Thursday, December 29, 2011

The "Gift" of Financial Literacy

MyFoxDetroit.com has an interesting take on how to turn holiday gifts into something bigger - finanical literacy.

The key point:


Christmas and birthdays are often a time when kids get a windfall of cash and gift cards. Should you let them run right out and spend it all? Whoa. Not so fast. An incredible teaching opportunity for your kids has just presented itself.

Thursday, December 22, 2011

New Year's Financial Resolutions

CouponCabin.com published a survey this week looking at financial resolutions for 2012. Near the top of the list were "paying off debt," "increasing retirement savings," and "saving."

According to the survey:

Thirty-seven percent of U.S. adults surveyed said they feel less financially secure than they did at the beginning of 2011, while 43% said they are neither more or less financially secure. More than one-in-five (21%) said when they look back at the start of 2011, they feel more financially secure this year.

Monday, December 19, 2011

Interesting Survey Regarding Financial Protection

New York Life sponsored a recent survey designed to measure a family's level of financial security. The survey focused in on how "protected" Americans feel.

Among the findings:


Thinking about any savings accounts, emergency funds, or life insurance coverage they may have, the majority, 53%, report that they are financially under-protected, with one in five (19%) believing they are severely under-protected. Just 46% describe their family as being protected when it comes to their finances, the survey revealed.
The survey is another in a long list detailing the lack of financial security felt by Americans. The problem is particuarly acute in middle- and low-income communities. In this survey, those with an income of $50,000 or more were twice as likely to feel they had adequate financial protection.

So what is the solution? Certainly increasing financial literacy is a step. But public policy makers - along with the financial industry - must also make certain that middle-income consumers have access to financial tools and resources.

Saturday, December 3, 2011

Solutions for Low Financial Literacy

This blog noted a study out last month ranking financial know-how by state. A Houston Chronicle columnist picks up on his state's low ranking.

The column hits on an interesting dilemma. Most of the public policy discussion around financial literacy focuses (rightly) on teaching financial literacy in schools. This piece has interesting ideas about how to reach adults who long ago left the classroom. One idea - employers.

Monday, November 21, 2011

State Differences in Financial Literacy

The Employee Benefits Institute has an interesting look out at state by state differences in financial literacy. Equally as interesting is the potential coorellation between states that are low on financial literacy and low on finanancial behavior.

To quote EBRI:



"This suggests that there might be something going on at the state level whereby individual financial literacy and financial behavior are being shaped not only by individual demographic characteristics but also by the state in which people live."

So what can we do? EBRI is unsure. According to their researcher, "there may be a reason for policy intervention at the state level to help Americans achieve a financially secure retirement."

Interesting study. Worth keeping an eye on.

Tuesday, November 15, 2011

How Do Americans Learn About Financial Tools

In 2005, CFS conducted a survey with the League of United Latin American Citizens (LULAC) about some of the causes of financial security among Americans who had the resources to save and prepare for the future but did not.

The survey uncovered a number of causes, most notably a lack of finanical literacy and a lack of contact with professionals who could connect communities with tools like IRAs, life insurance and other products.

The Hartford-Courant this week has an article about a new tool being used to educate breadwinners about the importance of life insurance - - video games. The article notes the dramatic drop in the usage of life insurance and notes how video games may help educate certain demographics.

Interesting read.

Monday, November 7, 2011

Advice and Retirement

This blog has devoted significant attention to potential regulations in Washington regarding retirement advice. Today the Wall Street Journal has a practical look at how workers are using that advice in the 401(k) market.

The good news is that more and more plans are offering advice. The bad news is that Americans are still not taking advantage of it.

Key points:

Survey after survey shows that formal advice leads investors to increase their savings, diversify their holdings and continue holding stocks even when the market takes a plunge.

But here's the catch: Only about a quarter of the people who have access to advice through their retirement plans actually take advantage of it, according to retirement-plan providers and firms that provide advice services. And most of those who do use advisory services neglect to provide the personal details that would make the advice more valuable.
The article ends with some practical advice for those with 401(ks) looking to learn about options that are available.

Friday, November 4, 2011

Retirement Crisis

Reuters has an absolutely devastating look at the retirement crisis facing Americans. If you read between the lines, the article makes the point that Americans are increasingly on their own when it comes to preparing for retirement.

