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Catalysts for Change
For individuals, organizations and institutions wishing to increase others’ financial well-being, four leverage points are identified, each acting on a different part of the Personal Finance Ecosystem.
Interventions at these leverage points are collectively termed Catalysts for Change. All four are equally important, but one may end up being more impactful for a particular individual.
Knowledge Influencers seek to bolster financial capability through strengthening financial knowledge and decision-making skills. There are two main types: Financial Education and Financial Information and Tools.
They include a variety of engagements implemented with the purpose of increasing the individual’s overall financial knowledge and decision-making skills or to inform them about a specific, narrow topic. NEFE distinguishes between the two types of Knowledge Influencers, given that they achieve distinct outcomes.
- Financial Education: A systematic approach to cultivating financial knowledge and financial decision-making skills. Education implies the use of appropriate pedagogy, learning objectives and assessment techniques, as well as being of adequate duration to allow the learner to incorporate new knowledge into their existing schema.
- Financial Information and Tools: A variety of tools, resources and activities that inform individuals about a topic or decision. Examples include small-dose lessons not part of a broader program or curriculum, articles or reference resources, tips and tricks, calculators, and decision aids. They often are used in self-directed inquiry or in conjunction with behavioral interventions. They can and should be used as a part of a financial education program or initiative, but on their own do not constitute education as they lack pedagogy, learning outcomes and assessment techniques as well as sufficient duration and intent for the learner to fully assimilate the information into lasting knowledge.
Structural Policy Changes intend to impact financial capability by way of increasing participation in financial society through better access and inclusion to financial markets and services.
They include public policy aimed at increasing access and inclusion within financial society. Examples include government regulations and community initiatives, such as the adoption of rent reporting which creates new opportunities for people who were previously credit invisible to become scorable. In turn, these people have access to a new set of products and services. Certain financial technology innovations may also improve access and inclusion. It’s important to note that barriers to full participation in financial society are largely systemic, and systemic issues can only be addressed with fundamental structural change.
Behavior Influencers aim to directly impact an individual’s decisions and actions.
They include a variety of interventions implemented with the purpose of helping an individual make decisions or cultivate certain behaviors. Behavior influencers include informational interventions (e.g., just in time), nudges and choice architecture, expert advice or guidance (e.g., from certified financial planners) and financial coaching, counseling or therapy (including psychoeducational groups). Behavior influencers are distinguished from knowledge influencers by their intent. Most of the time these interventions are trying to manifest behavior rather than check for knowledge gain. As such, behavior influencers may influence knowledge and decision-making skills, but their goal is not explicitly to bolster that element of the individual’s experience.
Social and Materials Supports strive to change the outcome an individual would otherwise experience in a specific situation or circumstance, such as through public benefits or community assistance programs.
They include direct assistance to individuals from entities such as government or community organizations. Sometimes used to ameliorate the effect of a financial shock or provide assistance needed to meet basic needs, outcome supports act as a safety net. Examples include unemployment insurance when someone loses a job, healthcare paid for by Medicaid or delivered through community-funded clinics, the Supplemental Nutrition Assistance Program (SNAP), and other public benefits.
NOTE: Policies and interventions aimed at components of foundational factors are beyond the scope of this framework, but are still critically important. They are not included here because they typically do not have the primary end goal of influencing financial well-being (though it can be a byproduct), whereas the Catalysts for Change tend to be explicitly focused on financial well-being.
