The DNA of Financial Wellbeing Heidi Allan Head of Insights and Engagement Good afternoon everyone, my name is Heidi Allan and I am Head of Insights and Engagement at Neyber. I have been in financial services for 24 years with the last 15 focused on proposition strategy and product development. My main areas of expertise are in employee benefits with financial wellbeing at the heart. My previous role was as Proposition manager at Barclays where I was heavily involved in the production of thought leadership reports including: Talking about my generation – looking at todays multi generational workforce and the challenges this can bring to the HR community, and Financial wellbeing, the last taboo of the workplace – looking at how financial stress can impact the individual and the employer from an overall wellbeing and productivity perspective. I joined Neyber earlier this year to help build and drive their research and insights and imbed this into product development and client journeys. You may well be sitting here thinking what has this got to do with me? Why should I care about the financial wellbeing of my employees? The answer is simple – by ignoring the issues it is costing you money. It is costing you by reducing levels of productivity – not to mention stress and absence impacts. So who are Neyber and why are we here?

01 02 03 04 Why are we here? Understanding the workforce UK insights Employee support and wellbeing facilitation Understanding Neyber

Comprehensive research UK Workforce Study – Feb 2016 30 questions – 10,008 UK employees Segmented by gender, age, industry, salary, working status, region, job role and savings Neyber Debt/Credit Research – Nov/Dec 2015 19 questions – 5053 UK employee responses Results segmented by age, gender, region, industry and salary Neyber Financial Stress Survey – Jan 2015 22 questions - 5325 UK employees Results segmented by gender, age, region, income and industry The DNA of Financial Wellbeing Report – May 2016 We have carried out 3 large research surveys, totaling over 20,000 UK employees, broken down by gender, age, industry, region and salary. I have analysed all of this information in detail and have written a new report – The DNA of Financial Wellbeing which was released in May this year which examines how financial worries impact UK employees and what effects this has on their attitudes, their behaviours and their social interactions. This report examines how the impacts of gender and generation play a part in how we deal with situations and where we turn for support. Many people focus on instant gratification rather than long term gratification and do not see problems mounting before its too late - this is the catalyst for stress and worry which are two of the key triggers affecting our ability to perform as we should and behave appropriately in the workplace and outside. It is often the small things that you do that can really add up – small changes to your behaviour and attitude towards money really can turn bad habits into good habits. It is interesting to see how gender and generation play a part in attitudes to dealing with financial worries

Understanding Employees MATURISTS Born pre 1945 BABY BOOMERS Born 1945 to 1960 GENERATION X Born 1960 to 1980 GENERATION Y Born 1980 to 1995 GENERATION X Born post 1995 Physical Social Career Community Financial For the first time in history, we have up to 5 generations all working together, but with very difference needs, goals, drivers and aspirations. The older generations are traditional and loyal to their employer and have grown up with a ‘job for life’ ethos whereas the younger generations are loyal to their profession and not so much the employer. They are far more comfortable with shorter term contracts and are a mobile workforce. A study carried out by Deloittes estimates that by 2025, 75% of our workforce will be made up of millennial workers – millennials are our Gen Y’s and Z’s. This will bring with it benefits as well as challenges but ultimately, we need to make sure that these workers are healthy, happy and on the top of their game. There are 5 elements that make up your overall wellbeing: Physical – our overall health Social – our family, friends and relationships Career – what we do everyday Community – the area in which we live and interact, and Financial – how financially secure we feel All elements need to be aligned to make you happy – if one of these aspects is not quite right, it can have a big impact on your overall wellbeing. Just think about yourselves for a moment, Think of a time when one of these aspects wasn’t quite right for you How did you feel? Were you performing at your best? Did it affect your behaviour? Did it affect your relationships?

Elements of Financial Wellbeing Overall feeling of financial wellness Clear identifiable objectives Take control of daily finances Ability to cope with a financial shock Financial options throughout life Security for loved ones Clear objectives: Each of us needs to have clear and identifiable objectives – where do we want to go? What do we want to achieve? This is personal to each of us. Understand your own motivations and objectives and then you can create a financial plan that gets you there. Take control of daily finances: Financial wellbeing doesn’t necessarily come from spending more or less than you currently spend – wellbeing comes from having CONTROL over what you spend A lot of the time, when we find ourselves in a stressful situation it is because we feel out of control Understanding your cash flow not only looks at the big bills and expenses, its often the small things that just happen without us realising that can really add up – do you know where every penny of your money goes? Are you happy with what you have to show for your spending at the end of the month? Ability to cope with a financial shock: A financial shock is defined as something that is beyond our control – its not just the shock itself but also the worry that the shock might happen that can impact our wellbeing. Our aim is to increase our own wellbeing – or avoid it being reduced. We can do this in relation to financial shocks by: Understanding them Preparing for them, or even better Avoiding them The greatest measure of how financially secure we feel is our savings buffer – this is the amount of money yo have set aside to maintain your lifestyle should your income change or cease. Financial options throughout life: During your lifetime, you will have to make lots of decisions when it comes to your finances and how best to use them to maximise your potential and fulfil your goals and dreams Wellbeing comes from having your requirements for life and your finances well matched. Security for loved ones: As we have already seen when looking at financial shocks, there are certain times when we need to make sure we are protected – insurance policies are vital especially if you have dependents or family who are financially dependent on us. Making sure that those around you understand your wishes should something happen can really help lighten the load for you and your family. Be open and honest and talk about your wishes – plan and communicate.