As it notes:

There are multiple reasons for reversals in gains in fighting elderly poverty, including the impact of the financial crisis on stock prices and interest rates, the end of many traditional defined-benefit pension plans which provided people with a guarantee of retirement income, and the bursting of the U.S. housing bubble. But the trend is in line with statistics showing that median household income fell last year to levels not seen since 1996.

Huge numbers of older Americans are likely to fall below the official poverty line in the coming years, said Jack VanDerhei, research director of the Employee Benefit Research Institute (EBRI).

The question then for policy-makers is how do we help? With pensions a thing of the past, Social Security uncertain and the housing market no longer a path to the American Dream, what can we do to make sure Americans retire secure.

Interesting ideas noted on this blog include automatic enrollment into 401ks, auto-matic IRAs, better finanical literacy and more access to qualified, financial professions who can ask Americans difficult questions and help them in their planning.

Thursday, November 3, 2011

What Happens to Financial Literacy as We Age?

There is a fascinating article in the Wall Street Journal this week about how financial literacy acumen changes as we age. The conclusion? Financial knowledge peaks in the late 40s.

There are obviously consequences for this. Just as Americans are reaching their retirements and making major financial decisions, their ability to make smart choices is declining. Further compounding the issue is the fact that age and experience leads a lot of older Americans to feel a false sense of confidence about their financial know-how.

The article includes a lot of pratical advice and insight. Here is a snapshot:


First, acknowledge that your ability to make financial decisions will decline after age 60. Don't think this won't happen to you; it will.


Of course, you won't know that it's happening when it does. In fact, you're likely to develop a false sense of security about your ability to make financial decisions given that your confidence—if you're like most older Americans—will rise over time.

Friday, October 28, 2011

Financial Literacy in a Recession

Education Week has a must read on approaches to financial literacy at schools across the country. It makes an interesting point of schools struggling to meet demand for financial instruction at a time when resources are most scarce.

Key point:

In the past five years, some states have begun to make it mandatory, said Laura Levine, the executive director of the Jump$tart Coalition for Personal Financial Literacy, in Washington. Virginia and three other states have a financial-literacy requirement for graduation. Another 19 states have some financial education woven into their required curricula. While the recession has underscored the need for financial education, tight school budgets have kept programs from expanding, said Ms. Levine.

Tuesday, October 25, 2011

Being One of the Unbanked

CFS has done a lot of work to examine why some who have resources take advantage of banking products and others do not. The Pittsburgh Tribune-Review has a real life look at what it is like to be among the "unbanked." These are folks who do not have bank accounts - some by choice and others as a result of credit or other problems.

The reality is that the status affects all parts of ones financial life:

In addition to being all but shut off from loans, the unbanked turn to alternative channels to cash checks, purchase money orders and pay their phone, cable, gas and electric bills. Allegheny County, for instance, is home to 95 check-cashing outlets, including 50 in the city of Pittsburgh, according to the state Department of Banking, which regulates such operations.

DOL Fiduciary Round II

The Department of Labor continues to publicly insist that it is coming forward with a revised fiduciary proposal next year. Their comments give some lip service to the idea that they will address concerns about protecting small savers' access to IRAs, but as the saying goes, the "devil is in the details."

Read the latest remarks from DOL Assistant Secretary Phyllis Borzi;

Wednesday, October 12, 2011

More Fiduciary Discussion

The director of investor protection for the Consumer Federation of America was a strong and unlikely voice of opposition to the Department of Labor's proposed alteration of the fiduciary standard. Her opposition mirrored that of many in Congress and the financial industry. Specifically, she and others feared that the proposal would wipe out the broker-dealer business model for IRAs and leave small savers with few places to turn for retirement products.

She's back this week with a guest blog on Wealthfront.com where she discusses her support for a fiduciary standard that protects both consumers investments and their choices. The entire piece is worth reading. As the excerpt below illustrates, the piece drills down to a key difference between the DOL proposal and one being talked about at SEC.

Many investors prefer to pay for investment recommendations through commissions on a transaction-by-transaction basis. Others simply can’t afford or don’t have sufficient assets to justify the higher and/or ongoing fees that often accompany comprehensive financial planning or on-going portfolio management. For these investors, the SEC proposal offers the best of both worlds. It preserves the ability of brokers to charge commissions and offer transaction-based recommendations, but it requires them to disclose and – even more important – appropriately manage those conflicts of interest. And it requires them to make recommendations that put the customer’s interests first.

