CFPB FinEx webinar on financial well-being national survey results NWX-CFPB (US) October 26, 2017 1:00 pm CT Operator: Good afternoon. Thank you for standing by. I’d like to inform all participants that your lines have been placed on listen-only mode until the question and answer session of today’s call. Today’s call is being recorded. If anyone has any objections, you may disconnect at this time. I’d now like to turn the call over to Ms. Irene Skricki. Thank you. Irene Skricki: Great. Thank you very much. And welcome everybody to our monthly FinEx webinar. We’re very excited to have all of you with us today. And we have a very exciting topic. We have national survey results on financial well-being that we released a few weeks ago and we will be walking you through all of that today with our speaker, Genevieve Melford, my colleague here at the Office of Financial Education. Before we get started, I’ll do our standard disclaimer. As government employees, we always need to say this. The presentation is being made by CFPB representatives on behalf of the Bureau, but it does not constitute legal interpretation guidance, or advice from the CFPB. And any opinions or views stated by the presenter are the presenter’s own and may not represent the Bureau’s views. So most of you -- if not all of you -- hopefully know who the CFPB is. But to kick us off, the CFPB is a federal agency that helps consumer finance markets work by making rules more effective, consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. And it’s that last part about empowering consumers which is why we are here today and why FinEx exists. Just to give you a sense of where we sit within the Bureau, on the consumer-facing side of the Bureau, the Consumer Education and Engagement Division. There are six different offices. Some are devoted to special populations, such as students and military servicemembers, older Americans, and Financial Empowermen, which is for economically vulnerable consumers. We in the Office of Financial Education -- where Genevieve and I sit -- are tasked with educating and empowering all consumer to make better, more informed financial decisions, though we work closely with all of our other offices on that. I know this slide is very busy, but it shows that this webinar is part of the activities offered by the CFPB Financial Education Exchange or FinEx, CFPB FinEx. And we are essentially a vehicle to get our information and tools and resources out to people who are working with consumers on financial topics and to learn back from all of you about what you’re learning, what sort of work you’re doing, what you’re finding. And so FinEx is the vehicle to do that. Hopefully most of you, if not all of you, are already part of FinEx and have gotten a monthly newsletter from us -- CFPB News and Updates. If not, we encourage you to sign up. You can either do that by emailing the address you see at the bottom CFPB_FinEx F-I-N-E-X @cfpb.gov. You can also now do it directly online on our website. I’ll show you that in just a second. And I show you this slide just to show you that there are lots of convenings. There are lots of webinars happening. They’re all recorded. You can listen to them. So we hope these resources are helpful to all of you and that if any of you are not signed up that you consider doing so. We have a resource inventory. We just redesigned it -- it will be going up on our website in the next day or two -- which shows all the different tools and resources we have that you can use. Again, free. You can order them in many cases in bulk. And so we encourage you to look at that. We also have a web page. This is redesigned and was recently launched. The Financial Education for Adults web page which has all of our different resources that you can access. Again, the URL is on the screen -- consumerfinance.gov/adult-financial-education. And if you’re looking at the screen, you can see on the side there the little signup box where you can put in your email address and sign up for FinEx directly. And we also have a LinkedIn discussion group where you can post your own resources. And we also put our resources. Also you can see that on our website. So that’s my standard background to get everybody up to speed and give people time to sign in to the webinar. And now we’ll move on to our main topic, which is Financial Well-Being National Survey Results. Our very first webinar two and a half years ago was on the definition of financial well-being. About a year, year and a half later we did a webinar on measuring financial well-being. And now another year later we now have results on what we’re learned about financial well-being for adult consumers in America. So I’m very happy to have this webinar happening. Before I turn it over to Genevieve, I just want to note that everything she will say today more or less is in the Financial Well-Being in America Report. I’ve put a screenshot up here along with the URL consumerfinance.gov data-research research-reports Financial Well-Being in America. It’s not the catchiest of URLs. But it will also be up on the screen again at the end. It’s again available on our website. So everything she is talking about is available there. And then before I turn it over to her, I just want to note that if you have any clarifying questions, use the Q&A function on the WebEx. I will be monitoring that. And if any things come up, I can direct them to Gen at the moment. And then once she’s done, we will open up for voice questions. So we’ll let you know when you can do that. And then you’ll also be able to ask questions directly of Genevieve. So with that, I will turn it over to her. Gen, it’s all yours. Genevieve Melford: Great. Thanks, Irene and good afternoon everyone. And I’m glad that Irene mentioned that there have been two prior FinEx webinars on the earlier stages of this work. But as I was preparing for this, I realized they were pretty long time ago and I couldn’t assume that you all either were on or remember everything from those two. So I will spend about two minutes at the beginning of my presentation kind of setting the context for the survey before I get into the findings. So as many of you know, the CFPB considers the ultimate goal of financial education to be that consumers can really make money decisions that serve their own life goals and that improve their financial well-being. And a key part of our work in financial education is therefore to study the factors and programs that can help people have higher levels of financial well-being. So we’ve engaged in a multi-phase effort to define financial well-being from the consumer perspective -- that was the first webinar -- to create a reliable way to measure it that could be broadly used by financial educators and researchers, and then to conduct a survey using this new measure to learn the state of financial well-being in America and what factors, both personal and situational, are related to it. So, what exactly do we mean when we talk about financial well-being? Well through open ended, one-on-one