MMBB Financial Services 2016 Annual Report

Report of the Chief Executive Officer

By Louis P. Barbarin

Essentially, financial wellness is a state in which you practice wise planning, spending and saving with regard to the financial resources that God puts at your disposal. Even though we all have different amounts of financial resources available to us, living with a sense of financial wellness means you have an honest understanding of your financial circumstances and you manage them so you can be prepared for the inevitable financial adjustments that arise.

Recently you may have heard and or read a lot about the concept of financial wellness. But what is it and what does it mean to you? At MMBB Financial Services we define financial wellness as:

• having control over day-to-day, month-to-month finances;
• the capacity to absorb a financial emergency ($10,000);
• being on track to meet financial goals; and
• the financial freedom to make choices that allow you to enjoy life.

But what does it mean for pastors, church workers and congregations? Financial wellness is woven into everything that we do at MMBB; it is as important to young pastors as it is to those who are midcareer or close to retirement. We are experiencing a period in which ministry is evolving in terms of the tools and insights required to be effective in ministry. But the essential element is not changing—ministry is still about serving others and providing for the common good. Serving God through serving God’s people. That’s what pushes us to reach higher, striving for new goals in our effort to promote financial wellness and well-being for pastors, their families and their congregations.

“But one thing I do: Forgetting what is behind and straining toward what is ahead, I press on toward the goal to win the prize for which God has called me heavenward in Christ Jesus.” Philippians 3:13-14 (NIV)

The concept of financial wellness is not new to MMBB, but over the last two to three years we have taken a more holistic approach and have worked to build upon our strengths. Financial wellness is not just about balancing the numbers on paper. It’s about changing lives.

One aspect of financial wellness at MMBB centers around the Lilly Endowment Inc. National Initiative to Address Economic Challenges Facing Pastoral Leaders. The MMBB Financial Wellness Project for Pastoral Leaders and Their Congregations aims to signifi cantly improve the financial health of pastoral and congregational leaders, and therefore of congregations and ultimately the broader faith community.

The Strategic Pastoral Excellence Program (SPEP), one of our core Lilly initiatives, administered over a period of three years, is designed to strengthen the personal and organizational skills of pastors who have been identified as key leaders of healthy congregations. The activities of this one-week program are designed to lay the groundwork for pastors and their spouses to create a solid financial foundation and build the necessary skills for healthy conversations around money with congregations. The nomination process for attendees for the first cohort took place in late 2016 with ABCUSA Regional Executive Ministers and denominational leaders nominating candidates, who were then invited to apply for the program. Applicants had to provide personal and family financial information in a confidential manner as well as arrange for a member of their church leadership to agree to the program. The Selection Committee consisted of members of our internal Lilly Planning Team, who reviewed nominated candidates and applicants.

A second Lilly initiative, The Pilot Project on Addressing Financial Stress for Pastoral Leaders, held in October 2016, was developed in collaboration with consultants who have expertise in working with pastors from many denominational backgrounds and who are trained counselors with a keen understanding of the psychological and spiritual issues surrounding money for pastoral leaders. ABCUSA pastoral leaders who were MMBB members and their spouses were invited to participate. The workshop objectives were: (1) Understand how to track monthly cash flow, build a budget and manage debt effectively; (2) Begin to understand the impact of their family origin as it relates to how they handle money today; (3) Gain new tools for conversations about money in their personal and professional lives; and (4) Be better able to celebrate God’s provision in their life. The day-and-a-half workshop ended with a goal-setting session. To assist them with being intentional about their goals, each family was matched with a coach who will work with them over a 12-month period to help them live into a new reality about financial wellness based upon their goals.

Our experience has taught us that sound education is key to achieving financial wellness. That was the basis for the development of the Financial Wellness Program, our third Lilly initiative, which addresses the everyday economic challenges of pastors. We know that increased financial literacy results in enhanced financial wellness and well-being. The Financial Wellness Program, under the three-year grant from the Lilly Endowment, will provide financial education resources and financial literacy workshops throughout the country. For many of the workshops, our initial focus is debt management and debt reduction. We know from the results of our 2015 survey on debt that debt stress for clergy is 2.4 times higher than in the general U.S. population. Educational opportunities will take place at regional and national educational events and conferences facilitated by MMBB Certified Financial Planner™ professionals.

