Name: Future of Finance 2024: Preparing the Next Generation for Financial Success
Uploaded: 2024-05-16
Duration: 18 min 49 s
Description: Tom Davidson, Founder and CEO, EVERFI from Blackbaud, David Nason, Senior Executive Vice President and Chief Operating Officer, TIAA; President, TIAA Wealth Management, Vanessa Okwuraiwe, Principal, Edward Jones Moderator: Diane Brady, FORTUNE

Tom Davidson, Founder and CEO, EVERFI from Blackbaud, David Nason, Senior Executive Vice President and Chief Operating Officer, TIAA; President, TIAA Wealth Management, Vanessa Okwuraiwe, Principal, Edward Jones Moderator: Diane Brady, FORTUNE

Future of Finance 2024: Preparing the Next Generation for Financial Success

Conferences

Tom Davidson, EVERFI from Blackbaud, David Nason, TIAA; President, TIAA Wealth Management, Vanessa Okwuraiwe, Edward Jones, Diane Brady, FORTUNE

Hello, Tom. David Vanessa. Good to see you. II, I know I've been a start but I do like lightning rounds. I think it's good just to get the juices flowing since we're talking about, you know, preparing the next generation. I'm gonna start with you, Tom, what do you think we're spending too much time or money on when it comes to this space? And hi, thanks for joining us. Great. Hello, it's really great to be here, I would say and this will sound counter to like what I spend every single day of my life doing. But, um, I think we've talked too much about financial education and financial wellness. There's just an enormous amount of terrible advice kind of coming through the system now and new channels that there hasn't been before. There's also incredibly strong new ways to reach people, but we've done a lot of talking and I think it's the opportunity now to actually come behind that and build the infrastructure, particularly for young people to allow them to automate getting into the game of financial services. Do you disagree? I actually agree. And I'll kind of double down and say generic advertising about this is the biggest mistake. What, what really needs to happen in my view for financial education is it needs to be short, relatable and understandable and not at this very high macro level that people can understand and make it real for them. Well, no one has mentioned meme stocks yet. So if you're thinking about, so if you ask me about what's been overhyped at the moment, meals, definitely. But, but I would agree that, you know, we have spent a lot of time talking about financial education. Um But really we need to make sure we start to activate and use technology as an enabler rather than this. Um You know, I go bad for want of the best of phrase. So let me get to that second part, then let's go from the 30,000 ft down, you know, when you think about some of the more intriguing tools, um or, you know, maybe tactics out there, um You mentioned let's start doing what's rising on your radar in terms of what's actually making a difference. Yeah, I think that um you're seeing still the very early innings of um what what I would call is unlocking mechanisms. Um If you think about reward systems and things built into actual learning that allow you to actually activate an account of 529 a long term saving program for a child or families or others, um That's something that we feel very strongly about that there's lots of avenues, but the schools are the most structured um literal physical plant that we have in order to make this happen. So we've focused for 16 years on actually going into schools and going um literally going where uh all of the wonderful learning and there's infrastructure and support. And so we feel very strongly that that's not the only place, but that's a place and that um the co the country in particular needs to like triple down on that idea of enablement for young people in schools, in classrooms and use that as a venue. So I'm not gonna give you the perspective. Ti A is a company that is driven and mission driven to help people prepare for retirement. So I'll give you the employer's perspective, what's working, things like auto enrollment, things like making it easy for people to see opt out, not opt in, opt out, not opt in incentivize employers to provide the tax breaks that are available to their employers, teaching them what those things are. These are very easy things. Retirement policy is I think one of the three issues left in America that's bipartisan. So policy actually helps with this type of thing. So policy direction in the right way to help people save more and making it easier for employers to do this and then letting assets flow easily from different employers as people move around a lot more, these things really work. So an 18 year old, the beauty of compound investment and they'll put all their money in there. I do think that's very powerful. Have it for you, Vanessa. Well, so Edward Jones, we've been around for a long time. We've been around for over 100 years. But when almost every community in the United States, one but one count I might need to invest on the, we'll get there, we'll, we'll get there. But we know that we have this massive footprint that we can definitely leverage. And so what we've been trying to do is to make sure that we can get into schools. So of course, we have a financial education program. We partnered with F I in 2020 to make sure that we can get um into especially high needs schools. So we're in over 50% of high needs schools, over 6000 high schools and making a difference. We did say that by the end of 2025 our goal was to, to, to reach at least 1 million learners and we're over 900,000. So we're making progress. Thank you very much. We're, we're making progress in partnership with our, you know, um our, our great um company um fi but there's still a lot of work to do and just making sure that we can to have financial information in a smart and digestible way that's really appealing to young people because they want it, you know, one of the things that's interesting the last few years you think about, um what would seem to be innocuous, you know, um financial inclusion, um economic, you know, justice and addressing, especially for marginalized communities. This has become more difficult and I'm curious about whether the um or how the backlash against DE I and the like, how is that impacting if at all this space, is it just a conversation? Well, I would say broadly, you know, it's interesting, we do a lot of other things besides financial education. What's, what's interesting about this one? Is this, first of all, the politics, I was, I'm like a washed up politician. I was a state legislator for long time. And so I'm like kind of a state legislator at 22. I was, yeah, very lot of wisdom there, a lot of wisdom there at 22 all I had