Prepared Remarks of CFPB Director Richard Cordray at the Financial Literacy and Education Commission Meeting

I first want to thank everyone here today for their commitment to financial education in schools, in the workplace, and in communities all around this country. I have been pleased to see the work being done by these agencies, which gives me confidence that we are moving in the right direction on this important topic. I would also like to introduce you all to Janneke Ratcliffe, the new head of our Office of Financial Education. Please take the opportunity to get to know her better, as she will be working closely with all of you on the Commission.

When we met this past February in Atlanta, I spoke of the steps many public and private sector employers are undertaking to ensure that their employees are financially knowledgeable and secure. This emphasis on financial literacy helps empower people to make sound financial decisions, and ultimately pass on a higher standard of living to their children. Every parent in this room firmly intends to provide our children with the help they need to succeed in life.

People cannot properly educate their children on financial wellness without the proper tools. With that in mind, the Bureau’s Office for Financial Education, in collaboration with the Federal Deposit Insurance Corporation, has created an online resource for parents looking to improve their children’s financial capabilities. Consumerfinance.gov/parents is designed to direct parents to a variety of resources that can help them educate their children to make smart and informed financial decisions.

But it is not just children who need this help; it is adults too. That is why financial education in the workplace is more important than ever. Sir Francis Bacon wrote that “knowledge is power.” Those words continue to ring true today. By imparting basic financial knowledge to our employees, we can ensure they are better equipped to navigate the financial marketplace.

The great recession brought new financial stress for many families. Recent surveys show that one out of 20 employees admitted to taking time off work in the past year because of financial issues. And more than two out of three employees admitted to spending time at work worrying about their finances.

The ripple effects of financial distress are not born by the employee alone. As any manager knows, focus is the key to a productive employee. But research has shown that employees distracted because of financial distress are less productive, less organized, and more likely to be absent from work. No employer can hope to run a thriving business if their employees are worried about their own finances rather than the business challenges they must overcome. Addressing this issue effectively requires the concerted efforts of employers across the country.

Companies are increasingly warming up to the idea that financial wellness programs serve to generate greater engagement and productivity in their workforces. One example we have seen is a large global supply company with over 1,800 stores in North America. To deal with its diverse workforce, this company decided to develop an online game to help their employees learn about priorities like investing in a 401(k) retirement fund or paying off student debt. The game also tapped into the power of peer-to-peer relationships by encouraging colleagues to compete with each other to achieve various financial goals.

This example was included in the “Financial Wellness at Work” report that the Consumer Bureau published this summer about promoting financial wellness in the workplace, which is included in your handouts. The report outlines promising practices and demonstrates steps that employers can take to increase their employees’ engagement in their own financial lives. The report emphasizes that peer-to-peer support not only helps to build cohesion in the workplace, but also allows co-workers to impart valuable financial lessons to one another.

The report also recommends emphasizing financial wellness as soon as the employee joins the organization. Just as we at the Bureau have stressed the importance of beginning financial education in schools from an early age, we believe the same is true in the workplace. If new employees can begin to form positive financial habits at the early stages of their employment, it stands to reason that the patterns of saving, investing, and properly allocating their finances will continue into the future.

We are intent on building the case to convince private sector companies about the benefits of financial wellness programs in the workplace. Our aim is to encourage more companies to create and adopt their own plans for providing resources and tools to their employees about how to navigate the financial marketplace.

As employers, we have many ways to increase our employees’ financial wellness. For example, we can encourage them to go beyond direct deposit and split their paychecks into savings and investing categories. This can help them keep their financial portfolios balanced.

Boosting the financial health of employees across this country is too large a job for any one agency to accomplish. But if all of us here take up the mantle of financial wellness in the workplace, then we can set an example for others to follow.

We are already working with other FLEC agencies to update and submit their own workplace financial literacy plans. We are pleased to see that nearly all of the FLEC agencies have now done so. Yet this does not mark the end of our work. We will continue to work with partners such as the Office of Personnel Management and the Department of Labor to get the remaining federal agencies to submit a financial capability plan. Then we need to develop metrics to ensure that the substance of these plans is being fulfilled through increased take-up by our employees.

We have great leaders from across government here today who are dedicated to this effort. Now more than ever we must do all we can to create financially healthy workplaces that will help propel our nation forward. Thank you.

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The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.