Monday, October 10, 2011

Auto-Enrollment and the Racial Retirement Savings Gap

Auto-enrollment is one idea policy makers have kicked around for how to encourage more Americans to save. The idea is that if workers are automatically put into their 401ks, instead of having to "opt-in," more will do it.

It is a simple idea, but not without controversy. One issue some take with the policy is the fact that employers usually enroll their workers at a low contribution rate - - lower, in fact, than the worker would like if they were signing themselves up.

That debate aside, there is an interesting study from Vanguard covered in SmartMoney.com today. The study notes that auto-enrollment helps cut down on the much publized savings gap between races.

Here's a tidbit, but read the entire thing:

A new study by Vanguard suggests that companies automatically enrolling their employees in 401(k) plans might help. The report found that automatic enrollment not only increases participation levels across all ethnic groups, but it increases participation most dramatically for blacks and Hispanics. Whereas before automatic enrollment, just 57% of blacks and 67% of Hispanics (compared to 73% of whites) were putting money into their 401(k) plans, after automatic enrollment was instituted a full 94% and 95%, respectively, were. Furthermore, this jump in participation ends up eliminating almost all ethnic disparities in 401(k) participation, the study concludes.

Thursday, September 29, 2011

What is the "cost" of not using retirement advice?

A new study by Aon Hewitt and Financial Engines found that investors who relied on professional advice to manage their 401ks saw returns "almost 3% higher than those who did not."

This is an interesting study that comes just weeks after the Department of Labor withdrew its fiduciary rule. Many members of Congress, financial professionals and consumer advocates where concerned that this rule would force broker-dealers out of the IRA market and create a situation where small savers who invest below the thresholds for registered investment advisors had to "go it alone" in managing their IRAs. Read more here.

The Hewitt study is a reminder that access to financial professionals matters.

Tuesday, September 27, 2011

A Growing Movement for Financial Literacy in Maryland

Maryland State Comptroller Peter Franchot has been beating the drum for a high school financial literacy requirement in the state for a couple years now. Today he is taking his fight to the grassroots level and urging citizens to sign a petition urging the General Assembly to pass a bill when it reconvenes in 2012.

From the petition:


We, the undersigned, recognize that an education in the principles of personal finance - including the proper use of credit, the risks of excessive debt, the value of sound household budgeting and the importance of saving and investing for the future - is critical to a productive livelihood for Maryland's public school students. We believe that our nation's economic crisis - in which far too many Marylanders lost jobs, homes and life savings - strongly reinforced the need to provide our students with these essential tools of financial security. Finally, we believe that those who graduate from high school, and go on to higher education or enter the job market with an understanding of these principles, are at a significant advantage over those who do not.

CFS organized letters of support for financial litereacy legislation in previous sessions of the Maryland General Assembly.

If you live in Maryland, sign the petition here.

Wednesday, September 21, 2011

New Jersey Financial Literacy Law

The Courier Post Online covers the first few weeks of the 2011-2012 school year in New Jersey and how a new financial literacy education mandate is being implemented.

Here are some examples of what schools are doing:


West Deptford High School has offered personal finance classes as an elective for at least three years. This year’s freshman class will be the first required to fulfill 2.5 credits in financial, economic, business and entrepreneurial literacy in order to graduate. Washington Township High School has taken the further step of offering a full-year course, as opposed to a half-year class.

The Coalition for Financial Security did a significant amount of grassroots and grasstops organizing around the New Jersey law. It is good to see financial literacy going statewide.

Monday, September 19, 2011

Department of Labor Withdraws Rule, Will Repropose

Citing a desire to "protect consumers" and "avoid unjustified costs and burdens," the Department of Labor announced today that it will withdraw its current fiducuiary rule and re-propose a new rule early in 2012.

That is good news for small-savers. Now it will be important for the Department to protect small IRA holders in its plans going forward.

The DOL's press release hinted that it understands the IRA problem (excerpt below), but as always, the devil is in the details.

Also anticipated are exemptions addressing concerns about the impact of the new regulation on the current fee practices of brokers and advisers, and clarifying the continued applicability of exemptions that have long been in existence that allow brokers to receive commissions in connection with mutual funds, stocks and insurance products. The agency will carefully craft new or amended exemptions that can best preserve beneficial fee practices, while at the same time protecting plan participants and individual retirement account owners from abusive practices and conflicted advice.
Read more here.

