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we will conduct a question-and-answer session.
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I would now like to turn the meeting over to Ms. Irene Skricki.
You may begin.
Great, thank you very much and welcome everybody to the FinEx monthly webinar today.
I'm very excited that today our topic is a newly
released set of principles for effective financial education that we're very happy to share with
everybody.
And I am joined today by Janneke Ratcliffe, who's the assistant director for the Office
of Financial Education, along with Maria Jaramillo, Gen Melford, and of course myself, who will
all be telling you about these principles.
So as we get started, we'll do our usual disclaimer, which is that this presentation is being made
by CFPB representatives but it does not constitute legal interpretation, guidance, or advice
by the CFPB and any opinions or views stated by the presenter are the presenters own and
may not represent the Bureau's views.
I think probably most of the folks on this call know who we are, but I'll just say a
couple words to get us started about the CFPB.
We're a federal agency that helps consumer finance markets work by
making rules more effective, consistently and fairly enforcing those rules, and empowering
consumers to take more control of their financial lives.
And it's that last part around helping consumers manage their own financial lives, which is
why we are here today and why FinEx exists to help consumers.
We do a number of tasks around that.
Quickly, on our consumer facing side of the Bureau, the consumer education and engagement
division, we have several special population offices, such as
Students, Servicemember affairs, Older Americans, and Financial Empowerment, dealing with economically
vulnerable consumers and then Office of Financial Education, who work on educating and empowering
all consumers to make better informed financial decisions.
Probably most of you who are on this call are part of the CFPB Financial Education exchange
or FinEx.
This is our mechanism to get our information out
to all of you who work with consumers on financial decisions and to learn back from you through
surveys, convenings, and other things what you're all
learning and what's working and not working out there.
So if you are not part of FinEx, and you would know that if you are not getting the monthly
FinEx news and updates email, through which probably many of you learned about this webinar,
to sign up all you need to do is email the inbox
CFPB_FinEx@cfpb.gov.
That's CFPB_FinEx@cfpb.gov.
That will be up on the screen again later.
So if any of you who are on this call do not currently get the FinEx newsletter and want
to get a monthly newsletter with information about
things like these principles, please do sign up.
We'd be thrilled to have you and what we do is essentially we have webinars.
Again, we have convenings.
We have a number of other opportunities for you to learn from us and from us to learn
from you.
We have an inventory with all of our tools and materials in one place, the Resource
Inventory for Financial Educators, just a screen shot up there on the screen.
And then we also have a webpage, which again has just about everything
all in one place, consumerfinance.gov/adult-financial-education.
And lastly, we have a LinkedIn discussion group where we post our things and you can
also post your materials as well, and so we encourage people
to join that.
Again, there's information about that on the website.
So that's our usual starting point, just to make sure everybody knows who we are
and what we do.
I'm very excited about today's topic.
Now, I start off every FinEx webinar by staying I'm very excited about today's topic but this
time I really, really mean it.
And I'll say why.
This is actually our 25th webinar.
We've been doing one very month for the last two years, since May 2015.
And our very first one was on the definition of financial
well-being, which you'll hear a little bit about today as well, which was a signature
piece that then led to a measurement tool around financial well being.
And this is a kind of bookend on principles to help people improve their well being.
So this is how to implement the concepts underlying financial
well being.
So I feel like our first and our current webinar really nicely capture some of the things that
we're trying to do and we hope that a lot of you are trying to do as well.
The second reason I'm excited is that any of you who were at the FinEx National Conference
last September, and even those of you who didn't come but
emailed us, may remember that we actually listed strategies on how to implement these
principles when they were still in a draft form from people at
that conference and then had practitioners, hopefully some of you on the phone, actually
vote on what they thought were the most important or most
promising of those strategies.
And all of that is in the report that we're going to talk about today.
So this is building on the work that we learned not just from broader research,
but also from directly talking to many of you, and so we're very excited to share this
practitioner-derived work today.
So those are my two reasons for excitement and I will now turn it over to
our assistant director, Janneke Ratcliffe, to walk you through the principles and the
goals -- or at least start us off and then we'll move through the principles
individually later.
Great.
All right, well thanks everyone for being here.
Thanks for that great setup, Irene.
As you just heard from Irene, we've just released the new paper but as she
said, many of you have already heard about these principles and actually even helped
us shape them.
So I want to talk first about why we put these principles out.
First, as Irene said, we've done a lot of research into financial well being because
we see that as the common goal of financial education.
Many of you have seen that research and have asked us, what does it mean to my work.
Well, these principles are here to relate that research
to everyday factors.
Second, the principles demonstrate how financial education can work by laying out the specific
mechanisms that help people take particular actions
to improve their financial well being.
And thirdly, we want to draw attention to actual effective approaches.
I should say that we take a very broad view of what financial education is.
It can take place in classrooms, through one-on-one sessions or online.
It can be delivered through peers or through communication technologies and even
from products that teach.
We're going to draw from lessons learned from all of these approaches and more.
Before I get to the principles, I want to highlight that these principles
are not to be confused with work that many others have done, very valuable work, to identify
what are the features of high quality financial education.
