Filed under: Recruitment
Ask Matt Fellowes a question and he will probably start his response by saying, “You know, I read this study that showed ….”
He’s a self-described “data geek” who lives to find answers through numbers. As an analyst at the Washington, D.C., think tank Brookings Institution, Fellowes studied a growing financial problem in America and wanted to fix it by letting numbers lead the way. Since 2009, his solution has been an online-based independent financial tool kit called HelloWallet. It mixes data from users’ financial statements with a dose of behavioral science motivating people to make better decisions with money.
“I hate wasted money because we need all the money we can get right now to get ahead,” Fellowes said. “There are huge amounts of wasted capital out there.”
Fellowes ticked off a dizzying amount of numbers, but here are just a few of the financial problems he found digging through data: Americans pay $32 billion a year in overdraft fees; about 60 percent of Americans spend more than they earn; workers yank $70 billion from retirement accounts each year for nonretirement expenses; and only 20 percent of the population enrolls in high-deductible health plans when 70 to 80 percent would benefit from joining.
And, only about 25 percent of Americans have access to independent financial advice.
It’s a bigger problem than just at the individual level because it leads to a less productive, less competitive and less prosperous America, he said. If people knew what they were doing wrong, Fellowes hypothesized that maybe by fixing their personal issues, America’s stagnant economy would improve, too.
“I just kept on finding these kinds of wasted dollars that if properly allocated and used could really help accelerate investment in this country, its productivity and economic development, and most importantly prosperity for workers to start climbing the economic ladder again — which has largely been stuck for the past 20 years,” Fellowes said.
Fellowes, 40, grew up in Chicago and was an heir to office products company, Fellowes Inc. He could have moved right into top management, but, growing up, Fellowes said he was taught to strive for more than what he had.
“I was raised to be focused on giving back to the world, given the position in life that my family had,” he said. “So I was challenged from an early stage in life to think outside the box.”
In 2009, Fellowes was a Brookings Institution pundit and decided to do something far different from his job description. Instead of simply putting forward ideas to help national and international leaders think broadly about where the world should be moving, he wanted to be the one affecting change.
“I was tired of advising other people and wanted to do it myself,” Fellowes said.
Pundits at think tanks like Brookings are all about big ideas, but often their concepts get lost in political paralysis, said Bruce Katz, a Brookings vice president and founding director of the Metropolitan Policy Program.
“Matt didn’t want to be just an academic,” Katz said. “He is driven by the goal of changing the world.”
So Fellowes got to work thinking about how to solve what he saw as a glaring problem: people making a lot of fixable mistakes with their money and not having anyone or anything that was effective enough to change their behavior.
Meanwhile since 2006, Fellowes had been attending the Clinton Global Initiative, an annual meeting held by the Clinton Foundation assembling global leaders to help solve world problems. At the 2008 meeting, former President Bill Clinton challenged the group to stop ruminating and start moving on initiatives.
“At that point I decided I needed to start some kind of company and just jump off the cliff,” Fellowes said. “I was really motivated at that point by him.”
The following year, HelloWallet became the name of the software program that would open the financial wellness frontier for retirement benefits. Fellowes said he wanted a program steeped in data and not opinion. Just as importantly, he wanted to make it his company’s mission to help people take control of their finances and not get caught up peddling products.
Individuals can sign up for HelloWallet, but the company aims to sell its services to employers that purchase it as an added benefit to employees. Employers can also purchase HelloWallet and offer it as a benefit to employees. HelloWallet has also partnered with financial firms like Aon Hewitt and The Vanguard Group to integrate its services with retirement planning. The company also maintains its social mission of offering affordable guidance to everyone by donating one subscription to a family in need with every five it sells. So far, the company, which has 65 employees, said it has donated 200,000 subscriptions since 2009.
“He was a vanguard in leading the debate and helping shape answers to questions,” said Joe Mansueto, chairman and CEO of Morningstar Inc., which acquired HelloWallet in 2014 for $52.5 million. “In terms of solving [personal financial] problems, I thought he had some really innovative ideas.”
The least expensive way to attack the problem and to distribute the product was through technology, Fellowes said. But even in 2009, there were plenty of financial education and tracking programs — think Quicken — available. Fellowes knew he had to make his software different because the numbers he saw told him that people weren’t learning and making better decisions.
Enter behavioral psychology. Fellowes tested multiple messages, timing of messages and other essentials to see what worked. Users also got financial wellness scores and peer scores to see how they compared relative to others with similar variables. HelloWallet also cranks out personalized emotional messages letting users know whether they are making good or bad decisions.
“Everything about Matt is very much driven by data,” Mansueto said. “It’s not a hunch or intuition. He has a real ethos of test and learn.”
Fellowes also wanted employers to learn to make better decisions about their benefits budget as much as workers. His data showed that employers pump $175 billion into matching 401(k) contributions, but oftentimes workers pull out a percentage of that subsidy to pay for things. Fellowes tweaked his software so it could pull together aggregate data to help employers understand how workers use company benefits.
“The next chapter is to use that data to help employers better allocate their spending,” Fellowes said. “That will better position employers to start making some of these investments in a manner that really propels our country forward.”
Even with a great product supporting an important mission, the right people were critical to HelloWallet’s success, Fellowes said.
Rob Pinkerton, who recently became chief marketing officer at Morningstar after serving in that slot for HelloWallet, said he conducted lots of tough interviews, but always asked candidates why they wanted to work for HelloWallet. If the answer was about anything other than a link to the company mission, the candidate was most likely passed over.
“Mission is a powerful motivator,” Pinkerton said. “If you connect with the mission, then you are doing something larger than yourself. As a result, our team is tight and is hungry” to help people take control of their finances.
Mansueto said he remembered how energetic and impressive the HelloWallet team was when his Chicago-based investment research company started talking seriously about acquiring the startup.
“We thought it was a good strategy but, more than that, they had a whole team that just hit it out of the ballpark,” Mansueto said. “He hired an A-plus team — very bright, talented and mission-driven people.”
Fellowes said having solid people was just as important as the company mission, and to get it right, he knew he needed to go back to his rote test and learn methods.
That meant he had to let people go, but not without helping them find another job.
“[I] was the one who signed that person up for the job and mission, so it wasn’t that person’s fault, but it was [my] fault,” Fellowes said. “I had to take a lot of time helping people who turned out not being right for a role to find another job.”
Keeping the right mix of people meant injecting playtime, too. Fellowes recalled a college professor telling him that he’d never change the world if he wasn’t having fun and the people around him weren’t either.
“Lesson learned,” Fellowes said. “You really have to have fun with what you are doing because that’s when you are really going to get the most productivity, loyalty and creativity out of people.”
Fellowes’ idea of fun is signing up a bunch of colleagues to do Ragnar runs — overnight running relay races that take a little over a day to complete. One employee blogged about the experience, calling it difficult and intimidating, but one of the best feelings to cross the finish line.
Employees on career websites like Glassdoor describe the working experience as being fast-paced but also open. Little perks like free lunches on Fridays and bagels on Mondays are popular too. Plus, employees are encouraged to work on projects that interest them.
“We incorporate fun in every day,” Fellowes said.
Fellowes gets uneasy when asked whether HelloWallet is successful. The numbers look good though. A recent HelloWallet report showed median users increased their financial wellness score by 17 percent after one year of using the service.
He said the ultimate success is threefold: to help workers convert wages into improving their economic status, to help employers get more out of the dollars they sink into compensation and benefits, and to help the country make better investments in its infrastructure. Right now, he isn’t claiming a win.
“There are just years and years of work in front of us, but I am very emboldened by the fact that we have made as much progress as we have,” Fellowes said.