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New Financial Coaching Program Aims to Fix a $300 Billion Per Year Problem: Employees’ Money-Related Stress

Linze Rice
11.19.2019

An innovative new pilot program between Local Initiatives Support Corporation (LISC) Chicago and Peoples Gas seeks to revolutionize the workplace by addressing a critical problem costing American employers over $300 billion a year and affecting over 80% of workers in the U.S. — employees’ financial stress.

The solution: personalized, one-on-one financial coaching as a free benefit to workers.

“If you’re worried about finances and the stress of those kinds of things, it’s really hard to focus on your job. Paying bills, making sure your kids have what they need, making sure everything’s covered — it’s stressful,” said Lori Flores Rolfson, vice president — operations at Peoples Gas and board member at LISC Chicago. “Anything that helps someone with that helps with job focus as well.”

Lori Flores Rolfson, vice president — operations at Peoples Gas and board member at LISC Chicago
Lori Flores Rolfson, vice president — operations at Peoples Gas and board member at LISC Chicago

The project is part of LISC’s Bold Goal of helping 6,000 individuals increase income, net worth or credit by expanding its Financial Opportunity Center (FOC) programming to LISC’s employer partners. Those employers then offer financial coaching services to their employees, particularly in entry-level positions. The goal is to help employees better plan financially for their futures and learn how to take full advantage of other company benefits, as well as help employers cut down on the $300 billion annual cost of financially stressed employees, according to the Center for Financial Social Work.

Peoples Gas identified its Customer Care department as the place to launch the pilot, offering free financial coaching services to 50 employees on a first-come, first-served basis — with a waitlist quickly forming. Each employee was entitled to three private sessions, where they worked one-on-one with the financial coach of their choice to discuss financial goals, areas of stress, and ways to maximize additional company benefits, such as retirement or bonuses. Together with their coach, employees created an action plan that defined and began to tackle those goals.

Financial coaches from North Lawndale Employment Network, Metropolitan Family Services, Center for Changing Lives and Chicago Commons met with participants in the pilot program downtown in the Aon Center, where the company’s customer service call center is located, so that workers had easy access to the one-hour appointments.

The setup was in stark contrast to the types of annual, company or department-wide employee benefit presentations that are common across workplaces. The unique, highly personalized approach allowed the employee to ask questions pertinent to their own lives and receive expert advice from professionals in the field – whether they wanted to save for their children’s college fund, plan for retirement, save for a trip, buy a home or auto, improve their credit score, or put away savings.

“For example, as an employer, you want your employees to invest, but a lot of times they don’t because their personal finances aren’t taken into account. They don’t know how to make that plan where they can set themselves up to invest in their 401(k). So that is what a one-on-one coaching session can do — it can really get to the essence of that personal relationship with money, and behaviors around money, so that employees can make more informed choices.”
— Sarai Garza, a program officer with LISC’s Financial Opportunities who oversaw the pilot.

A Skill Everyone Needs

The inspiration and opportunity for the pilot came as LISC was brainstorming ways to build upon the successes of its financial coaching partnerships with neighborhood organizations, which have largely focused on increasing financial stability to empower a new wave of commercial development and entrepreneurialism on Chicago’s south and west sides. But they wanted to know: How could they expand this offering to a broader network and to even more people?

Sarai Garza, a program officer with LISC’s Financial Opportunities who oversaw the pilot
Sarai Garza, a program officer with LISC’s Financial Opportunities who oversaw the pilot

“We believe that financial coaching is for everyone,” Garza said. “We’ve been thinking about, ‘How can we expand even beyond what we’re doing in the not-for-profit sector?’ Also, because we understand that many of our participants work in entry-level jobs — just because you get a job doesn’t mean that all of your financial matters get magically addressed.”

The idea piqued the interest of Flores Rolfson, and Peoples Gas gave LISC Chicago the opportunity to pilot the program to some of their employees.

