Leading with Financial Wellness – Podcast
Last updated: March 11, 2020
Shawn Gilfedder, the CEO of McGraw Hill FCU and a national expert on creating financial wellness programs, shares his experience changing his credit union’s value proposition from products to financial wellness. He explains how McGraw Hill FCU created innovation within the credit union and how Zappos inspired their transformation.
Listen to the full podcast on: iTunes | SoundCloud
Cameron’s Top Takeaways:
- In the financial wellness initiatives that McGraw Hill FCU has done, over 70% of the people who attend are non-members. Financial wellness is a valuable product offering that can be used to attract members — it doesn’t have to be just a freemium product.
- Rather than pushing financial products like the big banks, credit unions should be promoters of financial wellness that also happen to sell financial products.
- Almost every HR department in any significant company has some kind of health wellness program; it’s a great model to look to as to how financial wellness can and will be structured in the future.
- Many Millenials feel too distant from their financial futures to be attracted to many financial planning programs, but if the context of financial wellness is framed in terms of understanding how they can live well both today and tomorrow, it resonates more strongly.
Cameron: Hello, and welcome to another episode of The Remarkable Credit Union Podcast. The Remarkable Credit Union Podcast was created to help credit union leaders and marketers think outside of the box about marketing, technology, and community impact. Each episode we bring on expert guests from inside and outside of the industry, to challenge your preconceptions about business as usual, and help you to think bigger. Today I’m very excited to welcome Shawn Gilfedder, CEO of McGraw Hill credit union, a 385 million dollar credit union based in New Jersey. Shawn is a nationally recognized leader in promoting initiatives that drive engagement through financial wellness in the workplace. His innovation and vision has led to the design of the first financial wellness center in New York City, to provide financial wellness to employer based organizations. Shawn truly embraces his role as a champion of financial wellness on both a local and national stage.
He’s penned numerous articles extolling the benefits of employer-provided financial wellness programs, and has been regularly interviewed by all sorts of media outlets including the New York Daily News, US News & World Report, and The Wall Street Journal. Shawn is dedicated to ensuring credit unions remain committed to their cooperative mission, about which he is truly passionate, and he recently served as chairman of the New Jersey credit union league, which represents over 1.2 million consumers. Shawn was born in Manhattan, New York, and currently resides in Montville, New Jersey, with his wife Alison. I learned before the podcast that Shawn is also the proud father of two girls and mountain bikes, with his trusted retriever Bode. To follow Shawn’s continued impact on financial wellness of consumers nationwide you can reach him on Twitter at @ShawnGilfedder, on Facebook at Facebook.com/McGrawHillFCU, and on their website McGrawHillFCU.org. Shawn thanks for joining us today.
Shawn: Well Cameron it’s great to be here, and happy to share our story of financial wellness, and some of the learnings that we’ve had over the past few years as we engage the employer based organizations, and truly looking forward to seeing credit unions grow and prosper as they think differently about approaching their respective marketplace.
Cameron: Great. So one of the things I loved Shawn about your background was your commitment to the original mission of credit unions, and looking at finances holistically. And I was first introduced to you through the great YouTube video that you did talking about your new financial wellness center, and what you’re doing with technology and education to engage your members. Can you share what this concept is and how it works for our audience?
Shawn: Sure. So when we looked at our brand we also were taking a hard look at our competitive advantage and operating in the shadows of many of the large money center institutions that exist in the greater New York City metropolitan footprint. And one of the things that we recognize is that many of the programs that exist were there to capture direct deposit and really just focused on the commodity in retail banking. And we really wanted to work hard at differentiating ourselves and communicating the message of financial wellness. So about four years ago we focused on that message and recognized folks were out in the space with financial literacy and financial education programs, and we felt that the term wellness is a state of being — that is how do you feel about your finances?