And actually these hold true for financial education of any type, but they're shown in
a list here.
We want to be sure you understand we affirm the importance of all of these features.
The principles are just meant to rest on top of them.
They're focused on supporting financial action.
So what we mean by effective financial education is not just delivering information, but rather
offering knowledge, and skills, and pathways that can
help people take right action, whatever is right for them.
So we hope you'll find these principles useful in identifying promising strategies, in holding
up against your own programs to show how your programs fit this framework, and also possibly
to give you new insights for refining your efforts.
Without further ado, here is a preview of the principles.
We'll describe each in more detail later in the call, but I'll just review them now.
First of all, effective financial education starts
by recognizing the real goals, the real opportunities, and the real obstacles of the people you're
trying to serve and then determining realistically what
can be accomplished through educational efforts, and then tailoring your program and defining
what success looks like accordingly.
The second one says that when it comes to money matters, information is more likely
to stick if it's actionable, relevant to the consumer, and given
at a point in time when it could be most used.
The third principle points to the importance of skills, what we call the how to.
We've identified a specific set of skills that seem to matter
most and could be transferable to all financial decisions that a consumer might face.
The fourth principle talks about motivation and this is useful
in those cases when a person may have all the know-how and the opportunity to do a thing
but just needs some help strengthening that motivational muscle.
And then finally, the fifth principle is one that's just emerging in this field.
It says find ways to make it easier for people to make good decisions
and follow through on them.
As a simple example, you go through a lot of effort to help a client build knowledge,
and skills, and motivation, say, about something like paying bills.
Well, signing up for automatic reminders then can help put that know-how into action by
really help supporting them in making consistent timely debt payments even
after the educational sessions are over.
So that's one example and you'll find many more examples later and in the paper.
In this paper, you can read more about the principles and we've also
looked to a lot of research that provides evidence that show how these different principles
work and includes all the rich examples we got from financial
educators such as yourselves.
So before I turn it over to Gen Melford, we will continue to see and value your input
and your help in getting the message out about how fin ed can make a big difference
in people's lives and I want to thank you for how you've already contributed and how
you will continue to do the great work you do.
And now, turning it over to Gen.
Great.
And actually, this is Irene.
I'm going to say one thing first, one housekeeping item or two actually.
One is that we've already had requests from people who would like to
see the PowerPoint deck and we can send it out to you afterwards.
We're happy to do that but you do need to email me at the CFPB FinEx inbox, CFPB_FinEx@cfpb.gov.
If you just request through the WebEx, I lose those email addresses once the webinar is
over.
So just you'll see the address again, but email me if you want the PowerPoint.
We also will be posting the recording of this.
And the principles, the report that Janneke mentioned along with the two page summary
you see up on the screen are available on our website already.
The URL is there.
Again, you can see it afterwards so we hope all of you have a chance to read that as well.
o now, let's go -- and by the way, we'll hold voice questions until the end, but if you
have any other clarifying questions, we're checking
the Q&A function on the WebEx for those of you on the WebEx.
So now, I will turn it over to Genevieve to give us a little more background before we
dive deeper into the principles.
Thanks, Irene and thanks Janneke for that lovely setup.
So for the next few slides, I'm going to talk a bit about how we
developed these five principles.
And as Janneke mentioned, and as Irene teed up from 25 webinars ago, the starting point
for this report is really what we've learned over the past five years
about financial wellbeing, what it is, what factors allow someone to have more of it,
and finally, what those factors imply about how financial educators
can help consumers, which is where today brings us, which is so exciting.
So just to tee us up super quickly, through open ended one-on-one interviews with consumers
around the United States, we learned that financial well-being
has four elements, which correspond to a person's sense of financial security and financial
freedom of choice, both in the present and when considering
the future.
So I just want to orient us to that's the north star for our work and certainly for
these principles.
But I've talked a lot about this work in the past and have entire reports just on
this definition, and so I will not belabor it now.
And so the next step in our project after we talked with consumers and really got a
better and more precise handle on what financial well being is was
to research the factors, both personal and situational, that support higher levels of
financial well being, and we need to know that so that we can
design and promote financial education approaches with those factors in mind.
And what we found suggests that a person's level of financial well being is influenced
by a number of factors.
Most proximally, kind of on the right hand side of this picture that's on the screen,
it's by what people do.
The actions they take as well by what options, opportunities, and resources are
available to them.
And as we move to the left of the picture, more in the middle, behavior -- what someone
does -- given a certain level of opportunity is then influenced by a combination of knowledge
and skill, personality and attitudes, and decision context.
And by decision context, I'm referring to the
social psychology literature on the power of the situation to influence behavior and
choices, which we'll describe in much more detail when we talk about
principle five which Janneke did touch on briefly.
This is the how can a situation make it easier for people to make a good decision and follow
through.
So kind of recognizing the power of the situation in that.
And all of these factors are influenced by people's current and past social and economic
environment.
Our research during this phase led to the development
of insights about the specific types of behavior, knowledge, and personal attributes that seem
to support financial well-being given a certain level of
opportunity.
