Officials at the U.S. Treasury Department might put most federal agency financial literacy and education content on one website.
Lawmakers, meanwhile, want to have tools they can use to figure out how well financial education programs are actually working.
Members of the Senate Health, Education, Labor and Pensions retirement security subcommittee talked about those issues Tuesday, at a round table hearing on financial literacy programs.
The witness list included Vishal Jain, a financial wellness officer at Prudential Financial Inc., and Jovita Carranza, the treasurer of the United States.
Sen. Mike Enzi, R-Wyo., the chairman of the subcommittee, said he has been interested in the topic of financial literacy since the days when he was mayor of a town in Wyoming. He cited results from researchers who found a U.S. financial illiteracy rate of 63%.
“Financial literacy is fundamental to navigating this world,” Enzi said.
But, so far, the country has done a poor of job of expanding knowledge about personal finance, he said.
The U.S. federal government has operated large-scale, formal financial education programs since at least as far back as the days of the Great Depression.
Congress created an agency to coordinate federal financial education efforts, the Financial Literacy and Education Commission (FLEC), by passing the Financial Literacy and Education Improvement Act of 2003.
FLEC began meeting in 2005, but investigators at the U.S. Government Accountability Office (GAO), an agency that helps Congress keep track of what’s going on in the rest of the government, suggested as early as December 2006 that FLEC leaders appeared to have trouble with setting clear performance benchmarks.
GAO investigators reported in 2011 that federal agencies were still running dozens of different federal financial literacy programs, but that the agencies had no great way to measure the impact of the programs.
What Steven Mnuchin Wants
Carranza testified at the hearing that FLEC now includes 23 federal entities.
Treasury Secretary Steven Mnuchin is FLEC’s chair.
In 2017, the agencies that belong to FLEC spent about $250 million on financial literacy and education efforts, Carranza said.
“Some of these efforts were duplicate and lacked clear measures of effectiveness,” Carranza said.
A FLEC steering committee has been working to assess the effectiveness of existing programs. The teams are covering seven different “functional areas,” including: savings and retirement, wealth preservation, credit and borrowing, home ownership, student loans, entrepreneurship, and the plight of unbanked and the underbanked.
The teams believe that the federal agency operates about 40 different financial education websites, and that about 25% of the content is present on two or more of the sites, Carranza said.
“As part of FLEC reform, Treasury is exploring consolidation of federal financial literacy and educational content onto a single web platform,” Carranza said.
Carranza said that officials are also considering the possibility that some agencies, such as the U.S. Department of Defense, may need to maintain specific websites aimed at specific populations of users.
Prudential has been promoting the concept of “financial literacy” and “financial wellness” for years.
It has developed a financial wellness program for its own employees that includes improved child care and adult care benefits; auto-enrollment and auto-escalation features for its retirement plans; and access to budgeting and on-site financial education help.
“Prudential’s financial wellness program has reduced the reported levels of financial stress by almost 50%,” Jain testified.
Prudential has other research showing that reductions in financial stress can reduce an employer’s health care costs, disability costs and absenteeism.
Combining the earlier research with the results of the financial stress reduction suggests that the Prudential financial wellness program has probably cut the company’s costs and improved productivity, Jain said.
Measuring the Impact
Enzi said in his open remarks that he always asked of financial education programs, “What are we trying to do, and how do we know if we’ve done it?”
He asked Jain specifically about how Prudential goes about measuring the impact of its wellness programs, and assessing the metrics it uses.
“We’re still in the early stages,” Jain said.
But Jain said Prudential is interested in developing metrics in three major areas: engagement, or how much employees use the tools available; the effects of the tools on what employees do; and the effects of the tools on the employer’s costs and productivity.
In some cases, using those metrics will require employers or others to collect new types of data, Jain said.
More information about the hearing, including a video recording of the hearing, is available here.
— Read Feds To Develop Financial Literacy Education Strategy, on ThinkAdvisor.