Tuesday, September 13, 2011

The Financial Industry and Consumer Groups Agree

Today the House Financial Services committee held a hearing on the regulation of broker-dealers. While much of the conversation focused on SEC regulations, the DOL fiducuiary rule was also a topic of discussion.

Not suprisingly, the industry expressed their concerns. Perhaps more surpising were comments made by Barabara Roper of the Consumer Federation of America. Of course, this is not the first time she has spoken out. But her comments are worth noting again because they echo much of what the industry is saying.

Pasted below is an excerpt of her comments in response to an inquiry about the DOL rule. Note the concern about whether or not small savers will continue to have access to financial advice.



I think the Broker Dealers firms are absolutely right when they say if you apply an absolute ERISA, no conflict of interest, no third party compensation model, particularly in the Individual Retirement Account arena, and with the sanctions that exist in ERISA, the brokers dealers are going to exit that business.

Two-thousand dollar a year investors are not that enticing a market, and there are not a lot of fee-only financial planners or fee-only advisors that are going to step in to provide those services.

So yes, we have concerns about the DOL proposal. We are not under any stretch of the imagination advocating that it be adopted into the SEC world. Quite the contrary we would like to see something under the DOL proposal that more closely resembles the SEC.

That is primarily an issue with ERISA - rather than with the definition itself. One of the key issues is how will they do the prohibited transaction exemptions which seem to sort of have replaced ERISA as the way the law is imposed. And I don’t think you can move forward with the proposal until you know the details of what it would look like in practice.

More Concern Expressed Over DOL Fiduciary Rule

Dale Brown, president and CEO of the Financial Services Institute, has an Op-Ed in the Washington Times today.

Brown, like others before him, makes a strong case that the rule's unintended consequences will result in a regulation that does more harm than good.

For those like CFS concernced with access to financial security in middle- and low-income communities, Brown notes that:

This regulation particularly impacts accounts belonging to moderate-income savers. Direct costs for savers could increase anywhere from 75 percent to 195 percent once they are priced out of working with a financial adviser. The practical result is that many families would lose access to retirement information, education and services. It's time for the administration and Department of Labor to pay attention to this important issue - to pay attention to the consequences for millions of Americans just trying to save for their retirement, especially in this time of economicic uncertainty.

Tuesday, September 6, 2011

Face-to-Face

LIMRA is out with a new study this week looking at Gen-X and Gen-Y and their approach to life insurance. Perhaps suprising for a group that grew up with texting, the Internet and video games, face-to-face interaction with a financial expert is still a key difference between those who take advantage of life protection and those who do not.

From InvestmentNews:



Advisers can play a pivotal role in convincing this market that life insurance is a good idea. Indeed, one out of four of the surveyed consumers said that they began shopping for coverage because an adviser had suggested they needed it. What's more, 57% of the underinsured adults said that they were more likely to commit to coverage if they could confide in the adviser.


These numbers from LIMRA echo CFS's own work on working class and minority communities. They also cut to the heart of why CFS is working to make sure all communities have access to qualified financial advice. As the financial industry has focused more and more on wealthy clients, it is important that those who will serve the middle-market enter the profession.

Friday, September 2, 2011

Fiduciary Standard and Future Savers

The Hill's Congress Blog has a piece by the President of the Financial Services Roundtable that looks at the DOL's fiduciary standard and its impact on small savers.

Key graph:


[A recent study] went on to estimate that 360,000 fewer accounts would be opened in 2011 if the Rule had been in place. Assuming zero population growth and simple projections, after just 10 years, 3.6 million fewer Americans would have retirement savings accounts.

Yikes! At a time when Americans need MORE retirement savings, not less, it is important that DOL get this right.

Wednesday, August 24, 2011

African Americans and Life Insurance

The Coalition for Financial Security has done a substantial amount of work looking at why some communities take advantage of basic financial products like life insurance and why others who have the resources do not.

The Pittsburgh Post-Gazette this week has an interesting look at African Americans and the community's relationship with life insurance.

It is well-worth a read. One key graph:

Researchers found the main reasons African-Americans remained so loyal to life insurance stem from a deep desire to avoid burdening others with burial expenses, as well as the fact that often life insurance is the only means of leaving an inheritance to their loved ones.

Wednesday, August 17, 2011

Teachable Moment

While there is a lot of bad economic news out there, the Washington Post has some advice about how to turn it all into a teachable moment to educate kids about financial literacy.

