Yanela Frias and Jamie Kalamarides: A Rock-Solid Path to Resilience

Jennifer Tescher:
Welcome to EMERGE Everywhere. I’m Jennifer Tescher, journalist turned financial health champion. As founder and CEO of the Financial Health Network, I’ve spent my career breaking down silos by engaging with innovators across industries. And now I’m sharing those conversations with you. Meet the forward thinking leaders, challenging the status quo and unleashing creative, new ways of improving financial health by seeing their customers, employees, and communities in 3D. Today, I’m joined by two senior leaders from Prudential Financial Yanela Frias President of the Retirement Business and Jamie Kalamarides President of the Group Insurance business. Combined, these two have over three decades at Pru, and they’ve been instrumental in shifting the company’s purpose to financial wellness. The products that they run, retirement plans and insurance policies are critical tools for building resilience. The pandemic has demonstrated why financial resilience is so critical and they are doubling down on their efforts to help employers serve as a backstop. Jamie and Yanela, welcome to EMERGE Everywhere.

Yanela Frias:
Thank you. Great to be here.

Jamie Kalamarides:
And we’re really excited.

Jennifer Tescher:
So the two of you are, maybe not lifers it Prudential, but you’ve both been at the company a long time. Yanela you joined in 1997. That’s 23 years. And Jamie, I think you’ve been there for about 16 years now. So that you both have the long view really on the company and its evolving strategic focus on financial wellness. Tell us about your path to your current role and how the company’s evolution, how that showed up in the jobs that you’ve held at the firm. Let’s start with Yanela.

Yanela Frias:
So yeah, as you said, I joined Prudential in 1997, fairly early in my professional career. And I certainly didn’t expect to be here for so long, but I’ve had an extremely rewarding and diverse path to where I am today that has, and really continues to challenge and help me grow. I grew up in the finance organization where I had a number of roles in corporate treasury, and also I was the CFO for several businesses, individuals, life and annuities. And about three years ago, I transitioned to the business side, specifically the retirement business. And I took on my current role about nine months ago, leading the retirement business. Along the journey, the constant and the biggest motivating factor has really been our purpose. We are a purpose driven organization, fully committed to serving our customers and solving the financial challenges of our changing world.

Jennifer Tescher:
What about you, Jamie?

Jamie Kalamarides:
As you said, I joined in 2004 when we acquired another retirement business, which I had been at for five years. And that business I stayed with within Pru, I was with the retirement business until three years ago. And within that business, I did all kinds of things. I ran clients segments focusing on not-for-profit, government clients and unions. I focused on our 401(k) and 403(b), 457 business. I ran an actuarial consulting firm and I was responsible for some institutional insurance products that are called stable value. They allow individuals to have a safe guaranteed fund within 401(k) plans.

And all of those experiences were really neat because I got to understand the fundamental needs and the fundamental gaps that individuals have across this country and how important it is for the employer and the workplace to be able to help solve those gaps. Three years ago, I took the challenge of running our Group Insurance business, which provides employee benefits like life insurance, disability insurance paid leave a variety of voluntary products and a variety of sort of edgy financial education to about 3,500 employers and about 25 million individuals across both government, associations, unions, the very largest companies and mid-sized companies.

Jennifer Tescher:
So you mentioned purpose, was one of the very first things that you said. And I’m wondering does that help explain why the two of you have stayed so long? The fact that Prudential really is a purpose driven company and they’ve also evolved their purpose to focus on financial wellness?

Jamie Kalamarides:
Our purpose is we solve the financial challenges of a changing world, and it really is what excites me and motivates me. I’m driven and my core values are around faith and family. And at Prudential, I find that I can do good while doing well for the company at the same time. And we found that if we can identify societal problems, that don’t have great solutions, that’s a wonderful opportunity for us to be able to come up with solutions and actually make them sustainable, competitive, innovative, and offer them at the right value and do the right thing for our shareholders at the same time. And that’s really exciting and motivating to us. And to me.

Yanela Frias:
Yes, so very similarly. I mean, our work is purpose-driven, very meaningful. In the retirement business, we are helping millions of Americans prepare for retirement and in order for them to be able to save for retirement an individual has to be financially well along the entire journey. That means having emergency savings, managing that, knowing how to manage their finances so they’re not living beyond their means. And that’s really where our financial wellness tools come in to help our participants prepare for that long-term goal of retirement while managing their day-to-day finances. And the fact that my colleagues and I play a key role in that for all our retirement clients is tremendously motivating and satisfying. One person at a time, but it really makes a difference. It really matters when we can help people save for that long-term goal and help them be well along the way, and be part of a company that really values that and really puts our customers first.

