Jun 16 2014

Leveraging Personalized Interventions to Help Members Improve Their Financial Management Strategies

Report  
Number  
327

By offering personalized interventions or one-on-one financial coaching sessions, credit unions can positively impact and influence members’ financial management behavior.

Piyush Tantia
Executive Director
ideas42
Manpreet Nat
Research Associate
Filene Research Institute
Report Number 327

Executive Summary

Every household has financial responsibilities. Expenses related to housing, electricity, food, and transportation are commonly shared by most people. When you combine these with credit card payments, student loans, childcare, and other bills, it’s not difficult to understand why households become so burdened with debt.

Piyush Tantia, executive director of ideas42, believes consumers need more help managing their finances than they currently receive. Most credit unions offer remedial credit management services or financial education for their members, but not services that emphasize better cash flow management. This report explores how personalized interventions led by financial professionals can impact consumers’ savings and debt repayment habits.

What is the research about?

The report highlights the disconnect between intention and action. People would like to save more, but don’t out of forgetfulness or limited self-control. Low- to middle-income individuals in particular can benefit from one-on-one financial coaching that seeks to “automate” financial responsibility. By redesigning financial education, counseling, and the types of support resources available, we can help consumers not
only develop the intention to be more fiscally responsible, but also actually follow through on that good intention.

What are the credit union implications?

Credit unions provide advice to members using various in-house and vended tools. Often such tools are online and self-service. A more effective approach might be to allow members to take actions right after using a tool or attending a financial education session. One-on-one coaching, as tested in the Financial Health Check (FHC) pilot, is the most intensive and customized of such services. In this way, members will be happier with their finances and more willing to trust their credit unions.

This report is sponsored by the Financial Literacy Center, the Social Security Administration, the Ford Foundation, the MacArthur Foundation, and the W. K. Kellogg Foundation.