interviews with consumers around the United States, we learned that financial well-being has four elements. The first is having control over day-to-day month-to-month finances, which means to comfortably meet ongoing obligations. Second, it means having the capacity to absorb a financial shock. And people told us that that could be achieved through a combination of savings, credit, insurance, and a safety net of family or friends. Third, it means being on track to meet to meet financial goals -- whatever they are for an individual. And fourth, having the financial freedom to be able to make choices that allow you to enjoy life. And another way to think about that is that financial well-being is the feeling of having financial security and financial freedom of choice in the present and when looking toward the future. So I do want you to think about that definition because that’s the heart of everything else I’m going to talk about -- about measuring the extent to which people have this. Okay. So because a person’s preferences and feelings of security and freedom cannot be directly observed or captured using traditional financial data, we needed to create a new tool to measure financial well-being that could account for differences in consumer circumstances, life stage, and preferences. With the support of a number of experts and using state-of-the art methods, we developed, tested, and validated a financial well-being scale. A scale is made up of multiple questions that can be scored to produce a single measure of something that cannot be directly observed, such as an attitude or an ability. And a scale is therefore the natural choice to measure the concept of financial well-being. These are the ten questions that make up the financial well-being scale and they’re how we measured financial well-being in the national survey. They can be scored to produce one number between zero and 100. For the first six statements, the respondent is asked how well does this statement describe you or your situation? And for the last four statements they’re asked how often does this statement apply to you. You can see that these questions are a mix of objective and subjective statements, like the statement giving a gift for a wedding, birthday, or other occasion would put a strain on my finances for the month prompts people to think really concretely about how much slack they have in their budget But the statement I can enjoy life because of the way I’m managing my money prompts a deeply personal reflection of what an individual values in their life and if they feel in control of their money. So these are simple questions that are relatively easy to answer but along with the scoring procedure they provide a scientifically rigorous way to make a distinction between people with different levels of financial well-being. And we’ll see in the survey results that it really does do it -- it really does distinguish between people with different levels of financial well-being. With this new measurement tool in hand, we set out to study the state of financial well-being in America and how other factors relate to an individual’s level of financial well-being. We did this by conducting the National Financial Well-Being Survey in late 2016. I’m going to just briefly describe the survey methodology here. But if you want to know more, the report that Irene linked to, Financial Well-Being in America describes the methodology in great detail -- particularly in Appendix C if you really want to get into the gory details. But the sample for the survey was drawn from the GFK Knowledge Panel, which is designed to be nationally representative of US households. And in addition to the standard GFK Panel, the survey drew upon GFKs knowledge of Panel Latino and the survey was offered in both English and Spanish to ensure representation of Latino respondents. Nearly 6,400 people completed the survey, which included both the CFPB Financial Well-Being Scale -- those ten questions I just showed you -- and around 70 other measures of personal and situational factors that prior research suggested may influence an individual’s financial well-being. Our prior research suggests that financial well-being is likely determined by a combination of both the opportunities available to a person and their own actions and behavior. So the additional measures included in the survey were identified from this prior research, which is all available on our website as well if you’re interested in the earlier phases, as well as from discussions with experts conducted during this survey design phase. In our result on the survey results, we include findings on financial well-being for all the measures and categories that you see in this table on the screen right now. But for today’s presentation I’ll present some high-level takeaways as well as a selection of findings for specific subgroups. The first finding I want to share is that levels of financial well-being in America vary widely and reflect people’s underlying financial circumstances. The graph you see here, the sort of colorful rainbow graph at the top, is the distribution of financial well-being scores for all US adults. I feel like I should have said ta-da, like this is it -- this is how financial well-being scores look in America. Especially for those of you who know about the scale and may have used it and may have been curious what scores look like, this is an interesting graphic. So the average financial well-being score for American adults is 54. But that in no way represents the majority experience. Rather, people’s level of financial well-being varies widely. And as you can see about a third of people have financial well-being scores below 50. About a third have scores between 50 and 60, and about a third have scores above 60. And within these larger categories, a number of people have scores at the very bottom of the distribution -- below 40 -- and a number have scores above 70, which is the top of the distribution. What I really want to emphasize when you see that is, this scale when we administer this is really helping us understand in a pretty fine-grained way how financial well-being varies and people, you know, answer these questions actually very differently. But what did these numbers really mean? Well, what we learned from the survey results is that financial well-being scores reflect real differences in underlying financial circumstances. I’ll show you the details of this in the next few slides, but to summarize, scores of 50 or below are associated with a high level of probability of high difficulty making ends meet and even for paying for basic needs like food, housing, or medical care. And nearly everyone with scores of 40 or below experiences those struggles. In contrast, scores of 61 and above are associated with quite low probability of having trouble paying for basic needs or making ends meet. And scores above 70 reflect nearly universal financial security. What this finding suggests is that the financial well-being scale is actually a practical measure for