learned. Um the um but the uh you know, what's fascinating about this one is we focus on, you know, mental health, suicide prevention, we focus on bullying, like we focus on a lot of yours. Those are incredibly difficult things to um inculcate into the culture of a school. The conversations, kitchen table, conversations. This, you know, financial literacy is actually like the easiest put that we take and it's actually something in a world that's very complicated. This is actually one of the easier ones from an infrastructure perspective. You can either we have it in, you know, we have, these massive institutions have the ability to do it. We've got incredible hearts and minds that wanna do it. And this is just to focus on in the next 10 years. Can you do what Jones has done and, and, and go and do something on a massive scale for kids in areas that there isn't any money for? And are you willing to step up and do that? That's a big idea. But it's a, it's an attainable idea. And so that's what gets me excited is this is actually something that can. So there's momentum behind. Have you noticed any difference with the, with regards to, to sort of the um the political environment and such? Not really, I, I think to your point, people do align on the need for financial wellness. That's a goal that we have financial wellness for as many people as we can reach. So I think that's something that is bipartisan and people agree, we haven't really seen any push back. I would agree with that. The only thing I would say is that the stats are challenging for minority populations that need to be addressed if you think about. So our, our research has suggested that 40% of Americans are not ready for retirement, that number is 50 or higher for minority population. So the, the the issue is more profound, but I think you're exactly right, which is, it's bipartisan and everyone kind of aligns. You're more worried about those older generations. Some of all time helps all these types of issues and an older generation has less time and there's a food fight on all of these things. You, you know, you have to be prepared for the fact that some people don't want the private sector in schools. You have the fact that you've got lots of different constituencies around a school around young people. You've got different ways, you know, media that are coming at them. So it's, it's a little bit of a complicated surround sound, but again, doable. Yeah, I want to ask a little bit about the the role of the employer. And let's talk maybe whether it's millennials, Gen Z, this is a generation that's perceived to be coming from a deficit coming into the workplace. You know, they feel they can't afford housing. So the idea that their paycheck can then stretch into savings um maybe seems less attainable. If what is your message to employers? Are you working with them? In terms of you mentioned opt in, is there anything else? Uh opt in is a big one? We are absolutely working with their employers. There's a couple of things we do opt in auto escalation are two things. Number one is providing financial education at the employers that we service. So we will basically create curated programs for kind of high touch people that really understand it. We'll also do Spanish language classes for people in the cafeteria for other people who work at higher education institutions. So you have to, you have to go where people are. You have to understand those types of things. I would say. One other thing I think is important because there's a lot of skepticism around Gen Z and millennials. I'm less worried about them because of two things. One they've got time, time is your best friend for these types of things. And two, I like the fact that they're skeptical and they push back. I like the fact that they went through a very tumultuous period in COVID. Understand what risk looks like. Understand what it's like to come back from risk. I've got a lot of faith that this learning, this population is going to do well on this issue. They're not going to be as reckless as us. I don't know. I think that's, that's, you know, Vanessa, one of the things I want to ask about is this Ed? Wow. Um You know, uh what do you do differently? You know, what do you think moves the needle? How did you approach this space? Making things smarter and more digestible for, for young people? So, one of the things that we did, we, we do a lot of research all the time. It would loans and we partnered with a couple of companies to just really understand, do the, do the next gen or gen next, whatever we choose to call that big group between 18 and 34. Do they actually think in very short term, um, lenses, is that, is that the case? And so we did delve in a, a lot deeper to understand. Well, what's their situation? We found that one in 10 of them still have, still have student debts. Um, only a third have health insurance and, and half, um, don't have any life insurance, which you wouldn't expect, you know, if you're less than 34 for the most part. So once we understood what maybe some of the issues were, we decided to create this new platform that is really just a digital focus, you know, you don't have to come in person to get that education and, and do it nice and short. And so we did it in a way that acknowledges that this generation especially has high anxiety and we decided to just make these, you know, snappy little videos that really speaks to. Well, what does it mean? I use that as a parallel. I you Yes, more youtube videos very short. Um And it speaks to budgeting savings, compounded interest, all these things that we think are still important. I know value systems are changing, but there's still certain things that are universal and will apply whatever age you are. So we've got really good feedback that this is helping. And the other thing we found is that we can't underestimate the importance of our parents and guardians. Um in terms of immersion. So Children learn their first languages at home. Financial education should be treated as a language. And when, when people are immersed at the, the, the home front, you find that they develop better habits when it comes to financial services. So combine that lens to, to be able to create this new digital platform that is really snappy and is getting a really good feedback. We, we launched it last August. We've had over 500,000 engagements and, and, and people seem to be happy with what um what messages they're hearing, you know, you know, I like and it pivots to what you actually said earlier. You have to treat people as like the whole person. We talk about anxiety. How much do you think about that in terms of the programs you're developing? Because you now you have this expert teeth and