Thank you all for joining us here today. We all agree that consumers need both a safe, transparent financial marketplace and the capability to navigate that marketplace effectively.
In the past few years, we have been working through the residue of the financial crisis. During that crisis, millions lost their jobs, millions lost their homes, and almost everyone lost part of their life savings. As we emerge from those tough times, it is even more essential that we empower people to take more control over their economic lives. Both consumers and industry will benefit if we can do more to achieve that outcome.
For this reason, we have made financial education a critical part of our mission. This goes beyond just teaching the nuts and bolts of financial literacy. At the Consumer Financial Protection Bureau, we are committed to helping consumers increase their own capability to make sound financial choices. Our strategy to achieve this includes providing tools and information directly to the public, collaborative education initiatives, and foundational research to spread effective approaches to financial education.
Promoting these initiatives requires partnerships of all kinds. We are engaged in partnerships around the country with libraries, social service providers, community groups, state and local policymakers, and anyone else interested in working toward these common goals. And we are well aware that many members of the Financial Services Roundtable share our interest in this area. There is much that financial institutions can accomplish here, given their ability to connect with many consumers from various walks of life at important times in their financial lives.
Today we are pleased to announce that the Consumer Bureau and the Financial Services Roundtable are joining together to promote effective financial education across the country. This joint initiative provides an opportunity to explore ways we can work together to advance a vision for stronger and more capable consumers. We have identified three areas, in particular, where we can focus our mutual efforts.
The first is working with our schools and teachers to help young people increase their financial capability so that they are better equipped with both knowledge and skills for a financially successful adulthood. The second is providing workplace financial education ourselves and encouraging others to do the same. The third is helping to educate older Americans and those who care for them to avoid financial scams and abuse. I have no doubt that we can forge a powerful alliance to advance these three important causes.
Let us begin with financial education in our schools. The marketplace for financial services requires consumers to make increasingly complex decisions. Yet, too many young people reach important financial milestones lacking the basic knowledge and skills they need to make sound choices. As leaders in the financial services industry, you know better than most the struggles that consumers face when they do not have a solid foundation of financial knowledge and decision-making skills. The challenges that confront us in achieving our goal of financial capability are difficult, varied, and significant. To overcome them, we must start early. In our society, financial education should be as fundamental as the education we all receive in mathematics and the language arts.
All across the country, financial institutions are finding ways to help young people obtain financial know-how and skills. We have seen financial institutions support teacher training, and this is a very important and productive emphasis – one that the Consumer Bureau strongly embraces as well. Teacher training is critical to help teachers get more comfortable and confident about presenting financial education topics in the classroom, as well as to identify ways to integrate this content into other courses. Teachers are specialists in teaching, but not necessarily in consumer finance. Most teachers have received little formal training or exposure to these kinds of financial issues, and many of them may struggle with these issues in their own lives just as much as everyone else does.
As a result, some may be reluctant to introduce these discussions into the classroom, yet doing so can be a highly effective means of conveying financial education. It is not really that hard to draw on young people’s interest in money issues for writing projects; to adapt budgeting and financial issues as word problems in math classes; or to expose young people to the distinction between wants and needs or choices between present and future goals. All of these ways to integrate financial thinking into the standard education curriculum can make a meaningful difference over time, and teacher training is a key avenue to achieving that outcome. So we are keen to work with FSR on this initiative in particular.
We also have seen financial institutions create or support experiential learning programs of many kinds. One of those is to have banks or credit unions located in the schools where students can get hands-on experience by taking part in their everyday activities. Where we can learn from the experts, and bring real-life experiences into the school day, that is well worth doing. Other programs are having positive effects as well. So whether young people are simulating a banking experience, opening an actual bank account at school, playing a computer game to hone financial decision-making skills, or following the stock market, students can learn quite effectively from these personal experiences. We support these efforts and will work with FSR members to broaden their reach.
Our second area of emphasis in this new initiative is workplace financial education. Financial institutions are huge employers – this segment of the economy provides more than five million jobs here in the United States – and they can model employee financial education for employers in other segments of the economy. Research shows that employees who receive effective financial education are more engaged at work and have lower levels of turnover.