gauging how people are doing financially. This slide provides a visual of how clearly the financial well-being scores is related to difficulty in making ends meet. As you can see, nearly everyone with scores of 40 or below has difficulty covering expenses and paying their bills in a typical month. And this is true for about three quarters of people with scores below 41 and 50 as well. I think if you hit the tab, some additional information will appear. So these are the scores below 40. You can see that that’s roughly the same experience 41 to 50. It’s about three quarters of people in the 51 to 60 scores range, which is what the average American is experiencing. About 30% of people have trouble making ends meet in a typical month. And this falls to less than 10% for scores about 60 and to nearly zero for scores about 70. Irene Skricki: And just to make it easier, the dark greenish blue bars are having difficulty making ends meet. And when it turns light is when you’re not… Genevieve Milford: Right. Irene Skricki: Since the key is a little hard to read. Genevieve Melford: Thanks. And overall, 43% of US adults reported struggling to pay bills in a typical month, if you’re curious. We find a very similar pattern in the way that financial well-being score tracks with experiencing material hardship, which means significant financial struggles such as running out of food, not being able to afford a place to live or medical treatment or having utilities turned off. So this is basically a more extreme version of having trouble making ends meet. Again, the vast majority of people with financial well-being scores of 40 or below have experienced material hardship in the past year, more than half of people with scores between 41 and 50, and then just like before we see that the incidence of these decline dramatically after 61 and virtually goes away after 70. And overall, about a third of all US adults reported experiencing at least one of these forms of material hardship in the past year. Yes, next slide. So now that we have a sense that people have very different levels of financial well-being, and that financial well-being roughly tracks with people’s experiences or lack thereof with financial struggles, the next thing we want to look at is what factors are associated with having higher or lower levels of financial well-being. In the report we examine differences in financial well-being by six categories of measures which I’m going to go through today. So I’m going to go through all of the categories but not all of the measures. These descriptive findings provide insight into which subgroups are faring relatively well and which ones are facing greater financial challenges. All the findings I describe have been tested for statistical significance and they highlight potential opportunities for both practice and further research. owever, descriptive relationships between various characteristics and financial well-being do not necessarily mean there’s a causal relationship. These factors could influence financial well-being. Financial well-being could influence these factors or both of them may be influenced by some other third factor. So please keep in mind that when I present these comparisons, we are not attempting to establish the causes or drivers of financial well-being, but we very much look forward to future research that does that. Irene Skricki: And actually Gen, a related we did have one question come in. Was a confident interval of predictability based on this sample? Genevieve Melford: Not entirely sure what that means. Irene Skricki: Okay. Genevieve Melford: I guess to the respondent I would say pretty much all of the technical details of the sample -- the weighting, the distribution statistics, et cetera -- are in the report or we can email or talk after to make sure that I can directly answer that question. Irene Skricki: Okay. Genevieve Melford: Okay. So with that being said, our high-level takeaway from looking at the distribution of financial well-being scores by a number of different measures -- we actually looked at it by about 50 different measures -- is that while many factors are clearly associate with financial well-being, no one factor determines it, which is consistent with what we learned in our prior qualitative research with consumers. For the subgroups of people we examined for this report -- so subgroups means like within a category like income, the subgroups would be the different income categories within income. That’s what I mean when I say subgroups. So it’s the different groups within any one measure. So for the subgroups of people we examined for this report, the average spread between the highest and lowest financial well-being score is more than 30 points. I just point that out to say that there are large differences, you know, when an individual is a member of a group that is a relative disadvantage, they might still have a financial well-being score higher than in the relatively more advantaged group. Not only do scores vary widely in the US overall, there’s large distributions and a lot of variation even within subgroups. That’s really interesting to us because it suggests that even when an individual is a member of a group that’s at a relative disadvantage, there may be compensating factors or strategies that really do offer opportunities for these individuals to boost their financial well-being. And I think that’s encouraging. And we’ll talk a little bit more about specific examples of that at the end. So, let’s get into the details. For each category of measures in the report, there’s a graphic like this one which shows how average financial well-being differs by all the measures in that category -- which in this case is individual characteristics. And it also shows how those subgroup averages compare to the overall US average score as 54. We refer to this as the green lollipop graph. And it’s one of the two kinds of graphics that I’ll teach you to read today and then I’ll go through a bunch. Irene Skricki: Right. And once you get the hang of the green lollipops, it’ll make sense. When you first look at it, it’s a little daunting but… Genevieve Melford: Right. Irene Skricki: …it’s actually kind of a neat way to portray this data. Genevieve Melford: It gives you a sense both of how much different subgroups differ from the overall average and then just a quick visual sense of which measures are kind of creating kind of strong differences in average financial well-being scores because you can see how far apart are the green lollipops in any one category. Ehat we find in this area is that among all of the individual characteristics, financial well-being seems to be most strongly associated with education followed by age and physical health -- which is really interesting. Irene Skricki: Can you explain what the bolded ones are ones you’re going to go into more… Genevieve Melford: Absolutely, yes. Irene Skricki: Okay. Genevieve Melford: Thank you. So when we do each of these overview slides for categories, the ones that are bolded are the ones we’re going to do a deeper dive on the findings of. But I want you to know all of the characteristics that are in the report in case they pique your interest and then you think Gen didn’t cover that. But I can get the details if I go to the report. Thanks. Drilling down on education, as you might expect the more education someone has, the higher their financial well-being tends to be. Adults with less than a high school degree have an average financial well-being score of 48 -- which as you may remember means they face a very high probability of having difficulty of making ends meet. By contrast, those with a graduate or a professional degree have an average financial well-being score of 61, which falls into the score range where most people are financially secure. And so, I’m not going to reiterate this on every slide we do, but I want to get us in the mindset that the difference between 48 and 61 is very significant. And I don’t mean that - it is statistically significant, but that’s not what I mean, I guess I mean economically significant, materially significant. If you remember back to what I showed you about the economic circumstances that people are experiencing when they get a score below 50 versus over 60, they’re quite different. So I just want to emphasize that this is a big difference. And so the graphic that you see here is the other kind of visual apart from that green lollipop image that I showed on the previous slide that we use to present results from the survey. So I’m going to just walk you through how to read it this one time and then you’ll see this graph again a bunch of times. So for each subgroup of people defined by the measure -- in this case, for people with differing levels of educational attainment -- the light gray line, which is, you know, the widest bar you see, shows the 10th and the 90th percentile scores. Which means that 80% of all of the people in that subgroup have financial well-being scores that fall within that long, light gray line. So the vast majority of people, 80% of all people in that category, have scores between those two points that’s the 10th and the 90th percentile. The dark gray line is the 25th and 70th percentile scores, which means that half of all people in that subgroup have financial well-being scores along the dark gray line. And the black line in the middle is the average score for the group. So we find this visual very useful as a way to demonstrate how widely scores vary within subgroups -- and there are differences in that in different measures -- and also how people in subgroups at a relative disadvantage can have financial well-being scores higher than those in relatively more advantaged groups and vice versa. The less overlap we see among subgroups, the more strongly the measure may be related to financial well-being. . Next we find that an older a person is, the higher their financial well-being tends to be. On average, adults ages 34 and younger tend to have the lowest financial well-being with an average score of 51, while adults 65 and older have the highest financial well-being, at scores similar to what we saw with adults with graduate or professional degrees. However, there is wide variation in the level of financial well-being within all age groups showing that people can have relatively high or low financial well-being at any age. Could be for many factors which we - if you’re interested in some of our ruminating on why this could be and some of the potential factors, we go into that in more detail in the report. But in the interest of time, I will not do that on each of these slides. Irene is looking grateful. Okay. So let’s move on to household and family characteristics. This section includes all the measures that you see here, which obviously are both kind of measures more about the household and measures about the family structure. And also census region, which is where is the household located. The largest differences in financial well-being that we see in this area are related to how satisfied people are with the place they live and whether they own or rent their home. The other things are sort of more modest differences. And interestingly, the findings by census region at least are no difference by census region but that could be because census regions are large so they hide a lot of variation within them. This graphic shows you that adults who report that they are very satisfied with the place they live have an average financial well-being score of 60. Which is ten points higher than for those who reported being less than very satisfied. And home owners have an average financial well-being of 58. Higher than both renters and those who neither rent nor own. While it’s possible that owning a home enhances financial well-being, it’s also possible that those who are able to purchase a home are in a stronger financial position than those who are not, and that those factors are also associated with higher levels of financial well-being. Irene Skricki: And I just want to say one thing. We didn’t actually say a whole lot about the green lollipops, but the line down the middle is the US average. If your green lollipop is going to the right, you can see how long the lollipop stick is. That means you’re better off. You have a 60 for the very satisfied with housing. The green lollipop’s pointing to the left, means you’re worse off than the average. Genevieve Melford: Absolutely. So next we look at financial well-being by a number of income and employment characteristics. Among the characteristics examined in this category, financial well-being seems to be most strongly associated with employment status, household income, and the relationship of that income to federal poverty thresholds. And that’s consistent with our qualitative research in which consumers described good employment and the ability to pay bills and afford wants as being important for their ability to achieve higher levels of financial well-being. So overall, retired adults in the US have the highest financial well-being of any employment category, with an average of 60, which is consistent with our findings that older adults have higher average financial well-being. Then, adults who are homemakers, self-employed, and employed part-time or full-time have an average financial well-being score of 54, which is equivalent to the national average. And students have an average of 51, which again may be related to being relatively younger. And financial well-being tends to be the lowest for adults who are unemployed or laid off and sick or disabled. So then as you would expect, individuals with higher household incomes do have on average higher levels of financial well-being. Average financial well-being for those with incomes under $20,000 is 46, rising to 60 for those with incomes of $100,000 or more. However, despite the differences in averages, all of the household income levels have a lot of variation within them and overlap substantially, which suggests that factors other than income are also in play in determining one’s level of financial