Friday, February 17, 2012

Reuters on Financial Literacy

Reuters has a great piece this week on financial literacy and how not having it can impact retirement.  The whole thing is worth a read but here are some highlights.

On the implications of a lack of knowledge in the new era of retirement:

Experts often point to poor financial decision-making as a cause of the retirement security crisis. The problem has become more critical as we've moved away from professionally managed pensions and toward do-it-yourself defined contribution plans. Studies show workers do poorly managing their 401(k)s, including too-low contribution rates, infrequent rebalancing and maintaining too much exposure to equities in the last few years before retirement.
On gaps in financial literacy:
Not surprisingly, Mitchell says, men and women with higher levels of education know more about personal finance than those with less education. The research also shows gaps between whites and minority groups, with blacks and hispanics less likely to know than whites. And while men are more knowledgeable than women, men think they know more than they really do.
What can be done? The article points the need for much more education in schools, more focus on finances from parents, more budgeting by all adults and a realization from policy makers that this is a priority.

Monday, February 13, 2012

GAO Releases Highlights from Financial Literacy Forum

Last year, the Government Accountability Office (GAO) convened a summit of leaders in the area of financial literacy.  Last week, the GAO got around to releasing the highlights of the summit.

The takeaways are what you might expect:  focus on k-12 and vulnerable populations; increase partnerships between non-profts, governments and private sector; test out solutions to find what works best; and leverage the unique position of the federal government.

One thing that stood out was a look at what employers can do.  Interestingly much of the past financial literacy conversation focuses (rightly) on schools.  A lot of recent conversation, however, has started to look at how we can get to those who have already left the school system.

Highlight:
One of the themes that emerged during the forum was that employers have a key role to play in improving the financial capability of their employees. Participants noted, for example, that employers could encourage their employees to save for emergency purposes and retirement. They also discussed the need to create incentives for employers to support healthy financial behavior by employees. GAO was also encouraged to consider taking additional steps to enhance the financial literacy of its own employees and thus serve as a model for other federal agencies.

Wednesday, February 1, 2012

Selling Life Insurance

There is a saying that life insurance is "sold, not bought."  The saying highlights the fact that families purchase life insurance because someone educates them about the product and the need.  The saying also suggests just how important agents are to the sale of life insurance.  Families still report preferring to purchase insurance protection face-to-face.

Recent industry statistics suggest life insurance usage is at an all-time low.  Not surprising, statistics also suggest the agent population is in decline.  The two data points likely go hand-in-hand.


One goal of CFS is to ensure Americans have access to the tools they need to find financial security.  In the case of life insurance, that means agents.  The new LIMRA research is a clear sign that there is more work to do.