Every year employee personal financial issues cost corporation billions of dollars in lost productivity, theft, low morale and absenteeism to name a few. My presentation takes a look at this important but often unseen issue exploring the actual estimated costs, psychological causes and some possible solutions.

1. Hidden Adversity:
Employee Financial Problems and the Workplace
Presented By: Matt Wilson, CRPC CFS
Securities and Investment Advisory services offered through United Planners Financial Services, Member SIPC 11130 N Tatum Blvd, Suite I-101, Phoenix, AZ 85028.
Gold & Associates is not a subsidiary of nor controlled by United Planners Financial Services

2. “To do the impossible, you first have
to see the invisible”
- Ancient proverb

3. Why Aren’t People More Open About Their Financial Matters?
• Financial habits usually start in
childhood, but many parents do not
discuss money with kids as it’s one of
the “taboo” subjects.
• Constant examples of extreme wealth
by celebrities, athletes, etc can foster a
distortion of reality.
• In today’s society money is equated
with power and status. Disclosing or
flaunting it gives some people an ego
boost (and an implied inferiority to the
other person).

4. Why Aren’t People More Open About Their Financial Matters?
• Negative stigma associated with
bankruptcy, excessive credit card
debt, etc
• Reluctance to expose personal
financial matters, especially if job
or career path could be
negatively affected.

5. Economic PTSD: The Great Recession’s Lasting Effects
Re-Traumatization Fear : An initial trauma does damage and
leaves one with a deep lingering fear of a second occurrence.
• All subsequent behaviors following such
traumas can be viewed as an effort to
avoid re-traumatization at all costs
• Examples might include social
withdrawal, alcohol/drug abuse,
moodiness & irritability, even rage (when
cornered or provoked) or suicide in
extreme cases
• People are left with feeling of
vulnerability; They harbor the secret that
they got past the trauma but never really
over. (Just like the 1930s)
Source: Dr. Mark Goulston Huffington Post 1/13/09

6. “Employees with money problems
are like sharks swimming around the
workplace taking bites out of the
bottom line.”
— Dr. E. Thomas Garman
President, Personal Finance Employee Education Foundation

7. Many Employees are in Trouble
• In 2010 Americans amassed 2.4 Trillion dollars
in consumer debt – $10,360 per household.1
• 61% of Americans report having “serious
financial problems”2
• 81% Identify money and the economy as a
significant source of stress in their lives3
Source: 1Wood, J., EHow The Average Amount of Debt
2
Kaiser Family Foundation 2008
3
American Psychological Association 2008
4
Partnership for Workplace Health
5
PWC Financial Wellness Survey 2011

8. Household Debt & Personal Saving Rate
Source: Federal Reserve Bank of San Francisco, 2011

9. Credit Card Debt Swallows American Households
Source: Business Insider Chart of the Day May 9, 2009

10. Many Employees are in Trouble
• Less than 1/3 said they have enough savings to cover
more than 6 months of life expenses 4
• 36% of those earning $100K or more say it’s
difficult meeting their household expenses
on time 5
Source: 1Wood, J., EHow The Average Amount of Debt
2
Kaiser Family Foundation 2008
3
American Psychological Association 2008
4
Partnership for Workplace Health
5
PWC Financial Wellness Survey 2011

11. Employee Financial Stress Ranks at the Top
One EAP study found that among the five key stressors in life:
1. Personal Finances
2. Relationships
3. Work Issues
4. Health
5. Crime / Violence
Concerns about personal finance were rated as the number one
source of stress, about five times those regarding health
Source: Financial Distress Impacts Health & Productivity: Employees
Turning to EAP for Help
Shepell FGT Research Group 2009 volume 5 issue 1

12. Top Causes of Financial Stress
 Stagnant / reduced earnings1
 Using credit to make up necessary
expenses & carrying excessive debts
 Life Events – marriage, divorce, death,
illness, accidents, lawsuits, emergencies1
 Caring for elderly family members1
 Uncertainty about their future
Source: 1 American Psychological Association 2008

13. Possible Symptoms of Employee Financial Problems
 Low Productivity  Decline to enroll in benefits
 “Presenteeism”  Substance abuse
 Absenteeism  Loss of customers
 Theft  Personality changes
 Low morale
Source: Personal Finance Employee Education Foundation, 2009

14. Financial Wellness Correlates to Productivity
Research by Joo in 1998 showed that:
Workers with good financial wellness Workers with poor financial wellness had:
are usually those who: • higher rates of absence
• came to work
• received lower performance ratings
• received good performance ratings,
• spent little time dealing with personal • spent “excessive” time at work dealing with
financial matters, personal financial problems
• saw increased productivity • saw decreased productivity
Source: Financial Distress Impacts Health & Productivity: Employees Turning to EAP for Help
Shepell FGT Research Group 2009 volume 5 issue 1

15. Impact on Productivity
 29% of employees say personal finances
have been a distraction while at work
 48% admit to handling personal finances
during work hours
 Personal finances being a work distraction
was highest among employees aged 35-44
(40%) and those making over $100K (37%)
Source: PWC Financial Wellness Survey, 2011

16. Estimating Productivity Losses
A recent study estimated that approximately 25% of working adults
reported stress from financial difficulties 1
• A conservative estimate is that a worker with financial problems
spends 15 minutes per day dealing with personal financial matters
• Equals 75 minutes per week, or 62.5 hours total in a 50-week work
year
• Multiply your average hourly pay per employee by your total
headcount.
So estimated losses for a 1000 person company:
• 250 Employees X $10 average Hourly Rate X 62.5 Hours Spent on
personal financial issues = $156,250 annually
Source: Bureau of Labor Statistics, 2011