well-being. So there’s really a lot of wide distribution and a lot of overlap that you can see on this graph, which is really interesting. But it’s also important to note that the overlap in distributions between the lowest two income groups and the highest income group is still quite low, which suggests it may be extremely difficult for individuals with very low household incomes to achieve the highest levels of financial well-being, given the other barriers they face. So we certainly want to acknowledge that while also noting that it’s very interesting that clearly income alone is not explaining financial well-being here. Okay. And so the next category we look at differences in financial well-being based on the savings, insurance, and other safety nets that people have developed or otherwise have access to. And we find that differences in average financial well-being are largest based on the level of liquid savings people have and on their ability to absorb an unexpected $2,000 expense. We define liquid savings as total savings held in cash, checking, and savings accounts. And at the lowest savings level, adults with less than $250.00 in liquid savings have an average financial well-being score of 41 compared to 68 for those with 75,000 or more in savings. This 26-point difference is the largest difference in financial well-being observed across any factor in our report. So I do want to emphasize of all 50 measures, this one in particular has the widest difference in average financial well-being scores and also has much less overlap than most. As you can see, the distributions are narrower and overlap much less for liquid savings, for example, than they did for income, which is really interesting. And there’s similarly a strong positive relationship between financial well-being and the ability to absorb an unexpected expense, which we define as certainty in your ability to come up with $2,000 in 30 days Adults who are certain they could come up with the money have an average financial well-being score of 62, which is 23 points higher than for those who are certain they could not. And as was true for the liquid savings, there are kind of narrower distributions around these and less overlap. And it really is interesting to compare those with the results for income and the fact that these groups have relatively less variation and overlap than income suggests that financial cushions may be more closely tied to financial well-being than income is. And while these patterns are purely descriptive, they are consistent with our earlier research which suggested that savings are fundamental to feelings of financial security. That’s what people told us. And also that income, while important, does not fully capture all of the elements of financial well-being. The next thing we look at is you’ll see this is a long list. There are a whole range of things that we were really interested in that we group under this umbrella category of financial experiences. So that includes lots of things, but among them - and you can see the whole list there. And if any of those are particularly dear to your work, please feel free to check out the details in the report. But among them, the largest differences that we found were based on whether an individual had been turned down for credit, if they had been contacted by a debt collector, or if they had used non-bank short term credit products. And I do want to note that all three of these measures may be associated with the conditions and constraints of living with limited financial resources. So it’s not like those are hugely shocking. But it’s interesting to see the details of how those scores distribute. To drill down a little bit more, you can see that the average financial well-being score for adults who indicated they had been turned down for credit and those who had been contacted by a debt collector are both 43, interestingly. This actually maybe begs some questions about to what extent are these the same people. I actually have not done that analysis, but this was kind of striking that at the low end, that’s pretty low. And then by comparison people who had had neither of these experiences had financial well-being slightly above average. And when we look at financial well-being by financial product use, we see that adults who have a checking or savings account do have higher financial well-being -- 56 --than people who don’t. Adults who reported using non-bank short-term credit such as payday loan, pawn loan, or auto title loan over the prior 12 months have average financial well-being of 42 compared to 55 for adults who did not use that type of credit. And users of non-bank transaction products like reloadable debit cards, check cashing products or services, or remittance products or services, have an average financial well-being score six points lower than adults who did not use such services. But it’s really interesting that - I won’t get into it now because I know I don’t have the visual, but for those of you who are interested in this topic in particular we discuss how the overlap and the distribution is actually quite different for each of these products, suggesting that some of them might have a closer relationship to financial well-being than others. So I encourage you to check that out in the report if this topic is of interest to you. The last category or the last financial experience measures I want to flag which I think are really interesting are looking at a couple other types of financial experiences. One is that consumers who have financial services experiences where they felt mistreated or not respected on average have lower financial well-being than consumers who do not have those experiences. And then because we have a lot of financial educators obviously in the group, I thought I would mention that we find that learning positive money management norms and skills while growing up -- which is also known as financial socialization -- does appear to be associated with higher financial well-being in adulthood. These experiences include having families that talked with them about money management practices or provided them with an allowance to manage or a savings account of their own. So if you are someone who studies or works on issues related to youth financial socialization, there’s some more good information to dig into around that. The final category of results is one that is likely to be of particular interest to this group. This is how we look at how financial well-being scores vary by what people know, do, and believe about money management and find the differences in average financial well-being are largest based on confidence in your ability to achieve a financial goal -- otherwise known as self-efficacy -- by people who have a habit of saving, people who have effective day-to-day money management habits, and also people’s level of financial skill. Tthe first thing I want to point out about this is that you can see the differences in average financial well-being based on these three measures -- financial