Jennifer Tescher:
So it sounds so obvious when you say it, this idea that to retire successfully, that you’ve got to be financially healthy, financially well all along the way. But that wasn’t necessarily the motivating factor or the motivating idea at Prudential until maybe a few years ago. How did the company get there?

Yanela Frias:
As you start looking at the statistics, right? And you start seeing that so many Americans don’t have emergency savings, can’t afford a $500 emergency. Then over time as we did research and we looked at our participants and our clients, and better understood the challenges. And you realize that when somebody is living paycheck to paycheck or perhaps beyond their means, saving for retirement comes last. And so over time through talking to our clients, understanding the research better, we realized that you really have to be financially well along the way, and that we need to provide those tools. And as we have worked with our clients, the employers over the past couple of years, they’ve really embraced this notion and they understand the value.

And they also understand the financial value to them. Because if you have employees that are concerned about their financial wellbeing, focused on their financial challenges, they’re not as productive. They’re not present at the workplace. And in addition, if you have employees that are not ready and can not retire on time, that creates all kinds of challenges for workforce management. So there are real business imperatives for our clients to help their employees be financially well and prepare for retirement. And I think that cross-section of understanding the value and understanding it as developing those tools that really help the participants has really made this a key area of focus. And really has everyone highly engaged over the past couple of years.

Jennifer Tescher:
So both of your businesses rely heavily if not exclusively on the workplace as a distribution channel. I wonder how the two of you break down the natural silos between your two businesses to collaborate and to leverage each other’s products and employer relationships. I mean, there obviously is an important connection between insurance and retirement. And I suspect you have, in many cases overlapping end user customers the policy holders and retirement plan holders.

Jamie Kalamarides:
Yeah, it is… Most people’s asset based wealth starts through their employer. In a retirement plan, most people’s growing area of getting insurance is through their workplace, whether or not it’s an employer or a union or a professional association. Despite that, there are all kinds of weird barriers that have been set up in the past, just over time, that sort of inhibit the connection of those things that we work to overcome on a regular basis. And here’s what some of those barriers are. Most insurance by group benefits are tied to the health care cycle and they don’t need to be, but they are. And that’s just a historical fact. Most retirement solutions are not done that way and they’re administered and recorded differently so that the employer has sort of historically put things into buckets instead of thinking about it from a financial wellness perspective. One of the real opportunities and challenges that our businesses work on together is coming up with one framework for financial wellness and delivering that one framework to our individual clients, our mutual clients, and all of the ecosystem, so that we come as one organization to the marketplace.

Jennifer Tescher:
So more of a modular approach where here’s a platform and now you can plug in as the employer, you can plug in the products that we offer that you think are of interest to your employees. Yes?

Jamie Kalamarides:
Yeah, exactly. So we want to make sure that we offer the platform. Sometimes it’s not our platform, sometimes it’s the employer’s platform and we’re the modular connector. Exactly.

Jennifer Tescher:
Got it. And Yanela, talk a little bit about how important or how valuable the workplace is as part of this idea of an integrated financial health system, particularly given the changing nature of work, both to technology, and also what we’ve seen frankly, with COVID. How do you adapt your businesses given the way in which work is changing?

Yanela Frias:
Yeah, I mean, look well before COVID employers were already embracing the idea of offering more financial wellness tools and resources to the workers as part of the holistic benefits program as we chatted about before. And that’s because we know people need help with their finances and figuring out how to save for the future when you’ve also got short term expenses and debt to pay off is not easy. And as Jamie mentioned, although there have been some obstacles we believe the workplace is the best place to build people’s confidence and familiarity with their financial options and to help them build positive habits for budgeting and debt management and savings.

And that is simply because the employer sponsored benefits program provides so many opportunities and touchpoints to engage with individuals in discussions about their goals really year round, especially on the retirement side, right? And also critical life events, whether it’s marriage or the birth of a child. And also when something unexpected happens, like they need a disability claim. So that covers a spectrum between the retirement business and the group, or when they need a hardship withdrawal from their retirement plan. And also the reality is that 76% of people say they trust their employers. That’s ahead of the trust that they have in any other institution, whether it’s the government, the media or other businesses. So there’s a very wonderful opportunity there to engage.

