MEASUREMENT / SCORE TOOLKIT

 

1. What is the FinHealth Score?

 

The Financial Health Network’s FinHealth Score provides a holistic, moment-in-time snapshot of an individual’s financial health. The score is based on eight multiple-choice questions that align with the eight indicators of financial health. For every individual who responds to the survey, you can calculate a FinHealth Score and four sub-scores corresponding to the four components of financial health: Spend, Save, Borrow, and Plan.

The framework is designed to be simple, straightforward, and easy to use. It is intended to be a starting point, proving that financial health can be quantified, measured, and ultimately improved.

 

2. What is the FinHealth Score Toolkit?

 

The FinHealth Score Toolkit is a simple three-part resource that companies can use to calculate financial health scores for their customers and employees. The Toolkit provides step-by-step guidance for using the following resources:

  • A Survey Guide that provides the foundation for the financial health score,
  • Scoring Logic to calculate financial health scores and sub-scores for your customers,
  • Benchmarks to help you understand how your customers are faring compared with their peers.

 

3. Why should my company use the Financial Health Network’s FinHealth Score Toolkit?

 

Investing in financial health will help you deliver what your customers and employees actually need, while helping your business succeed. You can use the toolkit to diagnose your customers’ and employees’ financial needs and then develop products, programs, and solutions to help them improve their financial lives. You can also share financial health scores directly with your customers and employees to help them better understand how they can improve their own financial health. By establishing an initial benchmark for financial health, you can then track changes in financial health scores over time to determine if your company is making a meaningful difference in the lives of those you touch.

*Please contact finhealth@finhealthnetwork.org to obtain further permissions to share financial health scores directly with your customers or employees.

 

4. What will the Financial Health Network’s FinHealth Score Toolkit tell me about my customers?

 

The FinHealth Score Toolkit will provide you with a snapshot of your customers’ or employees’ financial health. You will learn who is Financially Healthy, Coping, or Vulnerable, and how these figures compare to national and regional benchmarks. You will gain insights into how your customers and employees are spending, saving, borrowing, and planning. You can also explore financial health trends across age, income, tenure, and other demographics. To request customized benchmarks, please contact the Financial Health Network at finhealth@finhealthnetwork.org.

Your company can then use these insights to design and deliver high-quality products, programs, and solutions to improve your customers’ and employees’ financial health over time. In six months or a year, you can re-field the survey to determine whether your company is making a meaningful difference in your customers’ and employees’ financial lives.

 

Using the Toolkit

 

5. How should my company use the Toolkit to assess my customers’ financial health?

 

Field the eight survey questions in the Survey Guide to your customers or employees. Use the Scoring Logic to calculate a FinHealth Score and sub-scores for every individual who responds to the survey. Aggregate and weight your results to analyze financial health across the enterprise, line of business, or segment level. Compare financial health scores with the national or regional Benchmarks to understand how your customers compare with their peers. Append account data (product usage, channel engagement, etc.) to explore additional financial health trends at your institution. Use insights from this analysis to develop high-quality products, programs, and solutions to improve your customers’ and employees’ financial health.

 

6. How do I know what my customers’ financial health scores mean?

 

Use this key to interpret your customers’ financial health scores:

FinHealth Scores and sub-scores below 40 are considered “Vulnerable.” Scores from 40 to 79 are considered “Coping.” Scores above 80 are considered “Healthy.”

Please note that there are likely few material differences between an individual with a score of 80 and a score of 79, or between individuals with scores of 40 and 39. These individuals are likely to be on the cusp of financial health and could benefit from additional guidance and access to high-quality financial products and services.

 

7. What uses of the Toolkit are permitted under the license?

 

By accessing the FinHealth Score Toolkit, you agree to use the toolkit in accordance with the terms outlined in the license agreement which allow your company to:

  • Use the Toolkit to measure your customers’ financial health and use the findings to develop products, programs, and solutions to help them improve their financial lives.
  • Share financial health scores directly with your customers, clients, and employees to help them better understand how to improve their own financial health.
  • Reference the Toolkit or share the results of the Toolkit through public communications or marketing channels (such as your company’s website, annual reports, etc.).
  • Acknowledge the Financial Health Network in any attribution, sponsor, or acknowledgement section in the following way:

    “This [product/program/analysis] leverages the Financial Health Network’s FinHealth Score® Toolkit.”

