Tuesday, September 18, 2012

Interesting Report from Consumer Federation

The Consumer Federation of America is out with a new analysis today that shows an interesting paradox.  One the one hand, the study found that middle-class families had made "costly" financial mistakes.  On the other hand, it found that families still feel they can make "good" or "excellent" financial choices.

The react from CFA Executive Director Stephen Brobeck:
“Considering their past mistakes and the complexity of the financial services marketplace, we were surprised at how highly most middle class Americans rate their ability to make a variety of financial decisions and how infrequently they rely on information from the Internet and publications.”
Another interesting finding in the study is where middle-class Americans look for financial advice.  A full 45 percent said they want information from a financial advisor when looking for information about saving and investing.  This beat the Internet, books, magazines and TVs by a large margin.

As regulators in DC and states take a look at the financial industry, they need to keep this in mind.  As CFS's own research shows, the middle-class is woefully underserved and policies need to correct that problem, not make it worse.

Look Where for Financial Literacy Advice?

Given the debt crisis, it may seem like an odd choice but Time suggests the US could learn a lesson or two about financial literacy from Spain of all places.

Key point:
Why should Americans care what’s going on in Spain? The financial-education movement is a modern global phenomenon. No one knows for sure what works best and how to reach individuals with the information they need to make smart money decisions. Different nations are trying different approaches, and all of them can learn.

In Spain, they hope to reach all age groups but see getting to students with money basics as the long-term fix. In the U.S., students are on the radar for sure — but a rising emphasis is on helping adults by requiring simpler financial statements and products, providing closer regulatory oversight and creating online tools that will offer third-party advice at the point of sale.

Simpler products and timely impartial advice are fine. Let’s do it. But those are stopgap fixes. Empowering young adults to be confident about money — to be financially literate, just as they learn to read and write — is the right approach. Maybe we’ll learn something from a country at the center of the euro crisis.