1. Presented by Dr. Tom Watson Watson Training & Development “Workplace Financial Programs Are Profitable When Done Right” The Business Case for Financial Education © Watson Training & Development, 2009

2. Only 14% of eligible workers contribute to IRA accounts Only 42% of workers save for retirement, including 401(k)s Only 53% of workers participate in any retirement plan Only 60% of full-time employees have access to an employer-sponsored voluntary retirement plan 70% are not saving enough for a financially successful retirement Average 401(k) balance = $50,000 Median 401(k) balance = $19,000 Employees are NOT Saving Enough for Retirement

3. Participation in retirement savings plans are inadequate Most are not saving enough for retirement Workplace education and advice programs have been underutilized Millions of employees say they cannot afford to save for retirement, and 1 in 4 say credit card debt is a reason Employees do not know how to help themselves Employers do not understand the value of providing their employees easy access to the best mix of quality financial programs Employee Personal Financial Challenges in Retirement Saving

4. Surveys 80% - worried about their personal finances and think financial times will get worse 60% - trouble making ends meet 37% - no emergency fund $392 – average savings balance 10% - delinquent in bills 4 million – IRS garnishments 16 million – unpaid utility bills 15 million – calls from collectors More news  401(k)s are being tapped to save homes  $4 gas is a reality; $5 may be next Employee Personal Financial Problems

5. Credit card payments ($11K)$330-$430 month Vehicle payments ($15K) $400-$500 month College loan payments ($30K)$400-$600 month Savings$33 month  Child-care ($5-$21K)$400-$1200 month  Property taxes$  Homeowner’s insurance$ 401(k) portfolio balances “Don’t give employees a raise! Offer help with money management challenges” Employee Personal Financial Problems “70% live paycheck-to-paycheck and do not save enough for retirement” Because millions of investors are poorly diversified

6. 30 million American workers –1 in 4 – report they are seriously financially distressed and dissatisfied with their personal finances Employee Personal Financial Problems – Millions of Financially Unhealthy Workers

7. Over 80 research studies prove that employee personal finances and the employer’s bottom line go together Employee Financial Illiteracy is an Employer Problem

8. Research proves that: “Employees with money problems are like sharks swimming around the workplace taking bites out of the bottom line”

9. “Every time someone on your work team brings his/her money worries to the job, workplace productivity drops” “Employers ignore the elephant” Employee Financial Illiteracy is an Employer Problem

10. “Financially unwell employees do not make the best decisions for themselves… or their employers” Employee Financial Illiteracy is an Employer Problem

11. Research shows: 30-80% of ALL workers waste time at work on money issues How much time? 12 – 20 hours per month Employee Financial Illiteracy is an Employer Problem

12. Financially Illiterate adults do not manage their personal finances very well… And they do not save and invest enough for a financially successful retirement THIS contributes to lower productivity as well as higher health care costs

13. Employers Often Recognize These Issues… But Do Nothing. “You can lead a horse to water, but you can’t make it drink” Employee Financial Illiteracy is an Employer Problem

14. Employees with financial distress report poor health. Financially distressed employees have worse health than other workers. 40 to 50% of financially distressed workers report that financial problems caused their health woes. 1/3 of professional employees say are so sad or down they couldn’t perform job tasks due to financial distress. Positive changes in financial behaviors are related to improved health. Employer Costs: PFEEF Research Shows that Health and Personal Finances are Correlated

15. 1.Lost productivity for each financially unwell employee $450 2.Higher health care cost for poorer health 300 Subtotal = $750 3.Lost employer FICA savings on worker who does not join health care reimbursement (FICA) 92 (cash) 4.Lost employer FICA savings on dependent care reimbursement (FICA) 382 (cash) 5.TOTAL COST TO EMPLOYER $1,200+ © Personal Finance Employee Education Foundation, 2009. “Employer cost for not providing basic financial education that changes behaviors and job outcomes is $750 to $1,200+ per employee!” Employer Costs: Annual Cost to Employer for Ignoring One Worker’s Financial Illiteracy ©

16. Quality Workplace Financial Programs Rescue Employees and Employers by Quality Financial Programs Result in Improved Employee Personal Finances and Employer’s Bottom Line 1. Decreasing employee personal financial distress 2. Increasing employee personal financial wellness

17. Salary increases? No Bonuses? No Most retirement education workshops? No Employee Assistance Programs? No Marriage counseling? No Quality Financial Education? Yes Credit Counseling? Yes What does NOT reduce employee financial distress and increase financial wellness?

18. This is knowledge about Spending Plans Credit Management Savings “AND The lack of financial literacy is the major reason why employees do not save for retirement” Quality Programs Emphasize “Basic Financial Literacy”

19. Comparison shop Achieve savings goals Enjoy average to above average financial well-being Comparison shop Achieve savings goals Enjoy average to above average financial well-being Quality Programs Result in Financially Literate Employees Who are Engaged with Money Issues Human resources professionals can help make this happen

20. Lower financial distress Increase financial well-being Better health Retirement preparation Improved family relationships Gains in job performance “It makes a difference to that one!” Quality Financial Program Result in Improved Employee Financial Wellness

21. “Employers do not realize they can improve profits –and prove it– by helping employees improve personal financial behaviors” Quality Financial Programs Result in Improved Employer Profits “It makes a difference to that one!”

22. Return on Investment (ROI): The Personal Finance Employee Education Foundation expects employers typically will receive a ROI of 3:1 (or more) annually for quality financial programs Example: Cost: $1500 invested in financial programs by employer/employee Benefit: $4500 ROI = 3:1 Quality Financial Programs Result in a Positive ROI for Employers

23. One Year Projection of the Changes in 10 Variables 1.Less work-time spent on personal finances 2.Less absenteeism 3.Reduced turnover 4.Improvements in job performance 5.Lower health care costs 6.Health care premium savings 7.Employer’s FICA savings for more employees in health care spending plan 8.Employer’s FICA savings for more employees in dependent care spending plan 9.Fewer workers’ compensation claims 10.Fewer garnishments

24. It is in the employer’s best interest—more profits—to provide employees easy access to quality financial programs Conclusions about Employee Financial Literacy and Employer Profits “It also is the right thing to do as stewards of employee well-being!”

25. Companies Offering Our Financial Wellness Program Eastman Chemical Company Neiman Marcus Exxon/Mobil Xerox Corporation Citibank Harris County City of Houston Alcatel Corporation U.S. Navy Ernst & Young Texas Dept of Agriculture Methodist Healthcare System Texas Bank & Trust General Dynamics U.S. Air Force UPS Triad Health Care And 100’s of others

26. Our program is available as a live seminar, an online four month study course, in book form and on CD. It is Guaranteed to Improve Employee Financial Wellness and Your company’s Bottom-Line www.ThePayRaiseProfessor.com Dr. Tom Watson 903-758-0855 Tom@ThePayRaiseProfessor.com