Episode 9: The Next Evolution of Financial Education

Jon: Find something simple, book a quick win and then build from there because you're going to get the mandate and you're going to get the resources you need and the time and attention that's necessary once you start moving in that direction. But you got to start now because if you don't start now, the impact that those educational sessions have on the lives of your employees will never be felt.

Rodney: When you understand your employees, their concerns and their goals, you can provide them with more relevant financial tools and resources. Jon Stinson, executive director of Franchise Client Engagement for Morgan Stanley at Work highlights why the shift to financial education 2.0 is about more than literacy. It's about getting to know your employees and designing programs to meet them where they are. I'm Rodney Bolden, head of Industry Engagement and Learning at Morgan Stanley at Work. This is Invested at Work. Jon, thanks for joining me today.

Jon: Thanks, Rodney. Thanks for having me.

Rodney: Jon, when we first started seeing financial education appear in the workplace about maybe 20, 25 years ago, the curriculum was pretty limited to just a handful of topics. I can remember budgeting and savings, credit and debt management, planning for retirement, maybe protecting yourself against identity theft. Pretty much it. Fast forward to today, we have dozens of topics on a typical financial education menu. Walk me through the how and the why, we've evolved from a handful of topics to all the topics that we cover in a workplace financial education program today.

Jon: When we think about those initial sessions where we started say 20 years ago, they're still just as relevant today. I would argue are the foundational pieces that are super, super important. We're talking about retirement, we're talking about saving and budgeting, all that stuff is going to be the foundation of any healthy financial wellbeing picture. When we start to think though about the way that we expand, it's about connecting with a larger audience. It's about understanding the complex ways and the sophistication necessary to traverse certain financial situations. I think one of the more interesting ways though, that we're thinking about it today, and I hope where we're going in the future is beyond literacy. Literacy is the lowest form, and it's not that it's not important. From a general education standpoint, we want every kid to know how to read.

Rodney: Absolutely.

Jon: Absolutely. That's literacy, and numeracy. We want fewer people saying, "Oh, I'm not a math person." Everybody's a math person. You just didn't have the opportunity to learn it necessarily in the way that worked for you. When we think about financial literacy, yes, absolutely important, but it's table stakes. It's just where we start. It doesn't lead you simply because you can define the term and understand what a checking account is or what a credit card is or how a mortgage works. That doesn't mean that you're necessarily using it to improve your life, that you're taking the kinds of actions that are actually going to allow you to improve your circumstances and build wealth.

Rodney: So we've gone from financial literacy to financial education today. You could almost call it what? Financial education 2.0. Can you better define for our HR leads, our plan sponsors, our stock plan admins out there, what is Financial Education 2.0 today?

Jon: It is about the graduation from just literacy, and I think it does require an eye towards that engagement and adoption hat, which says, how do we understand what the needs of our employees are? How do we then take that knowledge and design programs around those needs and deliver solutions that meet those needs? It's not just a function of the needs to build a bucket of money. It's a lot more than that.

Rodney: I like a bucket of money.

Jon: Yeah. Hey, no one's going to say no to a bucket of money, but if as you're putting your assets into that bucket, you are thinking about liability management. You're thinking about, "Okay. Well, if I'm going to retire, how do I do that in a tax efficient way so I'm not just throwing money away? How do I do things in a tax efficient way as I'm saving for my kids' college?" It's getting to the nitty gritty of, okay, how do I take action? It's about that empowerment and the mindset shift that's necessary for people to say, "If I want to pursue something, if I want to know about something, it's no longer, gee, I wonder. It's, I'm going to go find out."

Rodney: One of the things I've heard from some HR decision makers is, "Our employees say they want financial education, but they don't show up for it." So how do you correct for that lack of engagement?