We then applied all of those findings to thinking about how financial educators can help consumers
take those financial actions that will serve the consumers' life goals.
And by the way, this diagram usually does have lines in between those sections, but
they don't appear here, but try to picture them.
You'll see it correctly in the report.
So as a first step of going from those insights about how do things work in consumers' lives
to what can financial educators do with that information to support consumers.
The first thing we did to try to bridge that gap was to distill our findings down to a
model that you see on this slide of what allows a consumer to
take a specific financial action.
So we went from the whole big picture of someone's entire life and financial life down to, okay,
what does that mean about supporting a specific financial decision or action, such as taking
steps toward improving their credit, or reducing debt, or saving to buy a home.
So first, a person needs to know how to do it.
That's their knowledge and skills, which we call know-how in the top circle there.
But know-how alone is just one's potential to
act and to make it more likely that a person will act on that knowledge, they need both
the motivation, which is related to attitudes and beliefs about
the value of taking the action, as well as attitudes and beliefs about one's ability
to succeed at it.
And also, the opportunity to actually take the
action.
And in our model, opportunity may include both the material opportunity to take an action,
like whether or not someone's employer offers a retirement
savings plan, right.
That's something that they have no control over and either they have that option or they
don't.
But also a decision context conducive to doing so, such as how easy is
it to sign up for a benefit that does exist.
So that's another way to think about opportunity.
Opportunity is both does it exist and then also how easy
or hard is it to access.
This is my concluding piece on how we got here before we turn it over to the principles
themselves.
So the broad strokes of these five principles came
from this research I've just been describing at a very high level into the factors that
support financial well-being and financial action taking.
The principles touch on knowledge, skills, motivation,
and opportunity, which are all of the elements of our model of financial action.
And then to both refine and flesh out the principles with examples of how to actually
implement them, we did three things -- consult with leading financial
education stakeholders.
We broadly scanned existing financial education program evaluation and related research to
find implementation approaches that have been demonstrated to be effective, and
each principle you'll hear about all the kind research-based practices.
And then just as importantly, through a FinEx convening last fall, we invited practitioners
from around the country, which probably included many of you on the phone now, so we thank
you for that, to provide feedback on the principles
and to share and vote on recommendations for putting the principles into practice, which
are included throughout this report and in their entirety in an appendix.
So that's how we got from learning about financial well-being, which we started to do five years
ago, to really being able to offer some recommendations about what financial educators -- and how
-- and really to be able to communicate, as Janneke said, about how financial education
can make a really big difference in people's lives.
With that, I'll turn it over to Irene to start our deeper dive into each of the principles.
Great, thank you very much.
So what we're going to do now is we're going to go through each of the five principles.
I will summarize the principle very quickly and then Maria
Jaramillo, our other staff member here, will give a little more detail about the research
behind the principle and the practitioner strategies that we heard
from our solicitation of educators at the FinEx Conference that we mentioned a couple
times.
So that's what we'll do for each of the five principles.
So first, again, and you heard the high level before, but financial education programs can
be more effective if they are matched to an individual specific
challenges, goals and circumstances rather than adopting a one-size-fits-all approach
-- so principle one.
The very definition of individual financial well-being that Gen reviewed earlier is inherently
subjective.
It's going to differ from consumer to consumer depending on their goals, their circumstances,
their challenges and therefore it really stands to reason that rather than treating financial
education as a one-size-fits-all, interventions need to
be matched to an individual specific challenges, goals, and circumstances in order to make
a meaningful difference to them.
And so that's what this principle is about is understanding who it is that you're serving
and using this approach can also help you really
understand the right level of expectations for the impact of financial education effort
that you're doing.
So with that, I am going to turn it over to Maria to say a little bit more about principle
one.
Thank you, Irene.
So one way in which you can meet individuals and families where they are is by understanding
their goals and motivations, and their barriers to take
action.
The model of financial action which you see on the screen can be used as a diagnostic
tool to identify what challenges are getting in the
way of your customers achieving their financial goals.
For example, you can start by identifying what is
it that your customer wants to achieve, what are their financial objectives, and what are
the actions they need to take.
For example, let's say buying a house.
You can go through the model and ask does your customer have the knowledge they need
to take the desired action?
How much information it needed and how do we link the information we'll provide
to the desired action or financial goal.
We can then inquire if the customer has the skills or if they know how to do the things
or how to take the steps needed to achieve that desired goal.
You can then ask if your customer feels confident in knowing how to take the steps or confident
in how to do the things effectively and if they believe
that doing these things is valuable.
Lastly, you can inquire if your customer has the opportunity to apply their knowhow or
if they will encounter a decision context that is conducive to
taking the actions or implementing the financial behaviors they desire to have.
Answers to these questions can help you identify what gaps exist in the journey of your clients
as they try to improve their financial well being or what
are the obstacles that are getting in the way to achieve their desired financial goals.
Another way in which you can understand the goals, motivations,
and barriers clients face to take financial action is by using the financial well being
scale.
The scale can be used to establish a baseline understanding of your clients' current financial
well-being.