confidence, having a habit of savings and, and engaging in effective day-to-day money management behaviors -- are among some of the largest we find for any measures. I guess I haven’t shown you many of the measures that have smaller ones. I’ve only shown you the ones that are relatively large. But these are essentially on par with some of these other major ones that you would expect around income, employment status, et cetera. So I think that’s really interesting that the basic magnitude we’re seeing here is actually really similar to some of the other largest ones. But I do think it’s important to acknowledge that several of these practices that we’re looking at -- for example, paying bills on time and paying off credit card balances in full, which are two of the things that go into the effective day-to-day money management behaviors measure -- obviously those are dependent upon people having enough money to make those behaviors possible. And finally, we find that both factual financial knowledge and financial skill are associated with financial well-being, though the relationship with financial skill appears to be stronger. Our earlier research defined financial skill as knowing how to find, process, and figure out how to act on financial information. And in our earlier work, we actually created a ten-item scale to measure that. So in the survey and in our report, we measure financial knowledge using a ten-item financial knowledge scale. We measure financial skill using a ten-item financial skills scale that we have previously developed. Irene Skricki: And those are different from the overall financial well-being scale, just to be clear. Genevieve Melford: Those are totally different scales, yes. Irene Skricki: They all happen to have ten questions but… Genevieve Melford: They all happen to have to have… Irene Skricki: They are not interchangeable. Genevieve Melford: Right. No, they’re different constructs. Financial knowledge is literally asking people to, you know, answer multiple choice factual questions. Financial skill is getting much more at people’s kind of comfort with finding and processing and getting themselves to act on financial information. And of course financial well-being scale you’re familiar with. So they’re different constructs and different scales. Thank you, Irene. We find a seven-point financial well-being gap between adults with higher and lower levels of financial knowledge and a larger -- 11-point difference -- in average financial well-being scores for adults with higher versus lower levels of financial skill. That’s our high-level takeaways and a selection of results. But I think the final reflection I want to say before we talk about some of the tools and resources that we hope can be of use to you all in your work is to kind of reflect on the key implications for the practice of financial education and financial capability programming that to us comes out of these result that we presented. First of all, we find it really encouraging for our field that many of the characteristics that appear to be most associated with financial well-being are in fact already the explicit target of a wide range of financial capability programs and policies -- which suggest to us that at a high-level, the financial capability field in on the right track. And these findings include that the strongest relationship to financial well-being appear to be related to savings and safety nets. That’s something that is obviously very much the focus of much of our programming as a field. That certain experiences with debt and credit seem to be strongly and negatively associated with financial well-being. There are whole major subsets of our field and whole industries that are working on this issue -- helping people improve their credit experiences. And also that many of the strongest positive relationship with financial well-being correspond to financial attitudes, behaviors, and skills. And what we also find exciting about that last finding and I want to relate it to we probably had a - we did have a webinar this summer, so maybe some of you heard it, but we recently put out a report on five principles for effective financial education, which is really a synthesis and compendium of what strategies, you know, have really been shown to improve financial decision making and financial outcomes. So the fact that it appears that these things like financial attitudes, behaviors, and skills are strongly associated with financial well-being -- and separately we actually know that there is a growing body of evidence on strategies that are effective to move the needle on that -- those two facts together we find very encouraging. But of course, more research is needed on what really drives financial well-being and innovative approaches which involves all of us and you kind of innovating and measuring and testing and sharing information on ways to improve it. So with that being said, I just want to talk about a few resources that we have that can hopefully support you either as practitioners or researchers or intermediaries or policy makers. These first two are really tools that we think that financial educators can use to kind of hopefully take inspiration from some of our findings like I was saying and think about using these five principles for effective financial education and the evidence-based strategies in that report to kind of move forward around a lot of these characteristics that seem to be associated with financial well-being. And then to pivot to what you see on the right-hand side, of course all of you no matter what your line of work you can use the financial well-being scale as a way to understand how clients or consumers are doing and also how these innovative approaches are working. So the kind of combination of here are some ideas about what folks can do and here’s how we can measure it and communicate it to each other in a consistent way we hope can be of use. And we would really love to learn from you. If anybody is doing anything along those lines, we want to hear about it. The next resource is something really neat that Irene and I were sort of tangentially involved in but we give way more credit to other colleagues for is the creation of the interactive tool for consumers which allows them to answer the financial well-being scale questions themselves. This is what it looks like. It’s on our website. It’s a consumer tool on our website. The URL is there. Here’s a screenshot of what you first see. And so basically it includes all ten items in the financial well-being scale. And you just click through and answer it. And after you answer it then you get your score immediately. It shows to you in this kind of same color spectrum as what you saw how we presented the results from the national survey. But it tells you how you’re doing. It shows you what the average score is and gives you a little bit of feedback based on those colors about sort of what we know about the more normative meaning of these score bands. Irene Skricki: And I just wanted to remind you that that’s