Thursday, December 29, 2016

Why financial literacy legislation fails

The Post-Crescent has a look at attempts to pass financial literacy legislation in Wisconsin over the last few years.  The article is most interesting for listing the reasons legislation like this fails and for providing financial literacy champions a roadmap to follow.

Key point:
Lawmakers in Wisconsin made a run at adding Wisconsin to the list last year. Rep. Scott Krug, R-Nekoosa, and Sen. Howard Marklein, R-Spring Green, proposed requiring public schools to include financial literacy in curriculums. Their bills also would have required statewide testing on the subject and financial literacy information to be provided during college orientations.

Monday, December 26, 2016

Who teaches the teachers?

The Raleigh News & Observer has a great article this week about teaching teachers financial literacy. The piece touches on the difficultly of squeezing personal finance into other curriculum and the need for dedicated training.

Key point:
That lack of preparedness is a real concern because, in North Carolina, personal finance is required to be taught to students from kindergarten through eighth grade as part of their social studies courses. In addition, Wheat said, about 40 percent of a civics and economics course that high school students must pass before they graduate – American History: The Founding Principles, Civics and Economics – is devoted to personal finance and economics.

Wednesday, December 21, 2016

Life Insurance Gender Gap

This blog recently noted a report in Texas showing disparities in who gets efficiently licensed to sell life insurance in the state.  In addition to the race/ethnicity disparity already covered in a previous post, the report also showed a gender disparity - with men passing the licensing exam at a rate of 57% compared to 51% for women (page 66).

Now comes news from LIMRA of a gender disparity in life insurance usage:
Just 56% of American women have life insurance coverage, compared with 62% of men, according to LIMRA’s Life Insurance Ownership in Focus, U.S. Person-Level Trends: 2016. While the amount of coverage women purchased spiked nearly 21% since 2010, researchers say it’s still inadequate relative to men at $160,782 vs. $206,357.
The article cites a few reasons why men take advantage of life insurance more than women, but could another be data like we see in Texas?  More men are licensed as agents, and women seem to encounter barriers to entry that men do not.

Does this contribute to the usage disparity?  It is question worth considering.

Friday, December 2, 2016

Texas Life Agent Exam - 2016 Version

This blog has spent years looking at reports published by the Texas Department of Insurance that show pass rates on licensing exams by demographic.

The 2016 report is out, and sadly, it continues to show distressing data.  Here is a look at pass rates on the Life agent exam last year by race/ethnicity when controlling for education (page 86).


As in past years, Caucasian/White applicants continue to enter the insurance profession in Texas in a more efficient manner than other testers, even when controlling for education.

This blog will dive deeper into the report in 2017.  The data seem to suggest the presence of barriers to entry for some testers.  With national studies like LIMRA's Facts About Life 2016 continuing to report that certain segments of the country are under-insured and under-served, it is critical that all stakeholders, including regulators, do their part to make sure all communities have access to important financial protections.

Wednesday, November 30, 2016

Sad News Out of New Mexico

It looks like the cash-strapped state government in New Mexico is being forced to eliminate financial literacy education positions in the state Treasurer's office.
The Sante Fe New Mexican reports that personal finance instruction for high school students is the latest victim of layoffs linked to the state’s budget crisis..... 'How do I teach financial literacy if I’m not fiscally responsible myself?” Democratic State Treasurer Tim Eichenberg lamented to the paper. “I can’t tell you how saddened I am to cut that program./"
We share the Treasurer's dismay and hope state efforts can get back on track soon.

Thursday, October 20, 2016

LIMRA Facts About Life 2016

LIMRA is out with their annual research on life insurance protection.  2016 represents the organization's big update since their shocking findings in 2010 that found a 50-year low in individual coverage.

This year's findings are only marginally better. Only 44 percent of households have individual insurance and 20 percent of households with children under 18 are uninsured.

For this blog, the question is "why?"  Why are people going without insurance?

LIMRA points to a few reasons, including other financial priorities and a general lack of knowledge about the product.  Thirty-five person of households say they aren't protected because they have not been approached by a financial professional.

This last finding is one reason all stakeholders - the industry, regulators and consumer groups - need to work together to ensure all communities have access to financial tools. There is research by CFS that suggests those most likely to work in underserved communities are the least likely to make it through the state licensing process due to barriers to entry.   It is critical to knock down artificial barriers keeping resources out of underserved communities.


Thursday, September 1, 2016

Classrooms in the Other 30 States

US News & World Report has an article this week about financial literacy. The article notes that only 20 states require financial literacy education but that doesn't mean educators in other states are not stepping up to the plate.

