainy day savings

    Messaging + process change example

    • Present installment loan borrowers with the proposition: “You’re making monthly payments now… here’s an easy way to continue making those payments, to yourself, once the loan is paid off”

      • Framing: borrowing as habit formation for saving

      • Process change: give someone a one-page auto-transfer authorization at an opportune time

    • Doing this with 10 credit unions

    • You could do this by messaging to employees with:

      • Payroll card with savings bucket

      • Own bank account (could offer when someone is filling out direct deposit authorization for payroll)

    • Join in our research! [email protected]


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    Example 2. Debt reduction

    • Pain point: student debt burden

    • Potential solution: messaging and on-ramps that connect employees with alternative repayment plans that reduce monthly payments

    • Pain point: repeat use of expensive debt products

    • Potential solutions:

    • messaging that informs and nudges before someone reaches point-of-sale

    • on-ramps that connect with lower-cost, longer-term loans (employer credit union, employer-intermediated loan, etc.)

    • messaging and on-ramps to PFM solutions (HelloWallet, meeting with an adviser, etc.)


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    Example 3.Behavioral 401k, v3.0

    • v0.0: matching

    • v1.0: auto- (opt-out) enrollment

    • v2.0: auto-escalation

    • These solve enrollment and contribution rate problems

    • They do not solve employee wellness problems

    • To solve for wellness need greater focus on:

    • Immediate needs, and liquidity to deal with them

    • Holistic needs (whole person, or at least more of her balance sheet)

    • Wealth accumulation


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    Behavioral 401k v3.0: for wellness

    • Add messaging that focuses on the whole, and the immediate

      • Don’t borrow your way to 401k contributions

      • Do use 401k as a safety net if the alternatives even pricier

    • Change menus, or add nudges, for wealth accumulation

      • Eliminate or marginalize high-fee funds

      • Provide auto-diversification options

    • Change process to nudge active, informed decisions about 401k

      • Enrollment (new employee on-boarding)

      • Open-enrollment


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    Key takeaways

    • There is low-hanging fruit!

    • Apply insights from behavioral economics(BE) to improve employee (financial) wellness

      • Using communications, on-ramps, and menus

      • Few additional resources needed

    • Prescription is method, not a recipe

      • Develop using BE insights and institutional knowledge

      • Test using gold-standard AB/RCT methods

      • Measure and learn

      • Tweak or re-design, and test again


    Hellowallet webinar

    Follow-up

    • Questions? Interested in working together?

      • [email protected]


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