Here's one snippet:

...one excellent way to teach children how to take part in the new family effort is to encourage them to come up with cost-cutting ideas. “For example, children can learn to turn off lights, fans, and computers when they are not in use and only buy the things that they truly need.”


Wednesday, August 10, 2011

How to Close the Wealth Gap?

NPR recently hosted financial expert Louis Barajas to talk about the PEW poll on the Hispanic wealth gap. The whole interview is worth a listen or a read. One key identified by Barajas is more education about how to build wealth.


It's really important that we understand that we need to somehow get education out there to this community, that they need to diversify and they need to build their wealth and they need to do it not just all in real estate. Nobody says that real estate is bad. I'm just saying is that they need to diversify it into other types of things like their, you know, mutual funds and their 401Ks.

Friday, August 5, 2011

The Wealth Gap Explored - Seniors

Late last month, we noted an updated look at the 'wealth gap' in America that was recently published. This week, USA Today, examines the gap among seniors. The results are consistent with earlier findings, but given the aging nature of the population, even more severe.

One look at California:


Among the state's single adults age 65 and older, 76% of Latinos and 69% of African Americans are unable to meet basic needs, compared with 44% of whites, says UCLA's Center for Health Policy Research and the Insight Center for Community Economic Development.


The article delves into some causes of the gap, including higher health care costs and fewer retirement savings. It also notes this issue:


It's also harder for minorities to navigate the complex financial world because they tend to lack adequate financial literacy, the Greenlining Institute report says. For the same reason, they're often victimized by predatory lenders that strip them of wealth and assets.
Part of CFS's core mission is making sure all Americans have access to financial knowledge and qualified advice. It is why we advocate for more financial literacy instruction in schools and for the industry and regulatory community to place a priority on ensuring all communities have access to sound financial advice.

Wednesday, August 3, 2011

Maryland Gears Up for Teaching Financial Literacy in School

As reported by the DelMarva.com, Maryland schools will start teaching financial literacy this year. Students in grades 3-12 will be taught financial knowledge throughout their time in schools. This effort in Maryland was supported by CFS.

Here's how it will work:


Among many specific requirements, students will be expected to "describe the services financial institutions provide, such as savings, checking, and money market accounts" by the end of Grade 5. By the end of Grade 8, students are expected to be able to compare credit products and services and describe predatory lending practices.At the end of Grade 12, students should have learned how credit scores can be used to leverage better products, services and employment opportunities -- such as security clearances.

This effort in Maryland was supported by CFS.

DOL Fiduciary Rule and Unintended Consequences

Cathy Weatherford of the Insured Retirement Institute has a column out today on the unintended consequences of the DOL's redefinition of fiduciary.

Key quote:

Ostensibly, the DOL wants to expand the ranks of fiduciaries to ensure that financial institutions avoid any potential conflicts of interest that might influence investment recommendations. Admittedly, this sounds appealing. A fiduciary standard is the highest and best the law allows, similar to what is imposed on trustees and guardians. The trouble is that fiduciary status triggers a little-known IRS regulation, making it nearly impossible for broker-dealers to handle IRAs held by average investors. These firms cannot satisfy the labyrinth of rules unleashed by fiduciary status except by (1) curtailing investment advice or (2) forcing IRAs into “advisory accounts” overseen by a registered investment advisor.

Monday, August 1, 2011

Massachusetts Tackles Financial Literacy

The state of Massachusetts is the latest to tackle financial literacy legislation. In supporting the bill, the Metro West Daily News makes a convincing case that holds for the Commonwealth and every other state.



Some students will borrow money to buy a car while still in high school. They need to know what interest is, and how to calculate how much interest payments will add to the sticker price. As soon as they hit college, they will be deluged with credit card offers many won't know how to weigh. Most will end up borrowing money for college - the average student graduates owing $20,000 - and many will be surprised when the bill comes due.



Later, they may be expected to manage their retirement accounts, but few will have been taught anything about investment strategies. They will have to make decisions on insurance and mortgages - and we've seen in recent years how easy it is for people to make poor decisions when buying homes.



That's why it is long past time Massachusetts incorporated financial literacy into the public school curriculum. We do no service to our children by sending them out into the world knowing all about geometry and history, but nothing about how to balance a checkbook.

Kudos to the Commonwealth for taking this step. It's too late for the 2011-2012 school year, but here's hoping the 2013 curriculm includes topics like interest, debt and savings.

