CFPB Releases Lessons Learned from Financial Education Providers

Throughout 2012 the Consumer Financial Protection Bureau (CFPB) sought insight into effective financial education from organizations across the the country. Through an Request For Information (RFI) process and individual meetings at four regional sites, the CFPB compiled and distilled the lessons learned from the field. Last fall IABG partnered with Heartland Human Care Services Asset Building Program to submit comments in response to this RFI, and many of our own lessons learned in the field are mirrored here in CFPB’s report. What they found was that “more successful programs, by comparison, build on individual successes around money. These organizations use what the client is doing right, and show them how they can do even better. For example, programs that focus on planning and building tend to be more successful than programs focused on learning, repairing, or fixing.”

In the document Feedback from the Financial Education Field, the CFPB provides advice on how to “make it STIC” (Salient, Timing, Integration, Comprehensive).

Make it STIC – Four keys to making your financial education services more effective.

Make it Salient

• Create culturally appropriate and language accessible materials – This is relevant for not only non-English speakers, but native English speakers as well as instruction in plain-language are received better.
• Present information at levels that consumers can understand – Presenting in a clear straightforward way reduces feelings of being overwhelmed with information.
• Focus on behavior change – Customize financial education strategies to focus on aligning behavior to successfully navigate the financial services marketplace and achieve their goals.
• Context Matters – Use strategies that incorporate lessons about behavior. For example: reduce hassles by eliminating long forms or waiting lines, and increase participation through default-in instead of opt-in.

Timing is Key

• Start financial education young – Begin in elementary school continuing all the way to high school.
• Use “teachable moments” – Clients who are ready to buy a home, need a bank account for a new job’s direct deposit, or want to get out of a cycle of  debt are highly motivated to learn and adopt positive behavior changes.
• Go where consumers are – Providing financial education in locations like workplaces, schools, or community centers at convenient times increases access and participation.
• Technology can complement face-to-face services – Text reminders about plans, goals or payments, or skype counseling and be effective reinforcing methods.

Integration Within Other Systems

• Use “Touch points” – Pairing financial education with relevant existing services like employment services where case workers have been trained in financial education can lead to better outcomes for both individual service programs.
• Integrating financial education in the school system – Systemic integration into existing K-12 curricula is a promising, but underutilized practice as reaching students early can help transition them into adulthood where they make important financial decisions.

Make it Comprehensive

• Identify government systems to embed financial education – Using existing touch points like receiving government benefit payments increases effectiveness.
• Make Financial Education a continuum over a lifetime – Financial education cannot be a one-time intervention, but must continue over a lifetime as our financial decisions change.
• High-touch financial education approaches are promising – Financial coaching has shown positive outcomes by personalizing a financial plan to reach identified goals.

CFPB’s Future Involvement in Financial Education

The CFPB’s Office of Financial Education (OFE) plans to expand the already available list of publication resources that financial education providers might find useful. Programs can order up to 300 copies of the initial set of resources free. In addition, expect future information and resources on the effectiveness of financial coaching and which types of financial education knowledge lead to the best outcomes. Lastly, they have already started their Innovation Project which will pilot test behaviorally informed strategies for financial decision making. We will continue to keep you informed of useful CFPB updates as well as any new research, policies, best practices, and regulations related to asset building.