And also as I mentioned, employers have a vested interest in helping their employees with their financial education and tools. Because again, research shows that the workers are more likely to stay when they have these financial wellness tools and they will be less stressed about finances. So the reality is that the workplace is such a wonderful opportunity. And I think as employers embraced more the fact that there is a real benefit here from not only the personal level but also the business and professional level. I think we’re having a lot more success, really engaging and really providing that holistic view and the tool set to help employers and employees.

Jennifer Tescher:
So how do we think about workers who aren’t connected to only one employer or who are gig workers or, I mean, there have been home care workers forever, right? This gig thing, we think it’s new, but it’s not really new. What do we do about those workers? And is that something that Prudential ultimately can play a role in or is that really needed to come from a different kind of company or from the government?

Jamie Kalamarides:
Now a different type of company and the government are certainly thinking about gig workers, 1099 workers, but Prudential’s already playing a role in them. And we really think about this, not as just 1099 or W-2, but people that are doing part-time 1099 jobs, side gigs as well. So there’s almost a spectrum of W-2 side gig workers and 1099 workers. And it turns out, side gig workers and some 1099 workers get benefits through their partner’s plans at the workplace. And so we think about not just what the employees doing but their whole family, we like to serve them that way. The other way we serve 1099 workers is through unions and associations. This allows individuals that have collective bargaining power or collective interest in terms of association to work together and be able to be portable across different workplaces, but still get the benefits of businesses.

And we do that for both professional organizations, like doctors associations, or certified organizations like CPAs, who are oftentimes 1099 workers, but then across things like nurses and a variety of other areas as well. And the retirement business serves that area too. And maybe Yanela you want to talk about the promise of open MEPs and how that might work as well.

Yanela Frias:
Absolutely. I would add, let’s not forget that small businesses account for almost 99.5% of all employer firms in the US. So in addition to the gig economy and the contract workers, we have the challenge of individuals working for small businesses where they do not have access to the plan because it’s very difficult for these small businesses to afford it. So that is an area that frankly, for over a decade Prudential has been advocating for increased access to retirement plans for small businesses through open multiple employer plans. And frankly, Jamie has done a lot of that when he was over in retirement, really focused on that. And the great news is that the groundbreaking SECURE Act legislation that was passed at the end of 2019 really brought this benefit to life and really has provided the opportunity for these multiple employer plans to be provided. So, we continue to monitor the implementation efforts. Obviously, it’s early days but we’re looking at what is happening at the department of labor and treasury to assure that any other regulatory furthers the development of a robust and competitive MEP marketplace. And obviously we’re looking at how we can participate and where there are opportunities to partner and really bring this to life now that we have the legislation available.

Jennifer Tescher:
So Yanela, earlier this year Prudential joined our Financial Solutions Lab, an initiative that we launched in 2014 with founding partner JPMorgan Chase. For the last six years, the lab has cultivated, supported and scaled innovative ideas that advance the financial health of low to moderate income consumers and historically underserved communities. Thank you for your support and investment. I’m hoping you can talk a little bit about why Prudential made this investment and the role of FinTech and InsureTech in driving financial health for all.

Yanela Frias:
Yeah. So first of all, we’re very excited about the partnership and we really view the partnership with the Financial Solutions Lab as really being very closely aligned to our mission of solving the financial challenges of our changing world. And we’ve really just been very impressed by the work of the Lab including the Lab’s success in producing consumer insights and accelerating cross sector collaboration and in scaling financial solutions for underserved communities, right? So that’s very much in line with what we’re trying to do. And much of this is done through leveraging FinTech and InsureTech, and really leveraging and focusing on areas where the ownership is really from places where these communities of Black or other minority owned companies, which is just really exciting.

And that is why Prudential has recently committed to $10 million as you mentioned over five years. And given the growing economic inequalities that we see, and that we’re obviously experiencing right now, we have increasingly focused on equipping historically underserved communities and individuals with the tools and support they need to get on the path to economic and social mobility. These are communities that we are very active in. We are in Newark and we were founded in Newark and are still in Newark. So we live in a community where we are quite active and we really believe this partnership will result in great outcomes for the communities that we serve.