Friday, July 29, 2011

Senator Akaka Introduces Federal Financial Literacy Bill

While reading this column on CBS Marketwatch about a financial literacy program at Champlian College in Vermont, we came across a nuggest about a new bill Senator Akaka of Hawaii introduced last month that would offer financial literacy counseling to those who take out student loans.

Information on the Akaka plan can be found here.

It is certainly an interesting idea. In many cases, those who are taking out student loans are making their first major financial decision. It can't hurt to make sure they have information that will empower them to make wise choices.

As Senator Akaka put it:


The increase in federal educational lending and student debt can be interpreted positively. I am happy to see young people continuing on to college in numbers that I would never have imagined when I graduated from the University of Hawaii in 1952. For our best and brightest, college continues to be a stepping stone on their paths to becoming future leaders. For millions of others today, however, college simply and rightfully represents an opportunity for better lives for themselves and their families. But, the ever-rising cost of education is a reality that we must address. We are allowing - and even encouraging - students to become borrowers and consumers. It is our responsibility, therefore, to ensure that these young adults have the knowledge, skills, and capability to manage the consequences that come with their financial decisions. Unfortunately, we are not doing enough.

Tuesday, July 26, 2011

Millions of Small IRA Savers to Lose Access to Advice?

According to Bloomberg, that is the message being pushed in a hearing on the Hill today about the Department of Labor's proposal to expand the definition of fiduciary.

What pops off the page are comments from the Consumer Federation of America:
“I think the industry is not exaggerating when they say they will abandon this business,” Barbara Roper, director of investor protection for the Consumer Federation of America in Washington, said in a telephone interview.
What is the problem?
If firms are considered fiduciaries by the Labor Department, selling investors bonds from a brokerage’s inventory or recommending a trade that would generate a commission may be considered a conflict of interest and a “prohibited transaction,” said [Jim McCarthy of Morgan Stanley[.
What is the consequence?
The change may cause financial firms to offer fewer investment options in retirement accounts and shift to a fee- based model used by investment advisers, which may increase costs, Kenneth Bentsen, executive vice president for public policy and advocacy at the Securities Industry and Financial Markets Association, said at a Washington hearing before the House Subcommittee on Health, Employment, Labor and Pensions. “Most firms require a minimum account balance for advisory accounts that could result in millions of IRA account holders being dropped,” Bentsen said in written testimony. There are more than 7 million IRA accounts with balances under $25,000 that are commission-based, according to Sifma, a lobbying group for banks and brokerages.
What is the response?
“The broker concern is perhaps due to misunderstanding,” Assistant Secretary of Labor Phyllis Borzi said at the hearing. “We’re not intending to overturn a commission-based system."
If that is true - - and this all a big misunderstanding - - shouldn't the Department of Labor slow down and publish the parts of the rule that it believes will satisfy those speaking out on behalf of small investors?

The Department says they are coming after the rule is published. For millions, that could be too little, too late.

Wealth Gap

Part of CFS's mission is to advocate for solutions that will help ALL Americans achieve financial security. Today's Washington Post has an article that details just why this important.

According to the Post's coverage of a new PEW poll, "the wealth gap between whites and minorities has risen to a historic high."

So what is the wealth gap?
Household wealth is the sum of assets, including houses, cars and banking accounts, minus debts, including mortgages, auto loans and credit cards. Researchers who study the economics of households by ethnic groups said that although the gap in incomes between whites and blacks has narrowed over decades, the wealth gap has been more persistent.
This research supports conclusion in Prudential's survey earlier this summer about African American ownership of wealth building products.

In response, public policy makers should be asking "what can we do to ensure all communities have access to the knowledge and resources they need?"

Tuesday, July 12, 2011

What would you give up to save?

That is the question a new survey from the National Foundation for Credit Counseling asks. Americans seem to be willing to part with coffee, eating out and shopping, but fewer want to go without cellphones and Internet.

What would you give up?

Tuesday, July 5, 2011

Follow-Up to Prudential Survey

The excellent Michelle Singletary has a follow-up column pegged to the Prudential survey of African American consumers. Her thesis is that the financial industry must build trust with consumers if it wants consumers to meet their financial goals. The entire column is worth a read. It is a reminder of how all stakeholders have a role to play in helping Americans achieve financial security.

Friday, July 1, 2011

CNN Money: Savings at an All Time High

We've documented in the past the problem of too few Americans saving for retirement. CNN Money has good news today for those who are saving, namely that "retirement funds are looking the healthiest they have in years."