The scale can help you identify how safe and satisfied the client is with the way they're
managing their money and their financial standing.
Next slide.
And Maria, before you do that, I do want to note -- somebody asked me if the questions
you were describing, which are not on the slides,
were available somewhere.
It turns out they are in the report.
So those specific diagnostic questions Maria was just speaking of, if you go to the full
report you will see them.
Oh, look.
The person answered yay.
Okay, now we'll go to the next slide.
Okay.
So to further develop the principles, as Irene mentioned, we scanned the growing body of
financial education program evaluation and related research.
And based on this analysis, we identified programs and approaches that have put the
ideas 'were presenting in the principles into practice and that have been the most rated
to be effective.
So for principle one, we've identified that starting with a needs assessment can lead
to better results.
For example, workforce financial education program used a pre-test to assess the needs
of employees.
They then adapted the program content to the identified needs and interests and the succeeded
in increasing the likelihood of employees starting or updating a budget, increasing
retirement contributions, and deceasing negative financial behavior,
such as late bill payments.
We also identified a personalized approaches like financial coaching can have positive
results, helping individuals improve their financial well being
based on their particular needs and goals.
And also, all the studies that Maria is referencing are also in the report fully footnoted.
So you'll be able to see all that if you like.
And then through the convening of the CFPB financial education exchange, we invited last
October financial education practitioners from
around the country to provide feedback on the principles.
Some of the strategies they shared with us for putting principle one into practice included
focus on client driven goals, in one-on-one engagements, practice active listening, avoid
judgment, connect with individuals served, and be empathetic.
There's a little bit more detail on some of those in the report.
So now, we turn to principle two, which is provide actionable relevant
and timely information, and I think all of us would say I think that knowledge is absolutely
critical to financial decisions and to financial education.
The question really is what kind of knowledge.
What kind of knowledge works and how do we best deliver financial knowledge and content
in a way that can improve actual decision making and behaviors.
And so these three characteristics are the elements that our research showed were important.
First, something that's actionable, meaning something that
people can really take action on -- what people need to take action is have specific details
on what they need to do.
And so information that's delivered to consumers is most effective when it's highly
actionable, including concrete steps needed to achieve the goals.
Secondly, information that's relevant is important so people are more likely to pay attention
to or absorb information if it connected to an upcoming
decision or to their motivation to achieve something.
And then thirdly, timely.
Financial information is often delivered in some cases too far away
from the point in time when someone is going to use it and people forget.
The information fades over time and so the extent to which it can be delivered
as close to the point where it will be implemented is important.
So that's the essence of principle two and I will turn it to Maria to say a little bit
more about that.
Great.
So an example of an approach that puts this principle into practice is housing counseling.
Several studies have shown the effectiveness of housing counseling in supporting
sustained homeownership by relating knowledge to a decision or goal, for example by providing
information about home buying, interest rates, mortgages,
and repayment options at the time a person is contemplating buying a home.
Using technology can be effective to deliver information in small, easily digestible, and
timely increments.
A study evaluated the impact of a text messaging campaign aimed at decreasing the
percentage of students planning to go to college but they never actually enroll in the fall.
High school graduates that intend to go to college and
their parents receive text message reminders of college related tasks delivered right near
the task deadline and the campaign increased college enrollment.
And then pointing people to concrete, actionable, and easy to manage steps can help people translate
intentions into actions.
Next slide.
Some of the strategies practitioners shared with us for
putting principle two into practice include breakdown financial goals into smaller steps
meet people where they are, connect information to individual
financial goals, customize or personalize information.
Thank you, Maria.
Now, turning to principle three.
Principle three is improve key financial skills.
Again, something everybody I think is doing in financial education is trying
to help people figure out the skills they need to move forward.
Our research shows that it's really important that there be this action component so that
people know what to do with the information that they have.
And here, the key components are really having people know when and how to find reliable
information, to know where to start looking for the information
that they need to make a financial decision.
And that could come from advice from an experienced friend, getting multiple quotes for a mortgage,
getting professional investment advice, looking at
the right website, but knowing how to find that information is important.
Secondly, knowing how to process the financial information to make sound financial decisions,
so knowing how to actually work with the numbers to figure
out what the right car loan would be to fit in their budget.
People need to know how to do that.
And then lastly, they need to know how to actually
execute the financial decisions and stick to their financial plans over the long-term
and adjust those plans as necessary.
So all of those are types of skills, knowing how to find the information, how to use it,
and how to act on it that is key to this principle number three.
Maria, tell us more?
So in our research, we identified that financial counseling can support learning skills to
successfully take or stick without familiar or difficult actions.
A study done by the World Bank Group concluded that individualized financial counseling helped
participants undertake difficult actions or tasks they had not done before,
such as regularly preparing a budget or opening a bank savings account.
Opportunities to practice financial behaviors with specialized financial products can help
build skills.
Rigorous studies have found that individual development accounts, or IDAs, have been effective
in fostering savings behavior among households with little prior history of formal savings.
We also found that teaching people to use if then
plans and to piggyback desired behaviors on existing routines can improve follow-through
and instill new habits.