what Gen said early on -- which is that when your score is under 50 you’re probably having a lot of - your consumers are probably having a lot of material hardship. If the score is over 60, they’re probably in better shape. So those colors are meant to give people the subtle suggestion that over 50 is better and over 60 is even better. Genevieve Melford: Right. And over 70 is really great. Irene Skricki: Right. Genevieve Melford: Exactly. And so people can get their score right away, see it on this. They then the next piece of information they get or the next opportunity they have is to take next steps if they’re interested. So it kind of asks them if they have a sense of what financial issues they’d like to work on, then they can get started on their own with a bunch of specific resources we have. Or if they would like to get some more personalized help on what to do next, then there are some suggestions and resources about how they can do that. And then the final thing on here is that if they want to, they can see how their score compares to national averages cut a few different ways. So they’re told upfront how their score compares to the overall average, but a lot of people are more interested in how they compare to people that they think are more like them. So you can see how your score compares using the national survey data based on age, household income, or employment status. So that’s a really neat tool that you can either encourage people to use on their own or you can play around with or if you are a practitioner and you’re interested, you could even have your clients go do this, fill it out ahead of time and then kind of save or print their results and bring it in to discuss with you. So those are just some ideas about ways that could be used by practitioners. Irene Skricki: Right. Genevieve Melford: And Irene, do you want to say more about this tool? Irene Skricki: Just quickly I just want to note for any of you who have used this scale with clients -- and I know quite a few people have out in the field -- this is the first place where you can get the scoring done automatically. When you do it on paper, you have to use the scoring lookup chart, which is a little cumbersome. But this will actually pop out the score using that lookup table without you having to do that. So that may be something even if you were using the scale and just want to go to this, site, you can actually do the scoring online very simply. And the other thing I just want to note is that during the development of this, folks involved in this -- Gen, myself, and many others as well -- did informal user testing with both consumers but also with financial educators. I asked a number of financial educators at different FinEx meetings we had about some of the different ways to show these results and got really great feedback. If anybody on the phone was part of those, thank you very much. And we really learned a lot about that some consumers want to know how they compare to others and some don’t. And so we tried to create the option to just get your score in a fairly neutral way just with color but not making it too blunt about, you’re doing really badly. But give people some feedback. Some people actually wanted much more comparison. And so you could dig deeper and see comparisons. So we tried to accommodate the different desires for types of feedback that we heard from financial educators, which was really helpful. And I think we’ll kind of continue to refine this over time. Genevieve Melford: So the one other thing that I just to let you know for those of you who are heavy data users, we also did release a public use data file from the survey. So if you are interested in asking all of your specific questions and honestly advance this knowledge base, please do. We can’t run every single question ourselves on this data, so we really hope that the public use file, which has over 200 variables, not only does it have more individual questions, but it also has scale scores already in it -- the financial well-being scale score, financial knowledge scale score, financial skill scale score. So you don’t have to do any scoring. That’s already in there for you and you can just start playing around with the data. So the URL is here. There are all the stub codes to read it into your favorite software package and user guide and code book. So I hope that’s of interest to some of you. Irene Skricki: Right. I’m going to say one more thing about the consumer tool because I received a couple of questions related to this. So this tool, this is not a data collection tool. Genevieve Melford: Yes. Irene Skricki: This will give you your score when you take the test. As soon as you leave that page, it’s gone. We are not collecting this. Genevieve Melford: Yes. Irene Skricki: We are not collecting it for the person. If they come back, they have to do it again. If they want to keep their score, they would have to print it out or write it down. So we can’t aggregate. Genevieve Melford: They can save a PDF. They can print it or they can write it down. But we are not… We don’t keep this data. Irene Skricki: Right. So, many reasons for that, but anyone using this, you’re going to have to collect it separately your own way, but at least you can get it scored. And of course for any consumer who just wants to come on their own can look at this and look at the tools that it connects to. But it is not a data collection tool. It is simple automated scoring but also consumer information about well-being. And one I’ll just note too is some of the consumers who actually tested it for us said they expected some kind of customized advice, right? This scale does not collect your credit score, your income. It’s not going to tell you you have too much debt. You should reduce your debt. It’s about how you feel about your finances. And so we try to message that. We’re not showing you some of the sub screens. But we try to message that this is not a Robo Advisor, right? This is meant to help you see how your own feelings about your financial situation, how you answered those questions, relate more broadly and then some tools that may help you depending on your situation. But it is not customized. So any educator using this of course would be doing that in their own counseling sessions or financial education. But we want to make sure that consumers know that this is not that. This is going to give them kind of more general ideas on how they can improve their finances but not things tailored specifically to their situation… Genevieve Melford: Right. Irene Skricki: …because we’re not collecting their financial situation. Genevieve Melford: And that’s also why we try to tell them that if they do need that more personalized help, what type of professionals can help them with that. Irene Skricki: Right. So I will just go to our final resources slide. Again, we’ve put up the Well-Being in America Report URL. It’s also pretty easy to find on our website -- the consumer tool -- our general website for our financial education materials. Again, I