State of the Nation – UK Employees – All Industries 70% have been affected by financial worries in the last year 84% 82% 71% 55% 18–24 year olds affected by money worries 25–4 year olds affected by money worries 35–49 year olds affected by money worries 50–64 year olds affected by money worries So lets have a look at the state of nation: 70% of workers have been affected by financial worries in the last year As you can see, the impacts of the younger generations are even higher with over 8 in 10 being affected But even for the older generations, the numbers impacted are significant– the issue is widespread across all generations. So what is important when we are speaking with employees is to reassure them that if they are worried about anything related to their finances, they are not alone – we need to give them the opportunity to draw a line and make positive changes for your financial future.

State of the Nation – UK Employees – All Industries Employees who feel financial pressure affects their ability to perform their job 62% 62% 58% 47% 18–24 year olds 25–4 year olds 35–49 year olds 50–64 year olds The impacts on the workplace can be significant We see some really numbers, across all of the generations who feel financial pressures affect their ability to perform their job Think about a lack of concentration for those operating machines or driving a vehicle, Think about professional people dealing with client money and financial matters, Think about healthcare professionals or emergency services to name a few.

State of the Nation – UK Employees – All Industries Employees who have less than one months savings to manage should their income change or cease 43% 41% 36% 23% 18–24 year olds 25–4 year olds 35–49 year olds 50–64 year olds And going back to that savings buffer we spoke about earlier – the figures here show the percentage of workers who have less than one months savings to sustain their living should their income change or cease Whilst this is worrying across generation, I want to highlight for you the older workers – nearly a quarter of which have less than one months savings – we are seeing more and more older workers remaining in the workplace for one of two reasons – either their desire for social interactions, or financial – they simply cannot afford to retire. If they have no savings, how far do you think their pension will go? So lets have a look at what is happening month on month…

State of the Nation – UK Employees – All Industries Employees who have borrowed to meet BASIC financial needs in the last year 78% 79% 67% 46% 18–24 year olds 25–4 year olds 35–49 year olds 50–64 year olds Keeping with the older generations for the moment – nearly half are regularly borrowing to meet BASIC financial needs month on month So – they are working full time, they aren’t managing month on month, and they have less than one months savings – not a very rosy picture and a big issue for employers across the UK. I’m sure your eyes have also been drawn to the high percentages for the younger generations too – just to put this into context, these youngsters are the ones who are trying to get on the property ladder who need large deposits to set them on their way – its no wonder it’s a distant dream for so many. Total who have borrowed in the last year - 64% Via a credit card - 37% A friend/ family member - 27% My savings (that I intend to pay back) - 23% A bank via an overdraft - 21% A bank via a loan - 9% A payday lender - 5% A credit union - 2%

Debt Repayment Defaults & Consequences When we look at those monthly repayments, defaulting can have devastating consequences We asked survey respondents whether they had missed 3 or more consecutive payments in the past two years, and 10% on average across all generations said yes. If we look at the younger generations in particular, the 18-24’s, 16% of them have defaulted and 22% of those that have defaulted have been subject to either a county court judgement, a debt relief order, or bankruptcy – and these workers aren’t even on the property ladder yet. When we look at the 25-34 year olds, the story isn’t much different. A Deloitte study shows that by 2025, 75% of our workforce will be made up of millennials – those born after 1980 – What does this mean for the UK’s future?

Support Mechanisms in Times of Financial Stress All Industries 18-24 25-34 35-49 50-64 Family & Friends 40% 35% 29% 19% Partner 33% 32% 27% Bank or Professional Adviser 15% 17% 18% Employer - Manager / HR 7% 5% 3% 2% So where do you go when you are worried about your financial wellbeing? As you can see from this table, partner and family leads the way across all generations, and the employer is a long way down in respect of where employees turn for support. So, whilst employees are not likely to initiate a discussion with their employer about their financial worries – when we look at facilitation by the employer, that tells a very different story…

Employer facilitation We asked employees if they would value: Affordable loans Attractive savings Financial awareness programmes, and Access to support and guidance to improve their financial wellbeing If they were facilitated by their employer – as you can see, overwhelmingly the answer is yes So although people are not comfortable approaching their employer about worries directly, they are looking to them for help, support and options which is really encouraging So this leads us nicely to where Neyber can help…

Our mission To give hard-working people access to fairer finance, when they want to borrow and save money BORROWING FAIRER FINANCE SAVING We are a financial technology company with a very strong mission: To give hard-working people access to fairer finance, when they want to borrow and save money

Putting employees first Unlike other lenders, we look beyond the credit score. We take their employment status and financial situation into consideration to make our borrowing available to more of your employees Affordability Employment history Past credit Repayment method We’re not a middleman. Rather than relying on a third party our own underwriting team put in extra effort to consider each employees individual situation, needs and how Neyber can help As the employer is facilitating the introduction to Neyber and not providing the loan themselves it doesn’t cost the employer anything to make Neyber available to their employees Traditional lenders would simply look at the credit score and often the ‘computer says no’ which leaves the employee still with the borrowing need but no solution – this is why so many are resorting to creadit cards and expensive payday lenders. Because we look at the individual, their circumstances, affordability and what they are trying to achieve – it means we can offer a great solution to the employee. There are times where borrowing simply is not the right thing for that person, we will never leave someone with no options and in those situations we have a third party who specialises in helping people who need that extra help to get themselves back on track (payplan).

Summary 01 02 03 Understand your workforce and the challenges they are facing Early intervention and knowledge building can create good habits Employer facilitation to create communities in the workplace So to summaruise, I would like to leave you with three simple messages: Understanding your workforce and the challenges they are facing are vital in helping you prioritise what your employees really need Early intervention and building of knowledge can create goods habits & help improve the ability to make smarter financial decisions Employer facilitation to create communities in the workplace can help all parties to support each other and turn borrowers into savers and change behaviours Thank you for your time