And that’s really how we’ve been approaching the mission of financial wellness in the workplace, that is how do we create a program that provides value to the employer base or seg base opportunity, for us as an institution that keeps us very close to our original mission as an organization for the last 80 years of our history, and how do we create value for the employer? So as we went through that process we were really looking at opportunities to not only engage our current member base within the employer organization, but also crafting a message, and helping further the culture and the initiatives of the employer, and creating value for the employer by providing a benefit to the employee population versus going after their deposit dollars.
Cameron: And can you tell us a little bit about the actual technology because it’s really quite cool, what it looks like when someone walks into this center. Is it just going to be about one’s physical location? Or how do you plan to deploy that through the web if that’s part of your plans as well?
Shawn: So it’s interesting, as we’re seeing tools or resources evolve — so there’s been many an organization that has been able to create different technology initiatives that are out in the marketplace to engage. But we recognize that that’s probably one of the greatest challenges for HR administrators, is making sure that their employee populations do engage when there are initiatives that are holistic and benefit them as individuals, so just like a health wellness program we created a financial wellness roadmap. And back in 2008 Stanford University did a study where they were able to identify the fact that if people could connect visually with what their future should look like and have a resource that’s in place that allows them to do so, they can start to plan for their future and do it in a such a way that allows them to start to visualize what that avatar is, what that future should look like. And those are some of the tools that we built inside of our financial wellness center in New York City, is really to help people connect with a healthier future, a healthier financial life. And those resources are really geared towards not only engaging the individual, but also helping that individual build a roadmap overtime.
Cameron: It’s such a great concept. I remember — I think it was a behavior economic study I read recently, where they talked about how people’s behavior shifts when they look at one of those aged photos of themselves, where they use those photo processing services, so you see yourself in thirty years.
Shawn: Yes, yes.
Cameron: Yes, fascinating right.
Shawn: And it’s interesting as adults 70% of our learning is visual, right? And through our experiences. So we felt like instead of putting somebody through a boot camp, or preaching to them that they have to utilize a specific resource, we tried to really just simplify the process. And that is, where do you think you are today? What are your desires? What are your needs? And doing that in such a way that allows folks to just click through and have that walk of life type of experience, where they can start to build a roadmap and do it in such a way that’s fun and interactive.
Cameron: It has emotional resonance I would imagine, right? Because it always seems like with finance the challenge is so few people react emotionally to numbers or spreadsheets.
Shawn: You know there was a study once done where if people — they were offered the opportunity to either go to happy hour or learn about their budgets, and I think it was like nine out of ten went to happy hour. So it gives you some indication as to if you don’t make it engaging, and you don’t make it — you know the language that you’re using, especially from a marketing perspective — forward-thinking and forward-looking, most people traditionally are not going to engage in the literacy and education component. And part of that too, Cameron, just using the word literacy and education comes with the connotation that someone is illiterate or maybe uneducated. And what we find through our business inside the credit union is that life happens, so having a wellness program allows folks to manage as life is happening, versus assuming someone is illiterate in the subject of managing their finances.
Cameron: Yes, absolutely. So clearly the next product offering has to be budgeting over happy hour right?
Shawn: That is correct, that is correct.
Cameron: [Chuckles] Always popular. So you talked about marketing, I’d love to hear — and you started this from the lens of differentiation. Do you think of this — there’s obviously a marketing effort to potential new members, but there’s obviously a marketing effort as well to your existing members, and how do you think about marketing this financial wellness initiative, and the breakdown between new and current members?
Shawn: So the comparison I like the most is when you think about Zappos, right? Zappos is a great service company that happens to sell shoes. Our future, and I think the future of many a credit union, is we should be known for promotors of financial wellness that happen to sell retail banking products. The future for us as an institution is truly — you know the margin-based product continues to be challenged by the non-traditional entrance in the marketplace. So we’ve been thinking long and hard as to how to shift our business model, because we’re operating the vertical of the employer base space. And what we recognize is there’s an immense opportunity, and I think an emerging opportunity within the space of financial wellness. And just like health wellness programs maybe weren’t known to employers I would say five years ago, you almost can’t find an employer today, or an employer who has a culture that you’d like to work for, that doesn’t have a health wellness program. And we think financial wellness is the next evolution within the overall wellness offerings of most employers.
Cameron: I love that. We do something at my company called a Painted Picture. There’s a bunch of names. Just an idealized future state three years down the line. And we talked about all kinds of stuff, we’ve been on a great path as a company, and we can see this exciting future. But what was interesting was we have a lot of financial transparency, we basically open up our finances to our employees. And the thing that perhaps got people most excited was providing people with financial wellness tools, so that they can learn how to fully run their lives like we run the company, and I didn’t really expect that to resonate, I thought that was really interesting.
Shawn: And we’re seeing folks and some of the assumptions initially were, well these are the folks that would traditionally engage in a self-help or EAP type program, or these are folks that won’t come to a session and share their stories, because the assumption was we’re going to talk about their personal finances. And the reality is we’re not talking about specific numbers or individuals numbers, what we’re talking about are concepts or strategies. We’re helping people modify their economic behaviors, or helping them understand how their economic behaviors are influencing certain results, or looking at the benefits that the employer provides, and helping them realize the full potential of those benefits.
So the initial assumptions — and I think this is more borne of the fact that most financial institutions have promoted financial literacy or financial education, you know it’s become so routine. Our approach is about getting folks to engage and realizing their full potential and the value of the benefits that are being offered by the employer. So, Cameron, in the end we actually become an extension of their HR and their benefits folks, and one of the examples I’ll share with you — and it was a rather unique story. We had an employee call us up, and she said “Hey listen, I have a terminal illness, and I need to take the qualified funds that I have inside of my HSA account.”
And in a onetime distribution you can withdraw those funds and not incur the tax penalties, but she wasn’t aware of that process, or how to go about that process. And you could only imagine if she had made that phone call to an HR administrator from a financial perspective, the HR administrator would probably struggle in answering those types of questions. And having us resident there as a trusted resource inside the space of financial wellness, what it provided was a tremendous resource to that individual, and then it also alleviated the possibility of having a confusing conversation with someone inside of that HR team, because finances aren’t their area of expertise. So I’m just sharing that with you as one example, but it’s just interesting how these conversations can gravitate and evolve and truly benefit the organization and the individual.
Cameron: Yes, I imagine the HR department loves you guys for that kind of connection. And there’s another credit union that I know pretty well, and one of their internal mottos is “a story behind every face,” and I imagine the more you guys work with financial wellness the more you get connected to those stories. And sort of back to this theme we’ve already talked about — the gap between the cold and sterile feeling of numbers and spreadsheets, and then the incredible human realities and stories behind those, or as a result of those. I’m curious, I would imagine you guys are gathering some pretty amazing stories as you get a lot closer to your members through this effort. Is that something you work to disseminate throughout the credit union? I’m sure there’s privacy concerns of course.
Shawn: We are, we are. And I think it’s more of when folks share their stories it’s about the benefit of and the outcomes, versus again their actual numbers. And going through the various programs that we have inside of our offering, what we’re seeing — and I think this is a great business development opportunity for credit unions — what we’re seeing is more than 70% of the participants have absolutely no affiliation to the credit union. So as a CEO I look at that and say, well let’s hustle up and change that equation right.
Cameron: Yes [Chuckles].
Shawn: But then on the other side I also look at it and say wow we’re bringing people to an engagement and a conversation that quite honestly we probably never would if we just were playing in the space of retail banking as a commodity or as an offer. So I think that’s where there’s an evolution here, and a tremendous opportunity for folks to think differently, and truly innovate with their business partners. Because what they’re not getting is they’re not getting this type of service from their traditional resources. So that is we did a survey with 3000 employer based groups in 2014 with the society of HR management, and one of the things that we realized when folks defaulted to financial education, they immediately defaulted to the quarterly education around their 401K plans. And the fallacy in that is that most people — like the average 401(k) when someone hits retirement is about $140,000 dollars.