Providing educational support for all the Lilly Grant initiatives is the MMBB Financial Wellness Institute (FWI), which aims to be the premier online learning center for financial literacy within the faith-based community. It is designed to provide educational tools in an engaging and stimulating way that will motivate pastoral leaders and lay staff to be empowered about learning various financial principles. The FWI is an opportunity for MMBB to demonstrate that creating financial wellness is possible for everyone and to promote our thought leadership on financial issues concerning pastors, churches and congregations. The cornerstone of the FWI will be online educational courses. The curriculum was developed with the assistance of our Certified Financial Planner™ professionals. Recognizing that debt can distract one from doing ministry, the first course, ” Managing Debt,” is designed to teach principles such as the difference between good debt and bad debt, how to use debt responsibly and how to develop strategies for getting out of debt.

Education has been a hallmark of MMBB’s ministry, and we continue to provide multiple resources with articles in trade publications and publications targeting specific employer groups as well as our own newsletter. Throughout 2016 we published articles on a wide range of topics including debt management, financial planning, financial wellness, stewardship, preparing for a new pastor, college planning, the social security outlook and estate planning. We also launched a monthly e-newsletter, Financial Planning Tips & Tricks, targeting large employers, churches and organizations with 15 or more employees. This engaging digital publication features useful information on saving and budgeting, retirement and financial planning as well as articles written by our Certified Financial Planner™ professionals.

Built on the foundation of the American Baptist Churches (ABCUSA), we continue our history of working with our denominational leaders at the national and regional levels. In addition to our retirement plans, financial planning services and comprehensive educational resources, MMBB lends support though the Heritage of Sharing ministry, through which we awarded almost $4 million in noncontractual benefits to our members for emergency assistance, medical needs and educational grants. Our Visitation Ministry is composed of recently retired clergypersons, who volunteer to make pastoral visits to longtime American Baptist annuitants. In 2016, we hosted 19 annuitant luncheons, which in conjunction with our Visitation Ministry allowed us to stay closely connected to annuitants, listen to their concerns and provide support and assistance where possible.

Our Young Pastors Initiative seeks to understand the unique issues they face, the barriers to MMBB membership and, for those who are members, how we can serve them better given the current realities and demands of their financial journeys. For our purposes, young pastors are identified as those who are 18 to 35 years old. Focus groups were held in every region of the country to address a diverse mix of participants and regional distinctions as well as the challenges of the pastoral landscape faced by bi-vocational, bi-congregational and bi-ministerial pastors. Questions were geared toward their thoughts on saving, thoughts about MMBB, suggestions for reaching pastors in the target audience and enrolling in MMBB. We listened carefully to the compelling questions and the honest and insightful critique that focus group participants offered. The responses and feedback we collected will help MMBB create a distinctive outreach to younger pastoral leaders that addresses their specific needs.

Excellence In Service

In 2016, we continue to ask ourselves what it means to be a premier provider of financial services. As a result of reflecting on some of these questions, the Ministry & Business Development Service Unit implemented a new Customer Relationship Management (CRM) system that consolidates multiple platforms and enables our Service Team to access member and employer information in a more timely and efficient manner. The new CRM system allows for integration of Call Center surveys as well as call-recording capabilities for improved customer service, and provides metrics for support, management and coaching of representatives. Implementation of these customer service improvement initiatives resulted in a 93% satisfaction rating in our Call Center surveys, up 2% from 2015.

The Financial Planning Team migrated from Money Tree Software™ Silver, a largely paper-based financial planning process, to Advizr. Advizr is an online financial planning platform that allows for real time “what-if” scenario planning and standardizes the financial planning process. Advizr also supports account aggregation, allowing members to see all of their financial accounts in one place, updated daily.

In 2016, we took the necessary steps to create MMBB Financial Planners, LLC, which will operate as a separate entity solely to provide financial planning services to our members, offering this service at no additional cost. The creation of MMBB Financial Planners, LLC will provide increased visibility and greater focus on this aspect of our work as a highly regarded source of financial planning services within the faith-based community. We realize that financial planning is personal and specific to each individual, therefore it should be separate from MMBB Financial Services. Creating MMBB Financial Planners, LLC increases the value-added benefit of fi nancial planning.

