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Financial Planning > Behavioral Finance

GAO: Consumer Ed Agency Needs Specific Goals

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The federal Financial Literacy and Education Commission has had trouble setting clear performance benchmarks or attracting many telephone hotline calls.

Officials at the U.S. Government Accountability Office have published those conclusions in an assessment of the 3-year-old commission’s progress.

Congress called for the creation of the commission in the Financial Literacy and Education Improvement Act of 2003.

The commission is supposed to educate members of the public about topics such as financial planning, retirement planning and paying for education as well as matters such as saving and starting a small business.

The secretary of the Treasury is the chairman of the commission, which is supposed to draw on information and other resources from a total of 20 federal agencies.

The commission has trouble getting things done because it must persuade the 20 federal agencies to reach a consensus but has no legal authority to direct the agencies to reallocate resources or take other actions, Yvonne Jones, a GAO director, writes in the GAO report, which was prepared for the leaders of the Senate Banking, Housing and Urban Affairs Committee and the House Financial Services Committee.

The commission was supposed to develop a National Strategy for Financial Literacy by June 2005, but it could not release the strategy until April of this year, in part because 2 regulatory agencies participating in the commission refused to let the strategy authors refer to private and nonprofit entities outside the federal government by name, Jones writes.

The 2 regulatory agencies “said that a potential conflict of interest existed if they were perceived to be endorsing a program run by an entity that was potentially the subject of an enforcement action,” Jones writes.

Eventually, the commission published the strategy without outside entity names, but it included the outside organizations’ names in separate document, the “National Strategy for Financial Literacy: Quick Reference Guide,” Jones writes.

The strategy does a good job of identifying the financial literacy issues that must be addressed, but most of its recommendations, or “calls to action,” are either descriptions of existing initiatives or are broad pronouncements that do not include specific implementation plans, Jones writes.

The financial literacy commission’s Web site, at Document Link, attracted 628,000 visits in fiscal year 2006, but a related telephone hotline receives an average of fewer than 1,000 calls per month, Jones reports.

But GAO figures show the telephone hotline did get more than 14,000 calls in April.

Although the law that created the commission permitted it to include links on its Web site to outside sites with noncommercial content, the commission has declined to do so, Jones writes.

The GAO is recommending that the commission improve its performance by including measurable performance goals in its strategy, conducting Web site customer satisfaction surveys, getting independent reviews of federal financial literacy activities, and making more efforts to build partnerships with nonprofit and private entities.

A copy of the GAO report is on the Web at Document Link


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