Key point:
But teachers who do cover financial concepts such as saving and investing find that students even as young as elementary school can grasp – and get excited about – money lessons. "When kids know how money works, they are more careful with their spending and take better care of their things that cost money," says Kristi Ekern, a fifth-grade teacher in the Denver metro area.

Friday, July 15, 2016

What can be done to improve financial literacy?

The Christian Science Monitor has an interesting article that looks at "what can be done" to tackle poor financial literacy.  The article hits all the right notes.  We'd also add making sure all communities can access financial advice and tools.

Key graph:
One would assume that the financial crisis in 2008 would lead to better financial practices in 2016, but a new report by FINRA Investor Education Foundation indicates that Americans are not saving for the long-run, even though they are on a better financial footing six years after the Great Recession, which began when a housing bubble burst in 2007 and led to years of decreased consumer spending. In America, 18 percent are spending more than their household income; 21 percent have overdue medical bills; 32 percent are paying the minimum amount on their credit card; and 63 percent failed FINRA’s financial literacy test. What’s worse is that many Americans don’t realize how much they don't know.

Tuesday, July 5, 2016

Ebony Tackles Planning for Life After Death

Ebony.com has a nice write-up on the important financial security life insurance can provide.  The article touches on some of the disparities in usage between communities.

Key point:
A 2011 study sponsored by two leading insurance industry associations, LIMRA and the nonprofit LIFE Foundation (now known as Life Happens), found that African-Americans are more likely to have life insurance, with 76 percent of those surveyed owning insurance, versus 62 percent of Whites and 54 percent of Hispanics. Underinsurance, however, remains a problem; a 2012 poll revealed that 42 percent of Blacks said they were in need of more life insurance, compared with 32 percent of the total U.S. population.

Friday, April 22, 2016

2015 Pass Rates on Licensing Exams

The Coalition for Financial Security conducts an annual survey of state licensing exam outcomes.  The goal of the survey is to help understand where there may be roadblocks into the financial profession that impact consumers.  Consumer research continues to show that contact with a financial professional can be the difference between a family acquiring the knowledge and tools that lead to financial security and a family not securing their financial future. Given this research, it is critical that professionals from all walks of life and all communities be able to enter the profession without arbitrary and unnecessary barriers to entry.

The 2015 survey results are published in the table below.  The table reports first-time licensing exam pass rates for life insurance agents and health insurance agents.  (The 2014 survey can be found here.)

If anyone would like individual state reports, please contact jvaness at coalitionforfinancialsecurity dot org.




Friday, March 25, 2016

Evidence Financial Literacy Education Works?

Wisconsin Public Radio recently completed an excellent series on financial literacy - and the lack of it across the nation.  The series included coverage of a study by the University of Wisconsin that tracked credit scores in states before and after financial literacy requirements were introduced.

Comments from the author J. Michael Collin who directs the UW Center for Financial Security:
"We followed the credit scores, on average, of people before and after the state implemented the curriculum, and the average credit score went up about 20 points, mostly because they were more likely to pay their bills on time."
Interesting stuff.

Thursday, March 10, 2016

Mississippi Paper Editorializes in Support of Financial Literacy Requirement

The Dispatch recently wrote an editorial in support of a program at Mississippi State to educate college students about debt.  Included in the editorial is strong support for a statewide program that educates students even younger.
While this move by the university is undoubtedly a good one, financial literacy is something that should start earlier. Unfortunately parents aren't always in a position to pass on money management skills. We hope area high schools will take note and help equip students to make sound financial decisions before taking on student debt.

Sunday, March 6, 2016

Financial Literacy Month - Good or Bad?

There's a column in the Wall Street Journal this month questioning whether Financial Literacy Month (April) is worth the fuss.  It is a thought-provoking take that is worth a read.

Here's one reason the month makes sense:
Lusardi, a professor of economics and accountancy at George Washington University, hopes that Financial Literacy Month could help nudge high schools to adopt financial curricula. Only 17 states currently require high-school students to study personal finance, according to the Council for Economic Education.

Monday, February 29, 2016

Headline - "Connecticut fails financial literacy"

The Greenwhich Time covers the unsuccessful efforts to pass financial literacy legislation in Connecticut despite that fact that the state ranks "near the bottom for financial literacy in the U.S."

There a nice quote from the state senator who has championed a financial literacy education requirement for the last eight years.
You have generations of kids graduating without a clue about managing their personal finances,” Frantz said. “It doesn’t have to be anything more sophisticated than how to balance a checkbook, understanding a credit card and interest rates, being aware of the marketing tactics that credit card institutions use. It’s an area that we need to improve upon significantly going forward.”