Jennifer Tescher:
So you mentioned Newark. Prudential obviously has deep roots in Newark, which is the headquarters of the company. And it’s one of the country’s oldest cities actually. And after the civil unrest in 1967 and the resulting white flight Prudential chose to stay in Newark when a lot of other companies left. I think Prudential has probably seen firsthand the impact of systemic racism and to its credit has invested over a billion dollars in Newark’s resiliency and success. After George Floyd’s killing, Prudential issued a statement acknowledging the problem of systemic racism and the company’s role in both the problem and potential solutions. I want to read from that statement for a moment, “Prudential was founded on the principle of equity that financial security should be within reach for everyone. And yet we haven’t always been on the right side of history with Black consumers. Examining our past revealed business practices as a legacy company that we are not proud of, including practices that negatively impacted Black Americans and other underserved communities. We know we have much important work to do and are prepared to be judged by our actions. It is important not only to publicly own that history and apologize for it, but most crucially to work aggressively to close the enduring racial wealth gap that our practices further widened.”

Now, I can’t think of another company, certainly not a financial services firm that has acknowledged its actions as it relates to systemic racism and has apologized for them. What does that acknowledgement mean to each of you personally? And how do the proactive measures that the company is taking to close the racial wealth gap show up in each of your businesses? Jamie, let’s start with you.

Jamie Kalamarides:
I think that the drive and the need for persistent action to create equity is a… There’s a moral case. For me, there is a faith case, and I think that there’s a very obvious business case for it as well. The business case goes like this, companies and organizations that have more diverse thinking are better performers. They’re more productive, they’re more innovative. They outperform in terms of stock. So even if we’re not even thinking about the altruistic or the moral or the faith-based approach, there was a very good reason why our shareholders want us to do this. Our consumers want us to do this. Our employees want us to do this. We want the very best talent. And that’s why we made a series of nine commitments taking action for our people, taking action through our businesses to make equity better and taking actions in society. And each of our leaders, myself included are personally committed, measured upon and are investing time, energy, and resources to make sure that we’re going to fulfill all of those actions, but actually make progress in our quest to have better equity across this country.

Yanela Frias:
So, I mean… First of all, I’m very proud to work in an organization that acknowledges his past mistakes and learns from them that cares deeply for its employees and customers. And that truly believes in equity and financial security for all. And Jamie mentioned the commitments we just made. These commitments were born out of the courageous candor of nearly 7,000 Prudential employees who shared their experiences and also share their expectations in more than 125 employee forums on racial equity across the company. And these were just incredible sessions. And each of us probably participated in a double digit number of them. Every one of them had similarities, but everyone of them had their unique characteristics, but so touching and just so personal, and it was wonderful to engage in these conversations. But these commitments were really born out of that. And these proactive measures and commitments will show up in every aspect of our business. Talent practices, product design, distribution, investment strategies, partnerships, and really how we engage within our communities and with our customers. And in our views they must be and will be part of who we are and in everything we do.

Jennifer Tescher:
I know it’s early. These are relatively new commitments the company has made, but as you think about your own businesses that you run. Less so about internal Prudential issues, but more about the businesses you run, the customers you work with. Are there top of mind or low-hanging fruit opportunities do you think, that can help contribute to closing the racial wealth gap?

Jamie Kalamarides:
We’ve talked about some of them already. We know that when you have access to a retirement plan, you have 13 times more savings than those people who don’t have access to a retirement plan. Retirement plans are by far the greatest way to actually not only create wealth for the individual for their lifetime, but to create intergenerational wealth transfer. The next biggest thing is the racial wealth gap… The next biggest factor is emergency savings and unexpected bumps along the way that inhibit financial resiliency. And we’ve talked about that too. Those two elements of both emergency savings and then either life insurance or disability insurance, if you have unexpected loss of work along the way, those things are really, really critical.

A final area that we’re starting to focus on a lot is… And COVID just is the catalyst for it is the need for paid family medical leave. That is when you need to be a caregiver for yourself, for a loved one or in a maternity, paternity situation. You need to be able to take time and still get paid along the way. And right now our country has a patchwork of solutions and a patchwork of mandates, and we’re committed to finding a public-private partnership that allows sustainable, comprehensive paid leave going forward.

Jennifer Tescher:
I’m glad you raised that last point Jamie, about public-private partnership. There is a lot that the private sector, that big corporations like Prudential can do. But as I think we’ve been reminded through COVID only the government can print its own money when there’s a big emergency, a big crisis. And again, many of the challenges that people are facing are decades in the making. They’re just being brought to the surface because of the challenges of COVID and the economic downturn. And some of them are going to require policy change. How does a company like Prudential engage? You have a job to, do you have a business to run, you have a variety of stakeholders, including shareholders. Is it your role to be advocating for policy change with the government? How do you think about that? I know you’ve done a lot of work in that regard in particular.

