Pathways to Financial Empowerment

Transcription

1 Pathways to Financial Empowerment May 14, 2015 Ann Solomon, Federation Strategic Initiatives Manager Sarah Sable, Neighborhood Trust, Chief Program Officer 1

2 Agenda Overview Background & Financial Counseling Survey Results Pathways Approach to Financial Counseling Pathways to Financial Empowerment Initiative Structure Questions?

3 Household Financial Challenges Source: Pew Charitable Trusts. The Precarious State of Family Balance Sheets, January 2015.

4

5 CU Financial Counseling Percentage of Credit Unions Offering Financial Counseling 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Mainstream Credit Unions Low Income Designated Credit Unions Sources: National Federation of Community Development Credit Unions and Credit Union National Association, CDFI Certification: A Building Block for Credit Union Growth, May CDFI Certified Credit Unions

6 Survey Results on Credit Union Financial Counseling Annual Volume of Counseling Clients FTE Delivering Counseling > 50 11% 8% % 29% 8% 10% 26% Less than % 16% 24% 24% More than 5

7 Most CUs Not Tracking Outcomes Does the credit union track results from financial counseling? Yes 38% No 62%

8 Value of Impact Measurement More so than ever before, the community development field is under the gun to prove that it is making a difference in its targeted markets. - Sean Zielenbach, Federal Reserve Bank of Boston In this environment, impacts-aware products and services offer a renaissance moment for credit unions to rethink and rebuild relevance in attracting members "Choosing Relevance, Filene Research Institute Financial Health Is The New Marketing Ron Shevlin, The Financial Brand Measurement Enables Credit Unions to: Evaluate effectiveness Gain insights into financial health and product usage Quantify credit union s impact in the community

9 Pathways to Financial Empowerment Initiative Goals: Develop a sustainable model for the integration of financial counseling into CU operations. Combine counseling with high-impact financial products to achieve better outcomes for clients. Track and demonstrate impact of counseling through standard data collection platform.

10 A Sustainable Model for Credit Union Financial Counseling Our approach to financial counseling helps both members and credit unions achieve their financial goals. Our program outlines a clear pathway to financial empowerment for credit union members. Each stage on the pathway is linked to specific credit union products that not only improve the financial health of members, but also provide a sustainable revenue stream to the credit union. Ensuring members effectively utilize the range of credit union products and services will create a sustainable revenue stream for the financial counseling program

11 A Pathway to financial empowerment that connects clients at different stages to credit union products Financial Rut Catching Up Getting Ahead Major Debt Crisis Under banked High-interest debt issues No established credit No savings Working on shortterm goals Working on longterm goals Sample Financial Products Debt payment plan Checking account Savings account Direct deposit Debt consolidation loan Balance transfer credit card Secured/ credit builder loan Savings / money market Club Account Certificate of Deposit Auto loan Personal loan Mortgage Retirement account Credit card

12 Financial Counseling Model Overview Outreach Counsel Support Measure 1 Market program to targeted member segment Use credit union services to identify members needing counseling and conduct outreach 2 Assess member financial situation 3 Develop Financial Action Plan 4 Leverage technology to help members follow their Financial Action Plans Create supportive environment with CU staff 5 Measure client outcomes Measure credit union impact

13 Metrics: Gain a better understanding of how counseling impacts your clients and your CU Client Tracking Total members served through workshops or individual counseling Referrals from Credit Union staff Clients who applied for CU accounts, loans, and other products Financial Products Balances in savings products: measure the increase in member savings as a result of counseling Credit Report Credit score: Are members more creditworthy as a result of counseling? Change in total debt: measure the decrease in costly, high-interest debts like credit cards, collections Debt to Credit Union: track uptake of recommended loan products and the status of the loan Take Action Today Do clients follow recommendations of counselors and take action to achieving their goals? Are clients empowered and feel more in control of their financial future?

14 Timeline Pathways to Financial Empowerment Structure June 12, 2015: Applications Due June 15 June 26, 2015: Application follow-up. July 2015: Pilot Credit Unions Announced July September 2015: Initial Remote Orientation and Training for Pilot Credit Unions; Execution of Grant Contracts October 14-16, 2015: Training in New York City October 2015 September 2016: Credit unions provide financial counseling for 12-month implementation period. October 2016 December 2016: Reporting, Evaluation, and Initiative Wrap Up

15 Benefits for Pilot CUs Training on the model in New York City in October 2015 (travel stipend provided); Grant of $20,000 to support program costs; Ongoing technical assistance through monthly Learning Network calls; One-year license for outcome tracking system Analysis of financial counseling impact For exceptional performers, possible additional grant of $5,000-$8,000 for pilot credit unions to expand

16 Overview of database features General Salesforce features: Cloud-based, making all your clients information easily accessible. Can be used with any web browser, even on your phone. Easy search Ability to text, , and manage communication with clients directly from the database Dashboards & Reporting Evaluate client progress over time.

17 Overview of TA Assessment of CUs in order to customize training to their needs October in-person training in NYC. Interactive, dialogue-based approach Topics overview: Diagnosing client financial health, Motivating clients to Take Action Behavioral economics Salesforce tips and tricks Ongoing support Webinars to share challenges and best practices Individual support as needed Site visits

18 Commitments of Pilot CUs Deliver counseling to at least 250 individuals Dedicate an initiative contact person Utilize the data tracking platform to capture financial information for all counseling clients Participate in monthly technical assistance and learning calls Extract data from core processor on product usage of counseling clients, including account balances and loan performance

19 What we re looking for Credit unions that: Serve a predominantly low-income and/or underserved community Provide in-house, one-on-one financial counseling Are excited about opportunity to learn and improve Have the capacity to meet Initiative commitments Are current Federation members or plan to become members

20 Questions?