1. Consumer Financial Health Study Financial Health Segmentation

2. Acknowledgements

3. Defining Financial Health 2. Are you able to pursue opportunities? 3. Do your daily financial activities support both of these goals? 1. Are you prepared for the unexpected?

4. We asked America, How are you?

5. What we heard... 27% of Americans report having less than $1,000 saved for retirement. 43% of Americans describe themselves as struggling to pay bills and credit payments. 30% of American households can only make ends meet for 3 months or less if they were to experience a sudden drop in income

6. Survey Details Survey Vendor: GfK Survey Timing: June – August 2014 Sample Size: 7,100+ consumers – nationally representative sample; over-sampled consumers with under $50k annual income; weighted data to general population Method: Online – homes without internet access were provided ISP services and a netbook; English and Spanish

7. Survey Topics Financial Health Indicators Financial Products & Services Psychographics Checking account Savings account Prepaid card Payroll card Direct deposit Credit products Internet & mobile banking mRDC, email, text Check cashing Other non-bank financial services Day-to-day Monthly cash flows Monthly debt obligations Keeping up with bills Budgeting Resilience Savings habits Plan for expenses Handle job loss Health & life Insurance Opportunity Retirement savings Planning horizon Credit score Risk aversion Financial stress Confidence about meeting financial goals Sense of being in control Attitude toward trying new technology Attitude toward debt Attitude toward fees Provider/product loyalty Demographics Age, income, marital status, education, geography, kids in household, employment status Note: This list is intended to be illustrative of major areas covered in the survey; however, it is not an exhaustive list.

8. Segmentation Latent Class analysis to form segments Variables based on financial health definition –Day-to-day financial management –Resilience –Opportunity –Attitudes 7 segments identified

9. About the Survey About the Survey Survey Key Findings

10. Key Takeaways More than half of the U.S. population (57%) is struggling financially. 1 4

11. Financial Health Segments

12. ’ Financial Health

13. Plan Ahead: Large Irregular Expenses 29%

14. Budget or Spending Plan

15. Saving Habits

16. Non-Mortgage Debt-to-Income Ratio

17. Key Takeaways More than half of the U.S. population (57%) is struggling financially. Consumers’ behaviors and attitudes within financial health segments are consistent across the core elements of financial health. 1 2

18. Consistency Across Financial Health Measures HealthyCopingVulnerable Total (%) ThrivingFocusedStableStrivingTenuousUnengagedAt Risk Day-to-Day I seldom or never juggle bill payments6599899453455513 My household never runs out of money before the end of the month589987934236 6 I do not always find myself living paycheck to paycheck419973701910141 My household keeps up with all bills and payments without any difficulties529879873423363 I do not worry all the time about meeting monthly expenses479672703325237 I always pay off my credit cards in full529467 3022446 I am confident I can meet my short-term saving goals 529272 51362614 My finances do not cause me significant stress418857632818227 I am highly satisfied with my present financial condition308440461510162 Financial obligation ratio under 40%457764574543927 My household plans ahead for large, irregular expenses5666797410003320 My household has a budget or spending plan that is used to guide monthly spending 504555 73373446 Resilience I am very or somewhat confident I could come up with $2,000 if an unexpected need arose within the next month 6310098965649314 My household could make ends meet for more than three months if faced with a drop in income 479677723032174 My household has $10,000 or more in liquid savings459074673228168 At least one person in my household has health insurance7587857881735069 At least one person in my household has life insurance6271827369632948 Opportunity Non-mortgage debt-to-income ratio under 40%7098838660536737 I do not have too much debt right now459759693017327 My household has $10,000 or more in retirement savings5590867151462021 I am confident I can meet my long-term goals for financial security4586615741332416 I have the skills and knowledge to manage my finances well 5381626554453032 I am willing to take some risk when I save or invest5579826458 1826 I save regularly with a plan407170563520222 When I think about saving money for the future, the most important time frame is the next 5-10 years or longer 326410002325712

19. Day-to-Day

20. Resilience

21. Opportunity

22. Key Takeaways More than half of the U.S. population (57%) is struggling financially. Consumers’ behaviors and attitudes within financial health segments are consistent across the core elements of financial health. While income influences financial health, consumer behaviors – esp. planning ahead and saving – also have an impact on consumers’ financial health. 1 3 2

23. Income Doesn’t Tell the Whole Story

24. Behaviors Matter Plan ahead for large, irregular expenses Habit of saving regularly

25. Key Takeaways More than half of the U.S. population (57%) is struggling financially. Consumers’ behaviors and attitudes within financial health segments are consistent across the core elements of financial health. While income influences financial health, consumer behaviors – esp. planning ahead and saving – also have an impact on consumers’ financial health. 1 3 2 4 The financial services community has an opportunity to help consumers adopt and sustain behaviors that contribute to improved financial health.

26. For Financial Service Providers... 2. Are we helping them pursue opportunities? 3. Do the products and services we provide them each day support them in reaching these goals? 1. Are we helping consumers prepare for the unexpected?

27. ... and Beyond More than half of American adults are struggling financially. They manage more complex financial lives than ever before. Significant consumer need Financial health requires: supportive economic environment available, robust social services individual persistence access to high-quality financial products and services Financial services ecosystem

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29. Questions? Jeanne Hogarth jhogarth@cfsinnovation.com 202.888.7586 @jeannehogarth

30. Thank you! Connect with us cfsinnovation.com @cfsinnovation #finhealth Linked In: Center for Financial Services Innovation Download the report: http://bit.ly/ConsumerFinHealth http://bit.ly/ConsumerFinHealth

31. Healthy Segments 2 ThrivingFocusedStable Most satisfied with their present financial condition Most confident in their ability to achieve their short- and long-term financial goals. Most long-term outlook; 100% say their most important timeframe for saving for the future is five years or more Focused on saving for the next few years; 0% say their most important timeframe for saving for the future is five years or more

32. Tenuous Coping Segments Striving Planners: 100% plan ahead for large, irregular expenses, and highest rate of budgeting (73%). High debt: 39% says they have too much debt right now, and 40% has a non-mortgage debt-to-income ratio of 40% or more. Non-planners: 0% plan ahead for large irregular expenses, and low rate of budgeting (37%). High debt: 47% says they have too much debt right now and 47% has a non-mortgage debt-to-income ratio of 40% or more.

33. Tenuous Vulnerable Segments 2 StrivingUnengagedAt Risk Most frequently answer "don't know“, and most risk averse. Low-to-moderate debt: 20% are debt-free, while 33% has a non-mortgage debt-to-income ratio of 40% or more. Most precarious financial situation: 27% could only make ends meet for a week or less if income fell suddenly, and most likely to frequently juggle bills. High debt: 63% has a non-mortgage debt-to-income ratio of 40% or more.

34. Predicting Monthly Income