In and if then plan, an individual identifies likely opportunities or obstacles and then
specifies what they will do when the opportunity or obstacle arises.
This makes it more likely that the person will seize opportunities and not be deterred
by obstacles.
Simplified memorable and actionable guidelines can help people learn new ways of managing
money.
A study performed under contract with the CFPB sent
catchy email messages to people who carried debt on their credit card from month-to-month
encouraging them to use cash instead of credit for purchases
under $20.
The simple messages were found to modestly reduce the participants' revolving debt on
their credit card at a very low cost to implement.
If anyone wants to know more about that, our January webinar was on that managing credit
card spending topic that Maria just mentioned.
And then some of the strategies that practitioners shared with us for putting principle three
into practice included provide opportunities to practice and experience, use technology
like expense trackers, goal trackers, or online coaching, to help build skills, deliver information,
and maintain intention and follow through.
Use simulation and experiential learning.
Let people practice making financial choices and experience consequences in a safe environment
and help people learn about how and why to do research.
Demonstrate the value proposition of comparison-shopping, for example, that the time that people use
to compare products will result in savings.
Okay, now we're up to principle four, gaining momentum here.
Principle four is build on motivation.
So personal characteristics and traits, which we collectively refer to here
as motivation also influence behavior.
They influence it both directly but also play a role in mediating
the connection between knowledge and behavior.
Our research points to specific types of motivation that programs, financial education programs
can help to build in order to effectively improve financial
well-being.
These include internal frame of reference.
So how do you judge your own success?
Do you compare yourself to others or measure yourself by your own yardstick?
And here's where you can help consumers focus on making financial decisions in light of
their own standards and values rather than in comparison to others.
It is important to mention too that one's internal frame of reference comes from people's
own values, which are influenced by their families, communities,
and culture.
That's all part of that.
Secondly, another trait or aspect of this motivation principle is perseverance.
Are you able to weather challenges and stay focused on goals?
And here's where you can help consumers to stay motivated
and stay on track in the face of obstacles and carry on when you are running into problems.
And then lastly, the confidence to take action, also known as financial self-efficacy.
Here's where you can support consumer's belief that they are
capable of influencing their financial outcomes and achieve the goals they set out for themselves.
And that the actions necessary to do so are appropriate and possible for them to carry
out.
So you're more likely to try to do something if you believe you can be successful at it.
I know I've heard a lot of financial educators talk about that financial confidence.
So that's what goes into principle four and Maria will say a
few things about the research behind that.
So what we have identified is that framing financial decisions to highlight its connection
to a personal goal can help inspire people to take action.
A study had social workers seal a targeted amount of savings in an envelope to encourage
participants saving for the long-term.
The social workers put the savings of some households
in blank envelopes and the savings of other households in envelopes that had the pictures
of the household's children.
Those who had savings in an envelope with pictures were less likely to open and spend
the money than those who had savings in a blank envelope.
Financial coaching helps people tap into their own strengths and work towards their goals
while building self-efficacy.
A rigorous evaluation of financial coaching programs contracted by the CFPB found
that coaching can help improve various aspects of financial wellbeing.
For example, on average, people offered access to coaching increased savings,
reduced debt, increased credit scores, and were more likely to pay bills on time.
Successive small victories with tangible results can keep people motivated for the long haul.
In the case of paying off debt, for example, there is some
evidence that people may be more successful in becoming debt free if they pay off debts
from smallest to largest rather than focusing on paying all debt
simultaneously or paying off higher interest rate debts first.
The strategies believed to work by giving people a greater sense of accomplishment and
progress on their way to reaching a larger goal.
Implementation planning can help people take the steps needed to accomplish a goal by spelling
out in advance the when, where, and how of what they will
do to reach that goal.
A study found that self-employed individuals who engage in implementation planning such
as filling out a tax preparation worksheet before going to a tax preparation session,
received substantially larger refunds on average than those in a control group.
And finally, peer support programs connect participants to a peer group in which members
are encouraged to share their experiences and challenges with
one another.
Participants may derive support from the group setting, while also feeling a certain degree
of accountability for results.
Next slide.
Then talking about what practitioners shared with us in terms of strategies for putting
principle four into practice is included -- celebrate success.
Find out what motivates the person you're serving.
Start with one thing.
Get one thing done in the first interaction with a participant such
as getting the person's credit report because it helps the person feel the satisfaction
of accomplishing something, taking the first step.
And finally, use reminders..
Great.
And here we are on principle five, make it easy to make good decisions and follow through.
This one is really in some ways the hardest to describe.
We've referenced it a couple times before, both Janneke, and Gen, and I think possibly
Maria have mentioned it, and we've -- but it's really, really important and so we wanted
to make sure that this stayed part of our principles.
And this is the idea that the situations that people encounter really influence what they
actually do.
So our actions are driven not only by our own
goals and behaviors, but also by the conditions under which we make decisions, often referred
to as the decision context.
It's a term some of you may have heard before.
The environment can both in some cases influence you to make decisions that might not be the
one you want to make, and in other cases the environment can make it easier for people
to make a sound choice that will serve them well, even if they don't necessarily proactively
choose that choice.