Jamie Kalamarides:
We do think it’s our active role as business leaders to engage in the conversation about policy. And we do that actively in Washington and State capitals with affinity groups, with regulators and I endeavor to bring a practitioner set of experiences and data on how to make solutions sustainable, comprehensive, affordable, innovative. And you can only do that if you participate in the conversations. Some of my greatest insights are gained by talking to not-for-profit organizations that are working on the ground with a specific community. And they don’t have a scale or the capital to be able to scale it up. And we either help them or they help us, or sometimes it’s both along the way. And that coupled with lobbying and making changes to make it better for everybody is really a core part of our business.

Jennifer Tescher:
So I was in an airport a couple of years ago, and I very clearly remember walking by a big poster about financial wellness. And I realized it was a Prudential advertisement. In fact, I took a picture of it and I looked at it the other day. It said, “Destination: wellness,” which makes sense because I was in O’Hare Airport in Chicago. And given what I do for a living, I was really excited, hence the picture. The company has really been one of the most bullish in leveraging wellness as a major part of its brand. Our conversation today shows how the company’s commitment goes beyond ads, beyond talk. But ultimately accountability matters.

I’m thinking about the recent stunt study funded by the Ford Foundation that showed that the statements made by the business round table companies that said that they were buying into stakeholder capitalism, didn’t always line up with their actions. We can quibble with that study, but in general, I want to close with this idea of accountability. And you two have mentioned that before, particularly as it relates to the racial equity work but also being held accountable around the financial wellness of your customers. So how are the two of you held accountable for the company’s wellness goals and ultimately what will success look like for your customers?

Yanela Frias:
So let me start, I mean, look, our responsibility within the retirement business is to bring a solid retirement plan design to each of our clients that really enables their participants to retire with confidence and security and be financially well along the way, we’ve talked about that. The right plan design can help organizations to simultaneously increase the retirement security of its workforce while increasing the organization’s bottom line. We talked about the business imperative as well as the participant benefits. And really that is what we focused on. And frankly, we’ve been quite focused on shifting our approach as to how we look at the retirement plan design. And we’re working very closely with clients and advisors to ensure their employees are prepared for their futures as well as another financial crisis, which will happen. And so we aren’t necessarily thinking differently as a result of COVID, but it has highlighted the shortcomings of the current approach and really further strengthened our resolve to help prepare our clients and participants.

Because at the end of the day, we are held accountable for outcomes, right? And it’s those outcomes in terms of helping participants achieve those short-term and long-term goals, having the financial cushions that they need along the way and really helping them achieve the right outcomes will result in our clients, the employers having the right outcomes as well.

Jamie Kalamarides:
And the same thing for the Group Benefits business. Our vision, and our mission is defined as achieving financial wellness for our clients and expanding that number. And we’re measured on as leaders about scorecard, certainly financial results to the shareholder, but also employee results and also impact in the marketplace in terms of these financial wellness metrics. And we think about it in particular to overly simplify it as increasing the availability of access to these solutions and then actually solving more and more people’s problems and being there so that they can have access to and then you use the solutions that help enable them to get to financial wellness. So many people think that it is about individual agency that determines people’s financial wellness.

It’s our strong belief that we can put in systemic solutions that actually help a large class of the whole society in a better way. And so it’s our drive and motivation to be able to do that, not only at the company level and the society level, but then family by family as well. And that’s a worthwhile goal. And the reason why we measure ourselves by that worthwhile goal is because candidly, that’s why people want to work here. People are attracted to and excited to, and like working at Prudential because we’re focused on a higher purpose.

Jennifer Tescher:
Jamie, Yanela, thanks for joining me on EMERGE Everywhere.

Yanela Frias:
Thank you.

Jamie Kalamarides:
Our pleasure.

Jennifer Tescher:
This has been EMERGE Everywhere, a Financial Health Network production. I’m Jennifer Tescher, and I’d love to hear your ideas for future guests and your reactions to the show. You can connect with me on Twitter @JenTescher. If you liked this episode, please review the show and subscribe wherever you get your podcasts. To learn more about the work and research we do, please visit emerge.finhealthnetwork.org. See you next time.