17. How Much is Lost Productivity Costing You?
If your company’s average hourly rate is:
$15 per hr $20 per hr $23.24 per hr
(National
the estimated the estimated Average Rate1)
annual loss is annual loss is the estimated
annual loss is
$ 234,375 $ 312,500
$ 363,125
Source: 1Bureau of Labor Statistics, 2011

18. Employer Losses Due to Theft
Employee theft is estimated to cost
employers $50 Billion annually
Source: US Department of Commerce

19. Financial Problems & Embezzlement
Usually requires 3 Factors to Commit:
• Rationalize it’s ok
• Opportunity
• Financial Pressure or Need
Source: White Collar Crime Fighter, Gary Zeune

20. Financial Problems & Embezzlement
Rationalization: Making the illegal
action fit into their personal code of
conduct
Opportunity: Poor control measures
and low chances of being caught
Need: Can be direct or indirect
Remember:
The only employees who can steal
from you are the ones you trust!
Source: White Collar Crime Fighter, Gary Zeune

21. Financial Problems & Embezzlement
Profile of the typical white-collar criminal
• Older, more highly educated
• More family oriented and attend church
frequently
• Long-time employees
• Hard workers, rarely take time off
• First to arrive and last to leave in the day
• Don’t steal money to save, it’s usually
spent quickly
Source: University of Dayton, Professor Janet Greenlee
Dayton Daily News, April 2010

22. Financial Problems & Embezzlement
Some warning signs & conditions to look for:
• Periods of major change in the
company (like downsizing)
• Employees with addictions
• Employees under personal stress
• “Thrill seekers” who like bending the
rules under the right conditions
• Employees who can’t stand not being
the center of attention or always have
to be #1
Source: University of Dayton, Professor Janet Greenlee
Dayton Daily News, April 2010

23. America’s Retirement Crisis
1. The Aging of America
2. Medicare
3. Social Security
4. Disappearing Pension Plans
5. Taxes
6. Inflation
7. Financial Mistakes

24. “Life is the
sum of all your
choices.”
- Albert Camus

25. Behavioral Finance
What is it?
The study of why people
make the choices they do
when faced with investment
and other financial
decisions

26. The Psychology of Loss
5 stages of grief:
1. Denial & Isolation
2. Anger
3. Bargaining
4. Depression
5. Acceptance

27. The Psychology of Loss
1979 Study by Tversky and
Kahneman
Findings: Prospective
losses bother people more
than prospective gains
please them

28. Which line is the same: A, B, or C?

29. Herding Effect
Solomon Asch study on Social Conformity: Social consensus vs. analysis
Asch planted fake participants into the
study group and had them say “B” was
correct even though obviously wrong
32% said B was correct, more willing to
follow the majority than think for
themselves
Explains the “Bandwagon Effect” or why
individuals are driven to follow market
trends resulting in financial bubbles in the
absence of data or analysis to support
their decisions

30. Emotional Decisions & The Recency Effect
Most Risk
Recency Market Cycle
Euphoria
Effects
Thrill Anxiety
Excitement Denial
Optimism Fear Optimism
Relief
Recency Panic
Hope
Effects
Capitulation
Least Risk

31. Cognitive Dissonance
Cognitive Dissonance is a term in psychology
that describes the feeling of conflicting tension
experienced by a person when they hold two
contradictory beliefs at the same time.
Since both beliefs or ideas cannot at the same
time be true, a person will feel uncomfortable
and start trying to figure out a way to reconcile
the beliefs so they don't seem to be in conflict
anymore or until the discomfort seems to be
relieved.
By the way…CD happens in Capuchin monkeys too…..

32. “Don't dwell on what went wrong. Instead, focus
on what to do next. Spend your energies on
moving forward toward finding the answer”
~Denis Waitley

33. Solving the Problem
Employee problems fit into two general categories:
Financially drowning: Financially disoriented:
Have stability, but no roadmap for
Have debt, credit, or spending
their future nor the understanding of
problems that are keeping them
today’s complex financial world to
down
help them find their way.

34. Solving the Problem
Good Solutions for each:
Financially drowning: Financially disoriented:
Employee Assistance Program, Personal financial education
debt/credit management programs, benefit info sessions,
companies (TCA, MMI, Others) accessible resources

35. Solving the Problem
Workplace Financial Education Program Success
• The typical 1-hour annual lunch & learn
from the 401k provider is not
enough.
• Should be ongoing and accessible to
everyone (in person, remote, or absent)
• The curriculum should be comprehensive
in nature and cover important topics like
budgeting, debt management, credit use,
the 401k plan, retirement planning,
investing basics, risk management,
taxation, and estate planning to name a
few.

36. Solving the Problem
Final Thoughts:
• Show that you sincerely care, don’t
judge
• Take a holistic approach going beyond
the norm: onsite child care, weight
watchers, yoga/stress relief sessions
• Review your internal practices for
access and handling of funds; pull
surprise audit check
• Start a library of financial resources &
books in the break room (magazines,
brochures, etc). Easily attained from
benefits providers, Social Security, etc
• Provide incentives for employees who
attend programs – get creative. (positive
reinforcement)

37. Thank You !
Visit:
www.employeefinancialbootcamp.com
Matt Wilson CRPC CFS
Financial Specialist
Gold & Associates
602-494-0400 x 25
mwilson@goldfc.com