encourage you to sign up for FinEx if you haven’t. So we have a little bit of time of questions. I know this is a lot of data. I personally think for a couple years we’ve been or over a year talking about the scale with practitioners and people say it’s really neat, but we don’t know what it means. I think we finally know a little bit about what it means now and about at least an early cut of what factors matter. Genevieve Melford: Yes. Irene Skricki: And as you’ve said, things like savings and financial confidence and things that our field can actually do something about, which I think is really terrific and gives us a lot to think about as a field. So I hope that this data is useful, and we would love to hear from all of you as you move forward in your work and we do as well. As we do more analysis of this data or if you do or you’re using the scale, we definitely want to hear about all that. So let’s open up for questions now. Again, you can continue to put them in the Q&A box. And Operator, can you also give us the instructions on voice questions, please? Operator: Thank you. At this time if you’d like to ask a question, please press Star 1. You will be prompted to record your name. Once again to ask a question, please press Star 1. One moment please. Irene Skricki: Great. So while we’re waiting for any voice questions, we have another email question here through the Q&A box which is please let us know if there are state-specific results. Genevieve Melford: Yes, and sadly there are not. The sample size does not allow for state level sampling. It would be wonderful to have it. These findings are representative of the US as a whole as opposed down to the census region. Region? Irene Skricki: Region, right. Genevieve Melford: The four census regions. Irene Skricki: Right. So census regions are not census tracks. Census regions are… Genevieve Melford: Are big. Irene Skricki: …essentially a quarter of the country. Genevieve Melford: A quarter of the country. Exactly. Irene Skricki: Not census tracks… Genevieve Melford: Yes. Irene Skricki: …which are… Genevieve Melford: Which are very small. Irene Skricki: …a few blocks. Genevieve Melford: Right, exactly. Yes. Irene Skricki: So yes, we didn’t do a large enough sample size to do state specific. Genevieve Melford: Yes. Irene Skricki: Great. Operator, do we have any voice questions? Operator: At this time there are no questions. Once again to ask a question, please press Star 1. Irene Skricki: I think people are still processing what a green lollipop really means. Operator: I do have one question now. Irene Skricki: Great. Operator: (Ray Johnson), you may ask your question. (Ray Johnson): Thank you. Is any of this work - all of this work is focused on consumer. Have you had companies approach you and say I’m trying to help my employees. You have amazing tools at your disposal. How can I use them, access them, modify them to understand how to best help my population improve their financial wellness? Genevieve Melford: I think the short answer to that is yes, but Irene and I are not the team that would be interfacing with those folks. So what I would love to say is we have colleagues who would love to hear from you, if that’s your interest. We have a workplace financial wellness sort of team within Fin Ed that Irene and I are not on. And I believe the answer to your question is yes but I’d love to connect you with those folks for a better and more helpful answer. Irene Skricki: Right. And I mean just generally certainly there are I think employers in work places who are using our tools generally. And many of them do connect well to different aspects of well-being and financial capability. You know, we have tools on retirement and on savings and owning a home and buying a car and things like that. We do also - again, this is a scale that is available for anyone to use. It is free. It is a resource for all of you. And we do know of quite a few organizations, including some employers that have tried using it or started to use it. We are - I particularly am reaching out to practitioners and others to understand how different practitioners are using this. To some degree, that would include employers and financial institutions. So I think we’ll know more about that over time. Operator: Again to ask a question please press Star 1. Irene Skricki: Great. Well we’re almost at time. So I hope that this has been useful and we’ll still if there’s one more - we’ll check once more for voice questions before we sign off completely. But I do think there’s a lot of things in here that the financial education field has just has only just come out. We have to start chewing this over and thinking about what it all means for the work we do. I do think - I hope this will make the scale a more practical resource for practitioners. Genevieve Melford: Yes. Irene Skricki: Because I know those who have been using it -- and there are quite a few people in different types of financial education programs who have been experimenting and trying out the scale. And I know that as I think I mentioned earlier, a lot of people say I like it but we don’t really know what these numbers mean yet. And now I think this data really does give us a lot of information about what national averages are, about what the score is related to different characteristics, different demographic groups. So we’re beginning to have more of a sense of what it means. Lots more work to be done of course, but I’m hoping this will give people more of sort of a framework in which to fit any use of the scale that they’re doing with their own programs. Genevieve Melford: Right. And to reiterate, if you’re using the scale in research, if you’re using it as a practitioner, if you’re using it as an employer and you haven’t already told us about it, please do. Irene and I would love to hear about it. Irene Skricki: Yes. And again, you can always email that FinEx email address. I check it multiple times a day. And I am trying to work with practitioners around the country to figure out what people are learning in using the scale. And we’ll start to really figure out how these results relate to that. And we’re right at 3:00 so we will wind up now. So thank you very much Gen for walking us through all of this very complicated in I think a very accessible way. Again, it’s all available on our report online along with the consumer tool. So I encourage everyone to take a look at that. I forgot to mention earlier if anybody wants a copy of the PowerPoint, please send an email to the FinEx box CFPB_FinEx@CFPB.gov and I will happily send that PowerPoint out to you so that you can look it over at your leisure. So thank you very much everybody. We’re thrilled you all joined us. And we look forward to having many of you join us on our next FinEx webinar in November. Thank you very much. Genevieve Melford: Thanks everyone. Have a great day. Operator: This concludes today’s conference. Participants may now disconnect. END NWX-CFPB HQ (US) Moderator: Sharon Mobley 10-26-17/1:00 pm CT Confirmation # 578256 Page 1