Forty percent of employees say they want help to achieve financial security, and eighty percent say that financial problems affect their productivity. It is a natural fit that makes a good deal of sense for employers to make financial fitness part of their employee benefit programs. And companies are starting to get the message. According to a recent survey by Aon Hewitt, 93 percent of employers surveyed are likely to expand their focus on financial wellness in the workplace in the next year.
The financial services industry can and should lead by example here – they have the expertise and credibility to promote best practices around budgeting, savings, and retirement options. For example, FSR has a “Save Ten” initiative encouraging employees to save ten percent of their income for retirement. Financial institutions can make it a priority to educate their employees and help them develop and use sound financial strategies, including savings for both emergencies and retirement. We also want institutions to be conscious of what more they can do to ensure that their employees understand and optimize the existing benefits already made available to them. Anytime employers can help employees stretch their dollars further or provide more securely for their future needs, that is almost as good as a pay raise in improving the employees’ financial lives.
So institutions can launch strategic awareness campaigns to promote positive financial behavior and increase employee awareness and utilization of benefits programs. For those institutions that 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.
We want to see financial institutions, financial providers, and all employers connect with their employees during those key life moments and implement programs to boost employees’ financial capabilities. And with financial institutions leading by example, we then can build a strong business case for expanding these efforts to other businesses and organizations to convince them of the many benefits of providing financial wellness at work. This is a current focus at the Consumer Bureau itself, and we look forward to joining with FSR members, some of whom already have great efforts underway in this area. We also are developing new financial tools and resources that we are eager to share with FSR members and their employees.
Our third area of focus is older Americans. With 50 million elderly people in this country, and 10,000 more reaching retirement age every day, we cannot afford for financial predators to victimize our seniors. Older Americans are attractive targets because many have retirement savings and home equity. They are also more likely to experience cognitive decline, which can impair their capacity to recognize fraud. Even though financial abuse is the most common form of elder abuse, only a small fraction of cases are reported. Perpetrators can range from close family members to caregivers or service providers to complete strangers like outright scam artists.
Curbing financial exploitation requires coordinated efforts on the national, state, and community level. It is important that seniors and those around them know how to identify and report common signs of elder financial exploitation. Sometimes the indicators are obvious: funds disappearing from accounts, bills that go unpaid, belongings that are missing. Sometimes they are more subtle, such as electronic or ATM withdrawals that fly under the radar or a new friend or acquaintance showing up with power of attorney or being added as a joint account holder.
Financial institutions are often the first ones who can spot these danger signs, and they may be best able to stop older accountholders from being victimized. They know their customers and are often either permitted or mandated to flag suspected abuse under federal and state law. Seniors have high trust in their financial institutions and make frequent use of traditional bank branches.
Through our partnership, financial services providers can work with the Bureau to focus on the “three Rs”: recognize, record, and report. Institutions can share our effective resources to prevent and respond to elder financial abuse. These resources include our “Money Smart for Older Adults” curriculum, developed with the Federal Deposit Insurance Corporation, which is delivered through a train-the-trainer model and an individual guide. We also offer “Managing Someone Else’s Money” guides that teach family members and friends how to spot and respond to financial exploitation and scams. Some credit unions and smaller banks are already sharing these tools with their account holders, and we encourage larger institutions to do the same. Input from FSR members can also help us create and improve materials best suited to protect their customers.
On all of these issues, we are pleased to join with members of the Financial Services Roundtable to find ways to deliver more effective financial education to more people. We are already engaging to develop opportunities to leverage resources, scale ideas, expand access, and identify high-level, measurable results. We have agreed to conduct working sessions on each of the three subjects just identified between now and May. Our joint efforts will create more visibility and focused effort to promote financial education and share promising practices around the country. There is no doubt in my mind that this new partnership holds the promise to make a real difference in the financial lives of all Americans. Thank you.
The Consumer Financial Protection Bureau (CFPB) 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 www.consumerfinance.gov.