That’s obviously not enough money for folks to retire in today’s marketplace, and by no means will social security be able to supplement that number. So speaking to employers we help them realize most people, even though you offer that as a benefit, most people are somewhere else in that spectrum. So it’s not to say that folks aren’t saving for retirement or those programs aren’t worthy, but where the needs exist, there’s probably another 80% within the employee population that have some other need other than just focusing on the space of retirement. And that’s where I think credit unions can just do a tremendous job, is helping those organizations realize those opportunities. And it’s also helped them realize how they should realign their resources, and that creates a whole other opportunity for credit unions to be offering financial wellness as a benefit, as a business line versus just a freemium out in the marketplace.
Cameron: Yes, absolutely. And so I’m curious to hear a little bit — you know I love where you talked about what you’ve been able to do, so let’s talk a little about scale. As you mentioned there’s one or two other financial institutions in the greater New York metro area, so you guys, you know what is this if not a David and Goliath story. And I loved Malcolm Gladwell when he talked about that in his book, he opens up with this great anecdote about how actually — I forget the exact term, but it’s like most likely Goliath suffered from a massively overstimulated pituitary gland, and he couldn’t see effectively beyond six feet, and his huge muscles made it difficult for him to run with any speed. And so while we always think of David and Goliath as this classic story of the small guy defeating the giant, he wrote about how there’s all these inherent advantages in being small that we forget about because you can be far more nimble. So I’d love to hear from your perspective both for your credit union, but I know you’ve worked so broadly in the space, and really the whole credit union movement relative to the megabanks is a David as well, no matter what size the credit union. So what are some of your thoughts on the advantages of being small?
Shawn: Well what’s been interesting, and what was recently brought to my attention about two weeks ago, was that Bank of America, they have a financial wellness product, and it’s kind of a self — I would say a self-initiated program that’s offered to their customers. And one of the initial quotes on their page was from the study that we did back in 2014.
Cameron: Oh wow.
Shawn: So here we are, a small organization that is visionary in its thinking, and we’re seeing the large big box institutions latching onto some of our research and our language out in the marketplace. And I look at that, Cameron, and I say this is where the real emergent opportunity is for credit unions, but folks have to look beyond the education resource, and really look towards pathways for engagement, and that is we’re staying true to our mission as an organization. And when folks hear the message of financial wellness, and the default language around Chase, Citibank, Bank of America, it’s not synonymous. They think about those banks offering out that service purely from a mechanical perspective, that is banking is just a mechanical activity, there is no relationship.
When you couple financial wellness with the mission of a credit union as a not-for-profit, mission-driven financial cooperative, now all of a sudden you compare the two, and you ask the general consumer, well, if you had to go for financial wellness as a resource which organization would you turn to? We did numerous hours of focus group testing in Manhattan, and what we found was that obviously four out of five folks leaned towards the message of credit unions as related to financial wellness. So we think that that is a tremendous opportunity. We are in the throws of our initial engagement and also continuing to build and iterate on our current foundation. And I think that our learnings are probably two steps ahead of most individuals and most organizations, because our thinkings been there for quite some time. And you know when you talk about David and Goliath, I think this is the opportunity for credit unions not to repurpose what they have, but to truly think differently about how they want to engage.
Cameron: I love it. So we talked a little bit just before we kicked off this podcast. So Jim Blaine the CEO of State Employees’ Credit Union in North Carolina, wrote a — how shall we say — a very pointed and highly entertaining piece about a year ago. And he said that credit union marketing adds no value, because it’s not focused on growing a movement, it’s just on pushing product. And it was very well written, it was very thought provoking, as someone who I guess I can probably technically claim I am a marketer, sorry mom. It was interesting to hear, because I think that’s been the most fascinating thing for me about starting to work in the credit union space, is how transactional all the marketing communication is despite this foundation of the seven cooperative principles and so on. So I’d love to hear your thoughts about that since I know you’re very passionate about the core mission, and how in turn that causes you to look at marketing?