And so what's important here is that financial educators can help consumers to act in support
of their goals and learn to navigate those influences or
forces that are actually in their surroundings.
While some of those situational forces are of the decision context, as we say, lie outside
of a person's control, there's some that can be adjusted
or titled to help the consumer.
For example, an educator can help set up a savings account that is harder to
pull money out of if the consumer is trying to save and wants to do that.
They can help people line up due dates of recurring bills with someone's
paycheck.
You can set up automated reminders, help people setup automatic deductions to save towards
the goal.
Those are ways in which people can help manage their own decision context to make
things easier.
So we'll say a couple more things about this.
For a financial educator, the things that you can do is you can also use it to make
your own program easier to access.
You can make it easier to get financial education.
It could be as straightforward as choosing convenient times and locations for people,
lowering any sort of barrier, making it easier to get into the program initially, better
understanding what challenges people are facing when they drop
out, and understand how to help keep people in financial education.
So those are things you can do within your own program.
Secondly, as I mentioned earlier, you can help people be aware of and navigate the environment.
So even if there is aspects of the decision context that
someone can't directly change, being aware and understanding how the context is helping
or hurting you can help a consumer better make their way through
it and find out ways to overcome challenges in that regard.
And then lastly, you can also build financial education into the offering and use of products
for those of you who might be at, say, a finance institution
or in some other way involved in products.
The financial transactions themselves can present opportunities for learning, whether
it's sending an email about homebuyer counseling to someone seeking
a mortgage, or teaching someone how to manage their first bank account, you can bundle financial
education with use of products.
It's another way to build it into the very decision context.
And even the very small things can make a difference, changing the way options are presented,
or how they're framed arranged, no cost to that but it may
actually impact how people make a decision, removing obstacles that get in the way, and
offering other support that can help people bridge the gap
between their intentions and actions.
And I'll just say one more thing on the next slide -- there's a lot of interesting literature
out here about this, but it helps for you as an educator
to understand the tendencies that people have and the way people respond to the environment
around them that can influence how they make choices.
So understanding things like how people are easily
derailed by hassle.
Giving someone a long form to fill out may cause them to not do it and not show up
at your program.
Or people may stick with the easiest decision because it's difficult to make a proactive
decision and so defaults matter, what happens when someone doesn't decide matters.
Present bias, where people are more focused on the present than the future.
Mental accounting where you may see money differently depending on how you
planned to spend it and attention to salient information.
It took me years to learn what salient meant, but it means what is really in front of you,
what's the most obvious.
And so people may miss disclosures buried in small print.
Knowing all of these things can help you structure programs and help people navigate that going
forward.
So that was a long introduction but Maria will
say a few more things about this and we'll have gone through all the principles.
So in regards to what we know about what works in the decision context, we have found that
studies of programs that embed financial education into mandatory training for army
enlistees into the workplace and into programs for employment training and income assistance
for low income job seekers.
They have demonstrated positive financial outcomes when compared to similar groups that
did not receive financial education as part of the
training or service delivery.
Making it easy to access products that support the person's goals can also be effective.
A Washington, DC youth employment program made it simple
for youth participating in the jobs program to open accounts and set up automated savings
transfers.
An important percentage of participants opened new accounts, signed up for the direct deposit
of their paychecks, and for the automatic savings feature.
A study compared enrollment rates in a 401(k) plan for employees who were given the option
to sign up for the program when hired that is the program
was presented as an opt-in option with those employees who were automatically enrolled
in the program and instead could choose to opt out of the program.
Taking advantage of the tendency toward inertia, the status quo bias, which Irene mentioned,
automatic enrollment resulted in significantly higher
participation rates.
The Save for Tomorrow or Smart program gave employees the option to commit in advance
to allocate some of their future pay increases toward retirement
savings.
The average savings rate for the program participants increased substantially.
By not reducing employee's current income, the Smart program
avoided present bias.
It also helped employees overcome hassle factors and inertia by enabling them to sign up in
advance immediately after learning about the program and three months before
their next paycheck increase.
With regards to presenting information to promote healthier financial decisions, we
identify that heightening the salience of key information can have a
positive impact.
For example, by presenting different information about payday loan costs prominently to different
borrowers on a randomly assigned basis, researchers found that certain information
such as the total dollar cost can add up over time, reduce borrowing.
A different study also found that simple text message reminders were as effective as financial
incentives at helping consumers make their loan payments
on time.
And then onto the next slide, the strategies practitioners shared for putting principle
five into practice included -- make it simple and
automatic.
Embed financial education with other programs, products, or services.
Change the perception of financial education training to make it valuable.
For example, reframe the incentives or financial rewards people will receive when participating
in a program so that this would be more likely to be valued, such as present missed opportunities
as a loss.
And finally, do a process map of your program and of your program decision points to figure
out where there is participant drop off.
Analyze what could be changed to maintain engagement and follow
through.
Great.
So that was the five principles.
You've been very patient.
You've been listening for a long time.
We're going to do two other things very quickly and then we'll open up to your
questions.