At MMBB Financial Services, we are always looking at ways to help our members on their journey to and through retirement, including potential new product offerings that might appeal to our membership. In 2016, we introduced an opportunity for members to acquire long-term care insurance. We invited ACSIA Partners, one of the largest long-term care insurance agencies in the nation, to assist our members and their families in preparing for the future through the expert advice of their licensed representatives.

Technology
MMBB has transformed the way in which we manage technology within the last three years. We began with three core state-of-the-art technological, security and regulatory enhancements:

• We have built a secure data infrastructure;
• Implemented continual threat monitoring and prevention; and
• Put into place security policies, training and preventive applications and security regulations.

We have demonstrated our regulatory commitment with the addition of a Chief Technology Offi cer and a Chief Legal and Compliance Offi cer serving as in-house counsel. Two technology/security engineers were also added to strengthen our Technology Unit.

Data security continues to be a top priority. In 2016, all MMBB data servers, mobile devices and private emails were encrypted. We rolled out big data applications and data warehousing to enhance business analytics. And finally, steps were taken to replace our aging financial and service applications with a state-of-the-art Enterprise Resource Planning (ERP) foundation. An ERP is a process by which an organization manages and integrates the important parts of its operations. The core operations/platform of the ERP type integration is set to go live in 2017. The new integrated ERP applications setup is the baseline for digitization and process automation that will offer a state-of-the-art service experience for existing and future members. This technology platform is now capable of providing sustainable data security and continuous growth and is just the beginning of our strategic transformation. The ERP will allow us to move toward our ongoing goals to become paperless; provide additional automation, new services and capabilities for those we serve; lower costs; and sets the stage for further updates and digitization for MMBB’s future.

Investment Strategy
Critical to our understanding of investment strategy is that we operate with a long-term perspective established by our investment team for each of our investment options. At the same time, MMBB frequently reviews the asset allocation of our funds to improve performance.

In early 2016, MMBB restructured the US equity asset class of investments, affecting the Balanced Fund, Annuity Fund, Endowment Fund, New Horizons Fund and US Blended Equity Fund. The new structure accomplished several things. First, it reduced manager concentration. Previously, two managers had handled the preponderance of US equity assets. Under the new structure, assets are diversified across six managers. Second, the weighting to small capitalization stocks was reduced. Third, a slight tilt toward the “value” style (buying stocks thought to be selling below their fair value) was introduced. Fourth, management fees in the US Equity class were slashed by approximately one-third. Later in the year a call writing overlay program was implemented as a means to generate additional income. It is expected, over time, to incrementally add to total return and slightly reduce volatility.

During its Fall 2016 Board Meeting, MMBB’s Board of Managers voted to approve a $3 million infusion into the Annuity Fund to sustain a payout value of $71.33 for another calendar year, through the end of 2017. The infusion was taken from the Special Benefits Fund. The Special Benefits Fund provides disability income, Retirement Plan premium support, widowed spousal benefits, medical premium support and other benefits for eligible MMBB members. The Board has the discretion to use the Special Benefits Fund for other purposes consistent with the objective of the fund to support MMBB members. This action was taken in consultation with our actuary after it was determined that it would remain sufficiently funded to meet all expected future special benefits obligations.

Financial wellness is about the whole person, the whole family and the whole church. Achieving financial wellness is in essence attaining wholeness, by putting the pieces of your money story together to create a solid future. We understand that when people feel positive about their financial journey and realize that they are utilizing the resources that God places at their disposal, each of us is better able to achieve our goals and move forward to contribute to the common good. MMBB is here to support you, your family and your congregation on your journey to financial wellness. We know that God provides resources to guide us so that we can use our resources for our own livelihood as well as to enrich the lives of others. “His divine power has given us everything we need for a godly life through our knowledge of him who called us by his own glory and goodness”—2 Peter 1:3 (NIV). MMBB is one of those resources that God has provided. We recognize our continued calling to be a trusted and valuable resource, assisting those who devotedly serve churches and faith-based organizations to live healthy financial lives that allow them to serve God’s people with enthusiasm and dignity.

/s/ Louis P. Barbarin

Louis P. Barbarin
Chief Executive Officer

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