Ronnie launched Onward and its suite of financial services as a way to show that, with the right structures and incentives, “even our nation’s most vulnerable can be financially secure and healthy.” Ronnie proves that, if given an on-ramp to savings and a warm introduction to good financial behaviors, the most vulnerable workers in America can become more emotionally and financially secure individuals, and also more reliable as employees and more valuable as customers.
Ronnie piloted this novel approach in 2017 in a factory in Kansas City, one of most notorious “payday loan hotspots” in the country. The manufacturer, Prier Products, has been in business for more than a century. The company’s team of around 100 employees proudly claims that they’ve personally produced the outdoor faucets found in most homes in the U.S. But even this longtime, steady employer was seeing its workforce getting caught up with payday loans. In an article in the Kansas City Star, Joe Poskin, who runs Prier Products, shared, “We’ve been trying to get our people to save money since we started.”5 Over the years they’d offered holiday bonuses in the form of savings accounts and on a case-by-case basis would extend advances on pay. But still Poskin estimated that more than 80% of his employees couldn’t afford to have their car break down.
Then Ronnie arrived. Working with Poskin and a local credit union, Ronnie was able to offer the Onward Financial program to all of Prier Products’ employees. What employees get is the invitation and encouragement to save small amounts from each paycheck with the credit union, in this case matched by their employer up to a certain amount. Onward brings together a user-friendly mobile and web interface, a national banking partnership, and ongoing integration with the payroll providers. In this way they create a seamless flow of dedicated funds from workers’ paychecks to newly established savings accounts that become the foundation of financial security. After three months of savings, workers on the platform can access small low-interest loans, with the option to repay incrementally over time by payroll deduction. During their repayment period they are building their credit, and once the loans are repaid, they are encouraged to keep directing the equivalent of their repayment into their savings accounts. Throughout it all, the platform offers encouragement, educational information, and small ‘nudges’.
While employers can’t see specific savings and financial behaviors of individual employees, they get reports on participation rate and total savings, for example. And Poskin at Prier Products notes that, “nearly every employee now takes part in the program.” Suddenly the majority of his employees are in the minority of Americans who have access to personal savings of $500 or more.
For Ronnie, the most important impact is on the individuals who build confidence that they can save and gain a more real sense of agency in their life. Ronnie believes that intentionality and a sense of personal accomplishment in taking that first action is critical, as in the case of opening a savings account and setting a savings goal. While the system’s “set it and forget it” nature then kicks in, the combination of action and consistency helps build individual confidence and growing financial independence.
Though the employers are invested (sometimes literally through their matching programs) in these savings accounts, they are held solely by the employee and in a separate account with a FDIC-insured financial institution. This means that the employee’s savings move with them. Not only is this far more freeing than pay-advances from your employer and more financially savvy than turning to predatory loans, having a small cushion is a far more sustainable way to deal with emergencies. And for the individual, building funds builds confidence.
Onward’s work to date has so far focused deeply on three manufacturers with 350 individual employees enrolled. With this relatively small group Ronnie and his team have conducted two years of rigorous AB testing of their product, refinement of their platform, and monitoring of participants’ behavior change. They’ve secured more than $1M in philanthropic funding and have added key roles to their team – from Chief of Product to Director of Sales – so that they can go fully to market in 2020. A key to Ronnie’s spread strategy is targeting America’s mid-sized employers, where employer-matched savings accounts can become a key distinguishing factor for job seekers, and greater stability and financial security a direct contributor to employees’ greater productivity and quality of life.
Ronnie knows that what he offers is game-changing for individuals and for employers alike. And he wants to ensure that financial security during people’s working lives is as ubiquitous and supported a goal as security in retirement, with a competitive field of financial products and federally-subsidized tax incentives to prove it. According to Ronnie, “in order to achieve wider adoption, we believe a tax-advantaged status or other financial incentive to the employer will be necessary.” Therefore, Onward will use case studies to show not only the impact their program has on the lives of workers, but also the societal and economic cost benefit of allowing workers to save for emergencies. Like tax advantaged retirement or health savings accounts, Ronnie would like to see federal support of up to $2,000 in a tax-free emergency savings. As part of that sort of policy change, Onward offers the best example of how this can work, and Ronnie is keenly aware that “the national conversation around emergency savings has never been higher and now is the time to deliver…Whether it is Onward directly or through organizations we inspire, this movement will happen. It’s my personal goal to make sure Onward and those with similar missions provide a counterweight to solely profit-incentivized efforts that may arise.”