Read it
here

Thursday, June 30, 2011

Teacher Calls for Financial Instruction in the Classroom

A Florida teacher makes the case for providing financial literacy instruction in the classroom in Education Week

Key point;

"Success in school may ultimately mean little to a student who lacks the skills and knowledge necessary to manage his or her money. We can add to the value of our students’ learning by preparing them to prosper in the world beyond our classrooms."

Tuesday, June 28, 2011

Teens, Mistrust and Financial Literacy

There is a fascinating study out today of teens, their financial literacy and their attitude towards financial institutions. The study finds a lot of mistrust among the demographic towards financial institutions, and it concludes the industry needs some good PR and a whole lot of support for financial literacy programs.

Read more here.

Key graph:

"This isn't just about bad PR for the industry. Adolescents with this level of distrust of financial institutions become adults who don't open bank accounts, invest for retirement, insure against risks or finance important purchases like college educations or homes. This type of financial disengagement could push a generation of consumers away from mainstream institutions and toward risky alternative service providers or toward simple inaction, which has its own perils."

Federal Government Gets Behind Financial Literacy

In what seems to be a positive step, the Government Accountability Office today produced a study mandated by Dodd-Frank about how to increase consumer financial knowledge. The study suggests increased financial literacy courses - - but cautions that some sort of standard or certification is needed to create a baseline of knowledge.

It sounds great. But as the saying goes, the devil is in the details.

Read more from InvestmentNews.

Monday, June 27, 2011

Boomer Women

Much has been made of the baby boom generation as they approach retirement. The Raleigh News & Observer takes a look at Boomer women in particular. The entire article is worth a read.

The crux of the matter? Many in the demographic never prepared for retirement and never thought they'd have to.

"Experts began years ago to predict this land mine for single women nearing retirement. The Federal Reserve Board found in 2001 that only a third of single women had any sort of retirement savings account; at the same time, fewer than 10 percent of single women had pensions through their jobs.

Now, the turbulent economy has turned those early warnings into full-scale alarms. Plans have been derailed for even the women who prepared. Some eye their retirement savings warily and wonder whether they will outlive the money they set aside for these years, a real possibility as their life expectancy stretched to age 85. Others are heading back to work."

Another Day, Another Poll

This one is from J.P. Morgan. Like last week's news, the Morgan findings show Americans understanding that they need to save for retirement, but too few actually doing it in a meaningful way.

Key quote from J.P Vice President Diane Gallagher:

"There's still a significant gap between acknowledging responsibility and acting upon it."



Friday, June 24, 2011

Gen-X and Retirement

The headline of this article is about how confident Gen-Xers feel about retirement. Answer? Not very.

Perhaps more newsworthy is this nugget tucked in that the end.

"Only 15% of Gen-Xers said they had incomes that exceeded their current expenses and only 46% track their incomes and expenses on a monthly basis -- two red flags that make it clear that they're in desperate need of financial advisory services if they're ever to reach their retirement goals."

Yikes.

What is Americans' Biggest Financial Worry?

Is it medical costs? Credit card bills? Mortgage? Nope.

According to a new survey by Gallup, it is not having enough savings for retirement.


66 percent of those surveyed were either 'very' or 'moderately' worried about running out of money in their Golden Years.


The survey is not surprising, but it is a good reminder that as pensions and other benefits disappear, we need to help Americans fill the void.

Prudential on the African American Financial Experience

Prudential has a new study out looking at the "African American Financial Experience." The whole study is worth a look.

Some things that jumped out:
  • African American ownership of IRAs is significantly lower than the general population 35 percent to 52 percent.
  • 58 percent don't know or can't find an advisory they trust.
  • Yet almost half admit they need help.
The survey is the latest in a long line of research that supports efforts to expand the population of qualified financial experts throughout all communities.

Thursday, June 23, 2011

Bad Economy is Bad for Retirement

The Daily Chronicle out of Dekalb, IL, has a good look today at how the bad economy is affecting Americans ability to save for retirement. There is some good news in that experts see younger people focusing on retirement. But there is also some bad news. Specifically more Americans dipping into their savings to make ends meet.

A great quote:
“[Retirement savings is] more and more of a concern. You’re not thinking about retirement at 65 when you’re worried about employment at 35."

The article is a good reminder of why public policy makers must do more to help make sure Americans have access to good, qualified financial advice and products.