But I just want to note again, if you have questions or thoughts you can send them through
the Q&A function if you want to do that now or
we'll open up for voice questions in just a minute.
We just wanted to really quickly show you some of the Bureau resources that support
these principles.
Many tools will cut across different principles.
But just to give you a flavor of how you can think about tools that support the principles,
first, for principle one, know the individual to be served.
We have several things particularly to help immigrant populations and people of limited
English proficiency, and newcomers to the financial system.
It could be newcomers to the country, it could be young workers.
Our newcomers guides, of which there are four up on the screen there along with our
paper on financial education program serving immigrants, are both examples of tools that
are targeted to particular needs and challenges of specific
populations.
For principle two, provide timely, relevant, actionable information, we would just note
things we have include the explore interest rates tool, which
gives people real-time, updated daily, mortgage interest rates for people in their approximate
situation and ZIP code, again, to help people understand
if they're getting a mortgage rate that sounds like it's like what other folks like them
are getting.
And also for someone, for example, who might have a credit issue, want to improve their
credit we have a number of one pagers like the one you see here,
how to rebuild your credit, that can give very actionable steps on how to improve your
credit history.
For principle three, improve key financial skills, we have things like the comparing
auto loans worksheet, which actually helps people to compare
different car loan choices through a worksheet the emphasizes total cost and different terms
of different loans to help people make an informed choice
and practice the skills of comparison shopping.
And also, we have a budgeting worksheet called My New Money Goal, which helps people figure
out how they can actually meet a savings goal or other money
goal through their budget and that worksheet helps people to do that.
Again, it's a skill building opportunity
For build on motivation, we have resources for financial coaches.
Coaching is a classic way of motivating people by holding them accountable and working
with them on their individual goals.
We have resources for how to implement financial coaching through a report on that topic, as
well as things like the financial rules to live by worksheets,
which is a suite of currently four worksheets that consumers can use to set a goal for themselves
around spending, or savings, or checking their credit
report, write out an action plan and sign on it.
It's on the back of the sheets.
You can't see it here.
Again, to motivate and then hold yourself accountable to meeting your own goals.
And then for principle five, make it easy to make good decisions and follow through
principle.
Our managing spending worksheet provides suggestions for
consumers on how to get real-time feedback or close to real-time feedback on their spending
so they can know in the moment whether the next purchase
they want to make fits into their spending.
And so that's understanding the context of their decision in the moment and that worksheet
has thoughts on that.
And then lastly, we have tax time savings resources.
That's a moment in time when people are getting money, making money decisions.
They have money coming in, in some cases, if you're getting
a refund.
And we have worksheets to help encourage people to put some of that refund into savings if
it meets their goal.
That's another example of making a decision easier by allowing you to save automatically.
So those are just quick examples of how our tools fit.
There are many other things out there that we have, as well as lots of other organizations,
things you all use that would probably fit well into
these different principles.
Just quickly, someone asked via the Q&A that these forms or worksheets look great.
Are they available on your website?
And the answer is absolutely.
Absolutely everything you see today is available on our website.
Someone else asked for the link to report.
We'll put up the link to the website in just a minute.
So we just wanted to show you those tools to see how some of the things we have map
onto the principles.
We're going to have one more slide by Genevieve about how to measure all this and then we
will open it up to questions and comments.
So Genevieve?
Thank you, yes.
Our last content slide here.
Hi, everyone.
So before we conclude the presentation and get into the Q&A, I did
just want to say a quick word about advancing effectiveness in our field through measurement
and this is the concluding section of the report too.
So I'm going to talk about this at a really high
level and if any of this intrigues you, feel free to ask questions in the Q&A but also
there's more detail on all of these approaches in the report as well.
The whole purpose of this report and these principles that we've been talking about today
is to promote and help us all communicate about effectiveness
in financial education.
And if we as a field are going to continue to advance our collective understanding of
what works, we need to have a way to measure and communicate the effectiveness of different
programs and approaches going forward.
So we wouldn't be able to be presenting you with all of these tested and demonstrated
strategies today if someone had not already gone to the trouble of
doing the measurement and doing the research to demonstrate that it works and we're grateful
to everyone who's ever done that, which is probably many of
you as well.
In the report, we lay out three potential approaches to this type of measurement.
They're shown here on the screen labeled 1, 2, 3 and also the possibility
of integrating all three approaches to describe and measure a full programmatic theory of
change.
So the approaches are first, focusing on measuring the
specific effects a given program is intended to have related to the model of financial
action, such as changes to know how, motivation, or opportunity to
take a specific action.
And that's very program specific.
That would be very much thinking about my particular program is explicitly trying to
support action through changing strengthening the
motivation muscle through teaching new and timely, relevant, actionable information,
et cetera.
Whatever it is that very specific program is doing, this
would be an approach to kind of tracking that in a very specific way around interim changes
and is that supporting consumer action-taking.
The second approach would be measuring a common set of core outcome metrics that be designed
for use across a range of different programs and strategies,
and several different ones have been proposed over the last few years.
You may have heard of the financial capability scale.
You may have heard of CSFI's financial health work.