mental health in other areas. Does that apply to how you approach financial education? Sure. Yeah, I think um I think they've made, made the point earlier about, um you know, all of this is moving to thinking about the student individually. Um unless, you know, the concept of classroom didn't change all that much for a couple of 100 years and 40 seats and a and a chalkboard. And um it's, it's now changing pretty dramatically and I think that's a positive thing because what it ultimately does allows you to within reason, take a lot of individual factors about that student's life. And I think that's been the biggest thing that we've learned, you walk into any classroom that is uh 40 very different humans showing up in very different ways. Um And, uh and any technology ultimately has to be able to track that over time. Um And that's, you know, that's really where we are in this moment. There's incredible things going on that make me very, very optimistic about that potential. This is like both, it's, these are national issues. It's hyper local. I'm going to ask each of you, what advice do you have in terms of how we can create better infrastructure around this? Of course, you mentioned the schools, you were a former lawmaker. I mean, um whether it's on the regulation side or the employer side, give us um something you would change. What would you prioritize to really move the needle? You were higher ranking than I was. Yeah, you higher ranking. We'll start with you. I would make, I like, I'm gonna go from the employer's lens again. I would make money portable. I would make financial education a part of a employee wellness program and I would make an employee wellness program mandatory for all employees over 100 people. Uh We already have the infrastructure. I think the educational institutions, the employers and of course, lobbying the government, we've got financial education in at least 33 states. They're not necessarily all mandated, but they're either recommended or required required. So that's the uh people are heading in the right direction. We just need more alignment across business in order to drive um policy in on the government side. So do you wanna add anything? I would just say um I think the concept of the public sector doing their part of implementing actually a very good required and multi step, not a one and done, you know, a lot of times including us, we tend to um you know, do something senior year during senior week or something, you know, have multi year from second grade on. Um and then on the private sector side, I think every financial institution should actually step up to open accounts and create the long term infrastructure that's portable and can travel with a young person and start that from kindergarten and rock and roll on that. That's a good tactic. My tactic was not giving them any money after 16. That works, that works very well. So I don't think it hasn't yet before we get any tactic or, or that stuck with you in terms of that you would adopt. Um Again, we are in the audience as parents, employers employees, et cetera. What advice? I think the portability and opening those accounts really is very powerful. Is there anything else you would have? I would say I want to do two things. Number one, when I say man, where I said mandatory by the companies doing it, not the government because it's gotta be true to myself here. But what you said is so important. I think parents, I think parents are underrated. I think parents can make these issues very la relatable, very relevant and very, uh tangible to people relatable and tangible is everything for financial education. So, I think parents and guardians are undervalued in terms of their necessity to be a part of this. Yeah. And, and David, I'll double down on that. So we, we find, found that in, in this research study that we did recently, we found that um, 18 to 34 year olds would rather go to their parents. So almost 70% of them would go to their parents for financial advice. So you would think that in the social media world, everyone is gravitating to social media, especially for financial guidance. But we're finding that maybe they can get their financial information and everything else, but when it comes to guidance, they're going to parents. So for me, what I do, I'm trying to start early with my kids. They're eight and 10 years old. Um not, not all your pocket money can be used for LEGO, it's not gonna happen, you know. So how do you take a small portion of that and put it into your bank account and just start those habits really early? So that's something again that we built into our um financial education, not just for the young people, but for the parents across the board. I love that. So I'm gonna give you each a chance to give some final thoughts takeaways. I'm gonna start with you. I think that this is, um, there's gonna be a really, really great next five years where t a lot of the work that the people in this room, uh, you should see yourself deeply in the middle of this conversation. Like every company that was up here today actually has a really important role in this and it sounds a little cheesy. But um you have the ability to weaponize your, you know, your employees and get people out in classrooms. And most importantly, figure out a way that your infrastructure can get baked into a long term infrastructure for kids and you're gonna change its tombstone stuff. You'll, you will change the trajectory of the country. If you do that. I I would say two quick things. The first is that I would like people to understand that we do have a preparedness crisis in this country that people are not saving enough and people are living longer and it's getting worse. So encourage people to save as much as they can as early as they can and understand that. And two, I run a wealth management business here in the wealth management business. People think that financial advice is just for the wealthy. It's not, it needs to be democratized. People need to feel comfortable asking questions about these types of issues and taking that fear away is massively important. Um Yes, um I will double down again on the importance we have as employers. We, we have over 52,000 employees and the influence we can have over all those people is immense. So I think we need to put our own oxygen masks on first, make sure that all our employees have the very financial information and then you create champions who take it out to the rest of the community. So I'd say double down on putting our own ox oxygen mask on first treat our own people, right? And then we can make a bigger impact. I love that. So David Vanessa, thank you very much. Please join me in making our gathering. Thank you. Thank you.