Shawn: Well from a marketing perspective, and not to say that marketing adds no value, but I think how we market and how we tell our story as an industry definitely needs to shift. I think probably one of the greatest challenges that CUNA as a trade association continues to have, is that they‘ve tried several times and have not been successful at crafting a message that is unifying from an industry perspective. So creating awareness, and helping the general consumer understand how they connect to credit unions as a whole, I think still needs to continue to evolve. When we look at the value of marketing for a credit union, we also have to recognize that we have to pay the bills at the end of the day. And traditionally we’re in the business of thrift, that is we have depositors and people that want to borrow against those deposited dollars, and traditionally that’s how we’ve made money.
I think more so now than ever non-traditional ways of generating revenue is what credit unions really need to start to think about as margins continue to compress. And that’s where our thinking has been in growing out financial wellness as a benefit offering, there are truly ways to share our story and engage new member populations. It is a long-term strategy, it’s not a commodity of a quick hit and win, it is about embedding yourself and developing relationships with not only the wholesale market, the employers, but also the employees themselves. And I think that’s where, to Jim’s point if we just go out and we just promote rate as our competitive advantage than what truly makes us different than any other financial institution.
Cameron: Yes. We had Ron Shevlin on here a few months back, and his whole shtick, if you know much about him, is that it’s the shift from money movement to money management. And so I love how you’re looking at financial wellness not just as a freemium offering, not just as a throwaway, but actually as a potential product of the future. I’d love to ask, I feel contractually obligated to ask you, let’s talk about Millennials, I feel like every person in the credit union space I talk to wants to say something about Millennials. Usually when I talk to a credit union or I say okay who’s your target, it’s usually yes we want those younger people, the Millennials. And so depending upon whose definition you use, obviously Millennials can span up to two decades of age, to me it seems like an almost absurd broad range, and to talk about them as any kind of homogenous group, let alone a highly focused target market where you can really hone in on their needs and differentiate. So I’d love to hear what are your thoughts about marketing to Millennials, and do you have any thoughts about getting more targeted within that extremely broad group that the label covers?
Shawn: Well, yes, it’s interesting, when we think about Millennials we recognize that banking is a verb, and when they’re looking to bank they want it when they want it, and they want it at their convenience. And they will choose an organization and be loyal to an organization if they feel that their relationship is being serviced well. When we think about Millennials in the scope of financial wellness, what’s been interesting with our research is that most Millennials feel that the opportunity for financial wellness is distant. That is most are laden with debt. There are opportunities to realize that the richness of their parents lives is limited by the 17 trillion dollars of debt that the US government is carrying.
And when they see low economic numbers like GDP below 2%, they get worried because they think, well, I’ll be happier being rich in life as opposed to being rich in my wallet. And I think there’s a different way of approaching that demographic population and helping that population realize that there are opportunities. And what we’re seeing out in the marketplace or emerging in the marketplace is — I’ll give you an example. The traditional ways of marketing alone and looking at a Millennial, they may not have a great credit score because maybe they haven’t had the opportunity to build a great credit score. And there’s a lot of non-traditional lenders that are out in the marketplace today, looking at the free cash flow of those individuals versus a FICO score.
And I think credit unions have to get smarter about how they’re approaching that demographic, because some of the traditional means and measures of success and trying to penetrate that marketplace don’t apply. And also marketing to those individuals you have to really be prescriptive, nimble, and if there are any hurdles or friction in the process of engagement they’ll find a resource that is easier to use, or one that is not burdensome, that doesn’t require a lot of their time. So if you try to go after that demographic and push that demographic into your business model, you’re almost guaranteed that you’re not going to see the type of penetration rates that you’d like to see from that demographic.
Cameron: And I would imagine the financial wellness message resonates really well with them based on what you said.
Shawn: It does. Again our conversations are not around trying to make somebody uber-wealthy, at the end of the day it’s to try and help that person lose the next ten pounds, not to lose 50. And then revel in the fact and celebrate that they’ve made it that far, and then take the next step as part of that equation. And those elements and that type of engagement resonates well with that population.