Jon: If you pull into the parking lot in the morning, you're getting in later than most, and you're seeing all the cars in the parking lot, and most of those cars have backed into their spots because the minute they get there in the morning, they're thinking about how they're going to leave. That's one sign that you might have an engagement problem. If you're putting on valuable content that people have said they want and it's delivered in a truly professional way, you have certain criteria to make sure that this is quality content and people aren't showing up for it, you have an engagement problem.

A big part of the fundamentals of the way that I think we should be solving for that, I'm a huge proponent of persona work, and that is to say, "Go understand the demographics of your workforce. Understand who the people are." What's your mix? By gender, what's your mix? By background, what's your mix of what roles they have and seniority levels, and then make sure that you can accurately represent them with empathy and understand what's going on in their lives. So you've got the basic biographical data and the demographic data, but then that next level that you rarely see in personas is what's top of mind for them? What are they thinking about? What's going on in their lives? And it's not just, well, the company is going through this restructuring. That can be top of mind for people. For a lot of people, it's what's going on at work. It's going to be top of mind, but it's also divorce and birth and adoption, the death of a loved one and concerns about the security of their job and any number of other things, these inflection points.

And those inflection points, what's really interesting about that is when you come to understand what's going on in the lives of your employees and you try to really represent and be empathetic about the way you're making decisions of how you're going to communicate to them, how you're going to invite them to an educational event and make sure that you're really digging in with them, you start to understand that some of these people are dealing with life, and those life events also correspond to financial inflection points. You have a kid, you buy a new house, you get divorced. Every one of those coincide with super important financial decision points.

The idea that as you're designing your company's program, you can create a set of personas, is it three people that help to stand in and you can test your efforts against and really say, we are going to make sure that anytime we're sending an email that we're inviting people to an education event. Anytime we're doing anything in this space, we're going to test it against and say, "Hey, does that work for Catherine? Does that work for Ben? Does that work for Mark? Does that work for Susie?" Whoever your persona names are. And really saying, "Well, we know Susie's got this thing going on right now. How do we still figure out a way to communicate? How do we still feel a way to make sure that she understands that we're hearing her and that we're building content and delivering solutions that are meant for her?"

Rodney: Following up on that, talking about Susie. Solutions meant for Susie. Susie may be in a relationship or a partnership. She may be single, she may be of different types of race and ethnicities, different income levels. Those life events that you talked about, saving for Susie's college education, saving for Susie's retirement, how is that different and how's that intersect?

Jon: I love that question because there's two intersection dimensions. So a lot of companies have groups, ERGs, groups that they've created, a Black employee networking group and API and women's networking group. I love that because there are unique situations and considerations that can affect. In the LGTQ community, depending on what state you're in, and depending on the circumstances surrounding your relationship, you may or may not have an easy time of transferring your assets to your partner. So what does that look like and where do you need advice on that?

So when we start to think about delivering the solutions to those groups and considering that we all live real life in and through time, we realize that it's not just that someone may be a part of one of those groups that we're looking to serve with the ERGs. They may also be going through divorce or they might be also adopting a kid. So as we think about people living their life through time, both who they are and what they're experiencing, all have to come together. That's the way that we've been designing personas as we partner with various companies. That's the way we've been doing it. So it's who they are demographically, who they are biographically, who they are in terms of what's top of mind for them and what they're going through, and that's how I think you create a fully three-dimensional vision of the people you're serving.

Rodney: Are there myths when it comes to financial education and if so, what are there? And specifically I'm talking about workplace financial education.

Jon: I think the biggest myth is that the people who are just starting off, they maybe need the budgeting and saving stuff. You definitely don't need to worry about budgeting and saving for the c-suite execs, and the reality is sometimes you do. Sometimes the fact that you have assets can mask the fact that you need help with basic budgeting and things like that, and there can be even more complexity, especially when we're talking about their equity compensation and how all of that works. So it's not that they don't need that same education about what financial planning is and the different dimensions that they need even more.

Rodney: Recent research has shown that more and more younger employees are getting financial education outside of the workplace. They're getting it through social media. I'd like to get your thoughts on that, and does it have a place when it comes to workplace financial education utilizing social media or is it not so great?