 

“We invest a lot in our employees, and retaining them is important. So if there’s something that makes it feel like the company is supporting them, then that’s always a good thing.”
— Flores Rolfson

The cost of financial stress to both employees and the companies they work for is real. More than 80% of employees are financially stressed — and 53% of them deal with those problems at work, resulting in an average $7,000 loss in productivity per employee per year, according to Human Resources Magazine and the Center for Financial Social Work. Overall, money-related stress leads to an average of $760,000 per year in unscheduled absences, higher turnover and increases in workplace accidents.

However, the Center for Financial Social Work also found that when employers invest in the financial wellbeing of their employees, business is all-around better — with fewer sick days, more stability during volatile times, higher employee loyalty and commitment to the job, and higher participation in company benefits. When employees have more mastery over personal finances, employers save an average of $5,000 per employee each year due to fewer financial distractions while on the job.

Like employers have come to adopt other policies and benefits, such as mental health care, for their employees over the years, Flores Rolfson said that financial literacy for workers should also be looked at in a new light.

“Much like in health and safety we stress a lot about ergonomics and lifting properly, I think similar is true for financial management,” she said. “Knowing what you’re doing and understanding your options helps to lower stress and other things that create risks at work.”

The Peoples Gas VP said she could also personally identify with the need for financial coaching, having come from a background of modest income and little knowledge of how personal finances worked. It just wasn’t something her family talked about, she said.

“Personally, I’m the vice president of operations, but I didn’t have a lot of money growing up; no one taught me how to manage money,” she said. “It’s not something most people talk about easily, it’s just something you kind of watch and observe, or bump into your own struggles to figure it out. People don’t learn how to manage money any other way than to just live through it — and this was a way to try to help people learn what’s possible.”

 

Revolutionizing Workplace Benefits

One such employee to take part in the pilot was Lisa Alvarez, a 48-year-old mother and New Lenox resident who has worked at Peoples Gas for over 30 years. Though she’s not a new employee, she was working in the Customer Care department at the time of the pilot and said she signed-up to learn how she could start saving money for her daughter to attend college.

Alvarez met three times with her financial coach, who worked with her to find areas for savings, showed her how to pay down debt and put into play the goal she set at the start of the sessions, to establish an emergency fund. In a private setting, and with a financial coach who made her feel comfortable and earned her trust, Alvarez said she gained invaluable insight into her finances in a way she never had before — all at no expense to her.

So far, the feedback LISC and Peoples Gas have received has been positive — signaling both employees’ interest in the program and results benefiting both employers and employees.

“Everyone was excited,” Flores Rolfson said. “We kicked it off like physical fitness — everyone can use help being more physically fit or eating better, or whatever it is that you need someone to coach you — and the same is true for finances.”

Of those who participated in the pilot, 68% followed through with a second appointment, and 70% of those employees completed a third, with the main three topics of interest being savings and retirement, budgeting and debt reduction, and building credit. As a result, 66% of workers who listed credit building as a goal increased their credit score by between 10 and 114 points in less than six months, and 40% working on debt-related goals were able to reduce debt.

Of those who completed all three sessions, 99% said they would like to have more — an unsurprising statistic given that 99% of participants claimed moderate to high stress levels regarding their finances before attending a session, with 84% of survey completers then reporting a reduction in financially related stress after attending all coaching sessions.

LISC is now looking for ways to expand its financial coaching network to other employers, in the hopes of arming employees with critical financial knowledge, as well as helping employers retain and support their workers.

LISC is already mapping out a plan to continue finding new employers to partner with. Garza and her team have been working with a virtual team at J.P. Morgan Chase, who put together the foundation for a business model, cost analysis, market research and more that will help advance the program.

“The Chase team gave us so much insight and helped us organize the next steps to move us forward,” Garza said. “Their expertise in this space, combined with LISC’s expertise in the financial coaching network space, has built a solid foundation for launching this program even further, and we’re all really excited to watch it grow.”