If you are referencing the Toolkit or results of the Toolkit in any customer-facing or public materials, you must seek and receive approval for this attribution by contacting finhealth@finhealthnetwork.org.

 

Methodology

 

8. How did the Financial Health Network develop the FinHealth Score?

 

The Financial Health Network conducted extensive industry research to identify best practices in financial health measurement. Our 2015 Consumer Financial Health Study provided the intellectual framework for the FinHealth Score, which directly aligns with the eight indicators of financial health.

In the summer of 2016, we fielded a small-scale consumer study (n=400) to test and calibrate an initial version of the survey instrument and scoring logic. We then user-tested a revised version of the survey questions through in-depth consumer interviews. In the first quarter of 2017, we fielded a nationally representative consumer study (n=5,000) to explore national and regional financial health trends. We then conducted analytical testing to identify customer financial health segments.

Throughout 2016 and 2017, we tested various iterations of the framework with the seven companies participating in the Financial Health Network’s Financial Health Measurement Project. In October 2017, we released an initial version of the framework to the companies in the Financial Health Network. Based on further cognitive testing, we refined and finalized the Survey Guide, Scoring Logic, and Benchmarks. We are conducting additional analysis to help companies compare differences between the two sets of survey questions to track changes in customers’ financial health over time.

 

9. How did the Financial Health Network identify the cutoffs for the financial health segments?

 

We performed a series of analytical tests on data collected from the 2017 nationally representative benchmarking study to identify Healthy, Coping, and Vulnerable tier cutoffs:

  1. First, we applied insights from the 2015 Consumer Financial Health Study to the results of the 2017 benchmarking study to gain a general sense of where segment cutoffs might be located.
  2. We then conducted a cluster analysis on the distribution of financial health scores to determine where segment cutoffs might naturally occur in the dataset.
  3. Leveraging insights from the U.S. Financial Diaries, we developed consumer “archetypes” to evaluate the intuitive alignment of probable response patterns within financial health segments.
  4. We then examined the spectrum of all possible financial health scores that could arise from different combinations of survey responses.
  5. Finally, we graphed all customer responses from the 2017 dataset, to assess which scoring combinations were most probable from a nationally representative sample.

Based on these analytical exercises, we concluded that the financially Healthy segment cutoff was located at a score of 80 and the Vulnerable segment cutoff was located at a score of 40.
Please see the Methodology Overview to learn more.

 

10. How does the Financial Health Network’s FinHealth Score compare with other measurement tools?

 

The FinHealth Score goes beyond credit scores, which are narrowly focused on borrowing behavior and do not take into account an individual’s spending, saving, or planning activities. Credit scores look backward and are designed for a very specific purpose: to assess the likelihood that a borrower will repay a loan based on previous repayment behavior. The FinHealth Score is forward-looking and is designed to assess an individual’s resilience and ability to seize opportunities over time. Unlike a credit score, the FinHealth Score captures the entirety of individuals’ financial lives, including their spending, saving, borrowing, and planning habits.

The FinHealth Score Toolkit is one of many financial tools that companies can use to diagnose and track their customers’ financial health. Other popular frameworks include the CFPB’s Financial Well-Being Scale and the University of Wisconsin’s Financial Capability Scale. There are also a number of proprietary scoring models offered by companies such as Melius, HelloWallet, NerdWallet, and USAA.

The main difference between the FinHealth Score Toolkit and these other models is that our score has been specifically designed to provide financial service providers with clear, actionable insights they can use to improve their customers’ financial health. We encourage you to use whichever financial health scoring model best aligns with your company’s strategic goals and objectives.

Want to learn more about how your company can use this framework to measure and improve your customers’ financial health? Contact us at finhealth@finhealthnetwork.org.

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