Jon: Grain of salt. Yeah, no, I think it has a place. I actually do think that the learning from our peers is a really important part of this. There's a system of professional learning that I think you could rewind and point it towards general education as well. That is 70/20/10.

Rodney: I haven't heard of that. What's that?

Jon: It's basically that companies who approach this way tend to have a much higher level of engagement and actual efficacy in their educational work, and it's this. 70% of learning happens as a part of a project. As you're working on something, that's where you're actually learning it. 20% is through your peers and 10% is through formal educational efforts of the institution and from your manager and those traditional sources of learning. So that 20% is a really important part of it. Obviously, the project-based side of things, learning as you're doing it is really important, but the peer side of things is so important.

We know from general education that students who work in study groups have a much higher likelihood of success, much higher retention of the facts and understanding because they're having the opportunity not just to read the thing, but to say, "Oh, did you notice this? I thought that was interesting," and for somebody else to say, "Well, that's not what that said. I think it said this," and that dialogue is incredibly valuable for retention and for understanding, and so it's very valuable to be able to have that dialogue. If you're doing that on social media, not so much if it's fake news that you're seeing on there that says, "Oh, this one simple trick will make you a millionaire." That is clickbait. Please don't do that. It's not real. There's no get rich quick scheme here.

Rodney: Not at all.

Jon: It's just saving over the long term. That's the hack. All you need is 40 years and patience.

Rodney: I have one more question for you or a couple more questions, I'll say. For HR leads out there that know that they should start with some financial education, but they have other priorities and they're putting it on the back burner. What's the importance of making that move today, implementing a workplace financial education program today? Why does it have to be now?

Jon: I have a lot of sympathy for our partners. It's the companies we work with who are struggling with all these competing priorities. There's an acquisition event or there's a reduction in force event, or there's all of these things going on. I guess what I would say is there's always something else going on, and it's always important. Start small, start simple. Just advertising a webinar Wednesday that you think is useful, that goes a long way. Find something simple, book a quick win, and then build from there because you're going to get the mandate and you're going to get the resources you need and the time and attention that's necessary once you start moving that direction.

We spend a lot of time partnering with people to say, "You don't have to take this along on your own. We're going to help you with the project management. We're going to help you with the delivery of it." It's important that people understand you're not in this alone. We're here to help you, but you got to start now because if you don't start now, the impact that those educational sessions have on the lives of your employees will never be felt, and it impacts retention. People have told us. One of the important things that they look for when they're considering employment somewhere is what do you do in these types of benefits?

Rodney: Last question for you, Jon. What makes you invested at work?

Jon: Etched on the wall at our 1585 headquarters, our five core values, do the right thing, put the client first, lead with exceptional ideas, commit to diversity and inclusion, and give back. When I think about each one of those dimensions and the degree to which I'm seeing it and my ability to express those values on a daily basis, and how I see those values expressed by my peers, that has a profound impact on me showing up at work, on me being enthusiastic and engaged at work, me being invested at work.

Rodney: Invested at Work is brought to you by Morgan Stanley at Work, produced by StudioPod Media. Our executive producers are Fiona Kelsey, Lisa Boyce, and TJ Bonaventura. Our producer Sterling Shore. Our engineer is Alejandro Ramirez, and our writer is Dan Pelberg. Be sure to visit us at morganstanley.com/atwork for more insights on workplace financial benefits, and I'll see you next time on Invested at Work.

Not all products and services are available in all jurisdictions. This material has been prepared for educational purposes only. Morgan Stanley Smith Barney, LLC, and its financial advisors and private wealth advisors do not provide any tax or legal advice. Consult your own tax or legal advisor before making any tax or legal related investment decisions. Morgan Stanley at Work Services are provided by Morgan Stanley Smith Barney, LLC, member SIPC, and its affiliates, all wholly owned subsidiaries of Morgan Stanley.