Cameron: Yes, great framing there. And I’d love to know, as we’re heading towards close, but I’d love to hear — how do you think about innovation? You’re clearly a very innovative guy, very forward thinking, I know you’ve tried a lot, and you’ve been working down this path, this isn’t just a spasm that you guys had and decided to pursue all willy nilly. How do you think about innovation inside of the credit union? Do you think of it as something that’s dispersed across everyone, is it just reserved for the top executive team, and how do you go about creating that culture of innovation that you want at McGraw Hill?
Shawn: Well traditionally credit unions have not been known for their innovation. When I look at the industry as a whole, the existence of Filene as a think tank for the industry, we traditionally don’t have the resources that you would find in most large, well established industries, because most of those resources have been committed to traditional means or measures. And what concerns me is that the traditional strategies that are well embedded and well entrenched within the industry, those have to evolve. And I think first you have to think about what you’re looking to achieve as you’re moving to innovate, and then connect that vision with the strategies that will allow you to realize the true potential and opportunities.
So it is a process, Cameron, and I would say it’s a process that most credit unions probably have to work really hard at perfecting. I know we’re still in that process and it takes quite some time, but it has to start with an idea. And I applaud my board and the staff here for rallying behind the vision that we’ve created, and the message that we’re developing in our own respective marketplace around financial wellness. I truly believe, and I think there are others in this industry that also believe, that this is an opportunity for us to grow and prosper and find innovative partners.
I think that is probably one of the other challenges that we have, and doing that outside the industry, that is don’t think inside the vacuum but think about how we can partner with organizations like Everplans and others, that bring value to our membership base, and that may not be in the traditional water column of the credit union industry. That’s the type of thinking that I think will breed success, will also allow us to attract additional capital investments into our CUSOs, whether that be from venture capitalists or private equity. But I think there’s a slew of opportunities to think differently about how we can grow and prosper, and the opportunity to innovate and stay true to our mission, I think is a really unique opportunity when we talk about the message of financial wellness in the workplace.
Cameron: Very unique and very exciting. Well, Shawn, I love your focus on innovation, and the core mission of credit unions, and your passion for financial wellness. Do you have any parting wisdom? Is there anything you’d like to reiterate, or that you haven’t covered that you would like to make sure our audience knows?
Shawn: Well, Cameron, you shared our contact information at the beginning of the podcast. We welcome conversations, we’ve entertained many a credit union at our financial wellness center at 55 Water Street in Lower Manhattan, from big multibillion dollar institutions to community based organizations. So we’re always happy to share our story, and we’re looking for other innovative credit unions to join us in that journey.
Cameron: Fantastic. Well, Shawn, thanks so much you’ve been a great guest, and we wish you the best of luck in your future journey towards financial wellness.
Shawn: Thanks Cameron for having me.
Cameron: Thanks for joining us again for another great episode, it was a real pleasure to have Shawn on the podcast. A few of the things that really stood out to me, this notion that credit unions should be promoters of financial wellness that just happen to sell financial products. Think about Zappos, they’re not a shoe company, they’re a company that provides amazing customer service and they happen to sell shoes. I was also really struck by in the financial wellness initiatives that they’ve done, over 70% of the people who attend are non-members, which as Shawn said it shows the resonance of this message, and it shows the opportunity for a credit union to go find new audiences to speak with. I really like this notion of let’s think of financial wellness as an actual product offering, let’s not just think of it as something that we throw away as the freemium product, we give it away so that then they’ll buy our products.
If you look at how important finances are to our overall wellness, if you look at how as Shawn said, almost every HR department in any significant company has some kind of health wellness program, it’s a great model to look as to how financial wellness can and will be structured in the future. And then lastly this notion of the nebulous label of Millennials which everyone loves to talk about, and Shawn’s comment that for many of them it’s so distant for them to think about finances, and think about retirement plans. But that in the context of financial wellness understanding how you can live well both today and tomorrow, you have a message which is really powerful and which will resonate strongly. Thanks as always, and we look forward to seeing you next time on the Remarkable Credit Union Podcast.