The CFPB actually very recently, just last month from our Office of Financial Empowerment,
put out a recommended set of five core outcomes that could be broadly relevant across
all kinds of financial empowerment programs with suggested metrics.
So all of those citations that I just said are in the report, but those are all examples
of rather than focusing on the really specific details of one
intervention, thinking more about what's a common set of metrics across programs.
Personally, I would recommend doing both and combining it with the
third.
That's my preferred approach but these are all options.
And then the final one would be measuring the ultimate and common goal of all financial
education strategies, which we believe to be improvement in financial well-being.
And we think at the CFPB have developed a short and simple tool to measure individual
financial well-being, which is available on our website.
So you could do the full theory of change from I'm
helping strengthen the motivation muscle, the downstream effect on financial health
and capabilities, the following, then ultimately, improvements in
financial well-being.
You could do all of those things or choose one or more of those approaches.
So I will leave that there and happy to discuss any of those later and I will turn it to Irene
now for the Q&A.
Thank you.
Great.
Well, thank you everybody.
That was a lot of listening.
We appreciate all of you who have stayed with us through all of this.
So what we're going to do now is turn to -- we've got a few minutes for questions, comments,
thoughts.
I'll just note that I put up on the screen now,
in particular the middle line there, sign up for FinEx.
But also, if you want the slides, again, email CFPB_FinEx@cfpb.gov and I can send you the
slide deck after the webinar so you can see all
that.
Also almost all the resources we put up today you could get on the adult financial education
page.
That URL is up there.
I will admit, though, that the principles paper is not there yet because
it only came out last week and we haven't yet gotten it up onto that page.
So you may have to just go to our main page and put into the search function
"principles" and it will come up.
But it will get up there eventually.
So let's open up for questions.
Operator, can you tell people how to ask voice questions and then I'll also be reading a
couple questions we've gotten via the Q&A function.
Yes, at this time if you would like to ask question, please press star one.
Please unmute your phone and record your first and last name
clearly when prompted.
Your name is required to introduce your question.
To withdraw your question you may press star two.
Once again at this time, if you would like to ask a question please
press star one.
Great.
Okay, so what I'm going to do is read the one question we've gotten through Q&A while
people potentially are requesting to do a voice question and this is a very interesting
question and not an easy one.
Selma has asked, is there any research done by the CFPB around limiting beliefs.
Given the population we serve, we find that limiting beliefs is choking all the motivations,
inspirations, and incentives we offer.
Wow, powerful statement.
So people having beliefs, I assume that they can't succeed or don't have access or whatever.
So do we have anything to say on that?
Everyone is shaking their heads very hard.
It's a very interesting and valuable question.
What we're doing is looking at a little bit about the emotions around money and how
family and friends influence your financial decisions but we haven't looked at limiting
beliefs.
I think it's a really good point.
This is Gen.
The only thing I'll add that I think might be related is that a number of our kind of
research scans indicate that helping people experience success, sort of
the ability of simulations or real world experiential learning to help people increase their financial
self-efficacy may be a good strategy.
So options could include kind of showing people that people like them have accomplished these
things.
That might make it seem more feasible, these peer group
settings where people's peers talk about how they have accomplished these things and then
it can seem like oh, well, these people are like me.
They did it.
Maybe I can too and then the other option being helping -- sort of holding their hand
through actually successfully completing a financial action
could be a way to boost their self-efficacy as well.
I think also this idea of small gains and then rewarding success, even if it's small
and they're little steps.
Great.
Okay, let me ask, operator, do we have any voice questions?
I'm currently showing no questions on the phone line.
And any of you who see the chat, I of course had a typo in my attempt to send out the link
to somebody so I'm sending out the correct link
now.
There was something missing.
There, if anyone is looking at that.
That should work hopefully.
I don't have any other Q&A questions and we're two
minutes to close.
So I want to thank everybody -- again, I know this was an unusually content heavy webinar.
I hope it was useful.
Just to add to what Janneke had said at the beginning, we really
hope that this is something that these principles and all the research and practitioner strategies
-- and there's actually more practitioner strategies
in the appendix of the report than even was shown in the webinar -- we hope that all of
that is useful to you.
It's a starting point for us.
We are eager to get feedback on the principles, to hear what you have to say, to think about
additional strategies, to think about how to add to all of this.
Someone says that link didn't work either.
Okay, my final suggestion is go to our consumerfinance.gov website
and put in effective financial education in the search bar.
Apparently, I cannot type in the link correctly.
My apologies.
I know it is up there.
I printed it out today.
But we really hope that this is a starting point for everyone.
We're very eager to hear more.
So feel free to email the FinEx inbox, CFPB_FinEx@cfpb.gov to get the PowerPoint or to ask any questions.
We urge you to read the whole report.
There's actually a lot of interesting stuff in there.
I re-read it last night and I was like this is pretty darn interesting.
So I want to thank all the speakers, Genevieve, Maria, and Janneke
and everyone who has been on the call, and we will end right now.
Thanks again everybody.
Thank you for participating in today's conference.
All lines may disconnect at this time.
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