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

I want to thank all of you here for your interest in helping hardworking consumers achieve financial peace of mind. I firmly believe that employers who provide financial education in the workplace are not only doing the right thing, they are doing the smart thing for their employees and their businesses.

The recent financial crisis, and the deep recession that followed in its wake, delivered a devastating blow to American households. Many lost their jobs; many lost their homes; and many are still struggling to pick up the pieces. People have been shaken in their deeply held belief that if they work hard and behave responsibly, they will get ahead in life and pass on a higher standard of living to their children.

Yet even now – five years after the crisis – too many Americans still lack the tools to navigate through the often turbulent and complex waters of our financial system. Every day at the Consumer Bureau, we hear from people who lament the choices they made, often expressing anguished regret that they did not know more about the risks involved at the time they made key financial decisions.

Those of us here today are leaders within our own businesses and organizations, and we have a clear opportunity to stand up and make a difference on these issues. We can insist that from this day forward, both the public sector and the private sector in the United States will commit themselves to the concept that American citizens need to be fully capable of economic self-governance, just as we expect them to be able to participate on full and equal terms in our democratic system of government. For a society built on a foundation of free and responsible individuals, operating within a free market system, nothing less will do.

Research shows what intuition suggests, that particularly in the wake of the recession, financial distress has been widespread among the American workforce. In recent surveys conducted by PricewaterhouseCoopers, more than half of all workers say they are financially distressed. Many of you here today have seen this with your own eyes, because you are the ones a co-worker turns to in distress for a salary advance or for a hardship withdrawal from his or her 401(k) plan. You know and see how that financial distress negatively affects their families and their work. It reduces productivity and distracts from their focus and commitment to the job. It increases their absenteeism and undermines their health. One-third of workers admit they have spent time in the office worrying about money or even dealing directly with issues of their personal finances.

Workers will be more likely to avoid financial distress if they are better positioned to manage their own finances. As employers, we can play a critical role in this effort by implementing practices in the workplace that strengthen financial capability. It is possible to start out small – with little or no cost – by providing a few basic offerings, such as using direct deposit to encourage savings. Many employers already offer direct deposit, but they could make it easier for employees to allocate their paychecks across spending, savings, and investment accounts. And employers could do more to help employees prepare for their long-term futures by educating them about their options with 401(k) plans, IRAs, and now the brand-new Treasury vehicle that is just being unveiled to promote personal savings, known as MyRA.

Appropriately, we are celebrating “America Saves Week” this week. A 2013 survey revealed that only about half of Americans reported good savings habits. Of those surveyed who were not retired, only half of them were saving for retirement with a 401(k) or other similar plan. Employers are well-positioned to help their employees carry out the theme of American Saves week: Set a goal. Make a plan. Save automatically.

Many employers already enroll their employees automatically in retirement accounts, but they could move toward a higher percentage of pay as the auto-enrollment default choice to encourage more retirement savings. Employers could also provide more options – including default options – that automatically increase the amount contributed to retirement plans over time, as pay increases.

Along with these types of offerings, employers can make educating their employees and helping them develop sounder financial strategies a priority from their first day in the office or on the shop floor. We want to see more organizations offer financial education benefits and savings options to their employees. We also want them to be much more conscious of the need to ensure that more employees understand and utilize the benefits made available to them. Employers offering financial education and savings programs should organize them in one central location so that employees know how they can easily access resources and assistance. Strategic awareness campaigns can promote positive financial behavior and increase employee participation in benefits programs. Employers with an open enrollment season for choosing insurance benefits could use that time to promote their financial education and savings programs as well. This is a sensible part of a modernized workplace benefits package.

For those employers who want to go beyond the basics, they can leverage the key moments in an employee’s life – such as marriage, the birth of a child, or buying a home – to deliver financial skills training at the right time. Good decisions at these crucial times exert a disproportionate influence on the trajectory of people’s financial futures. And employers are already there every step of the way. Companies get the call immediately when a worker has a new spouse or a baby to sign up for insurance. Those are teachable moments where the person’s financial identity is changing and the need for new information and new skills is heightened.

Those employers who want to be even more innovative in their approach to employee financial fitness can expand their wellness programs to include financial wellness. After all, money is one of the top sources of stress in and out of the workplace. Programs that help employees manage and mitigate this stress are just as important to protecting employee health as standard programs that coach them to get in shape and quit smoking.

Some employers have also begun to focus on the need to help employees build up an emergency savings account to fall back on when a car breaks down or a relative falls ill. Employers can also offer savings incentive programs by matching a certain percentage of the employees’ savings. This can be a good strategy to increase employee retention or to provide non-permanent benefits. This week is a great time to start thinking about these programs, but we would like to see them implemented all year round. Saving now can help keep consumers out of trouble and help them achieve long-term stability by establishing and meeting their financial goals.

At the Consumer Bureau, we believe in leading by example. We are a fairly new organization, but this past year we launched an entire program focused on providing our employees with a solid foundation for their financial lives. Based on what we have learned from studies about financial decision-making in the workplace, we are striving to build a set of best practices for our own employees.

We have sought to increase employees’ access to retirement and benefits information through such efforts as planning seminars and benefits counseling. We have also contracted with a financial planning company so that our employees can access services ranging from debt management to tax and estate planning to help with paying off student loans.

We hope to learn from all of you here today how we can improve our own efforts at the CFPB. Many of you are leaders in this field and I look forward to hearing what you are doing. I am sure your efforts can serve as a terrific example for other employers who want to enable their employees to prosper both at home and at work.

Every day outstanding businesses deliver high-quality and cost-effective products where and when their customers need them. By the same token, their employees need beneficial and cost-effective help with their financial lives. I am convinced that the leaders in this room can appreciate and meet the challenge in order to find a way to help this nation get this important job done. By improving the financial lives of our citizens, we can enable them to contribute more in every sphere, including the workplace.

Thank you. And now I would like to introduce Phyllis Borzi, who serves as the Assistant Secretary of Labor for the Employee Benefits Security Administration and who has been an outstanding partner in working with myself and my colleagues at the Consumer Bureau.

The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit