    Highlights of a GAO Forum: The Federal Government's Role in
    Improving Financial Literacy (15-NOV-04, GAO-05-93SP).

    Research has shown that many Americans lack the knowledge of
    basic personal economics they need to make informed financial
    judgments and manage their money effectively. Yet financial
    literacy is increasingly important in a world where consumers
    must choose from an array of complicated financial products and
    services and employees must take on more responsibility for their
    retirement savings. Title V of the Fair and Accurate Credit
    Transactions Act of 2003, known as the Financial Literacy and
    Education Improvement Act, created the Financial Literacy and
    Education Commission, comprised of 20 federal agencies, and
    charged it with coordinating federal efforts and developing a
    national strategy to promote financial literacy. The act also
    mandated that GAO report on recommendations for improving
    financial literacy among consumers. To help in developing our
    work, on July 28, 2004, GAO hosted a forum on the role of the
    federal government in improving financial literacy. Forum
    participants included experts in financial literacy and education
    from federal and state agencies, the financial industry,
    nonprofit organizations, and academic institutions. Participants
    discussed the topics federal efforts should cover, populations
    that should be targeted, methods of delivering information, and
    the role of program evaluation.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-05-93SP
        ACCNO:   A13412
      TITLE:     Highlights of a GAO Forum: The Federal Government's Role
    in Improving Financial Literacy
         DATE:   11/15/2004
      SUBJECT:   Consumer education
    	     Financial management
    	     Government information dissemination
    	     Interagency relations
    	     Reporting requirements
    	     Conferences
    	     Public/private partnerships

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    GAO-05-93SP

    [IMG]

    November 2004

    HIGHLIGHTS OF A GAO FORUM

             The Federal Government's Role in Improving Financial Literacy

    What Participants Said

    Forum participants offered a number of suggestions regarding the federal
    government's role in improving Americans' financial literacy:

    o  	The federal government should serve as a leader. The federal
    government should use its influence, authority, and "bully pulpit" to make
    financial literacy a national priority. However, given that a wide array
    of state, local, nonprofit and private organizations already provide
    financial education, the federal government's role should largely be
    supportive, filling the gaps left by others and serving as an unbiased
    source of information.

    o  	Increased public-private partnerships and interagency coordination are
    needed. Partnerships between federal agencies and other organizations are
    the best way to use scarce resources efficiently, facilitate the sharing
    of best practices, and help federal agencies reach targeted populations at
    the community level. In addition, federal financial literacy efforts
    should be integrated across agencies and consolidated to focus on those
    agencies with the most expertise and best track records in this area.

    o  	Consumers need financial information on a broad range of topics. Among
    the most important topics for financial education are basic skills-such as
    budgeting, planning, and managing money-as well as information on saving
    for retirement, investing, and managing credit. Financial education should
    be delivered at "teachable moments" when the information is applicable to
    a person's life. Participants' views varied on the need to incorporate
    into financial education broader issues such as the implications to
    individuals of the budget deficit and long-term fiscal challenges facing
    the nation.

    o  	A variety of methods are needed to deliver financial education
    effectively. Participants said that the federal government should sponsor
    a major media campaign with a clear and simple message and find ways to
    ensure that existing financial education materials are more widely
    disseminated. Participants also emphasized the importance of personal
    interaction-such as one-on-one counseling-and of including financial
    education in school curriculums. To this end, they said the U.S.
    Department of Education needs to deepen its commitment to financial
    education.

    o  	Financial literacy programs need to be evaluated. Program evaluation
    ideally should assess outcomes, such as the impact on participants'
    personal savings. The federal government can facilitate others' evaluation
    efforts by developing or supporting standardized evaluation tools, serving
    as a national clearinghouse for evaluation efforts, and disseminating best
    practices.

                     United States Government Accountability Office

                                        Contents

    Letter 1

    Financial Literacy:

    The Federal Government Should Serve as a Leader in Efforts to
    Highlights of Forum Improve Financial Literacy
    Discussion Increased Public-Private Partnerships and Interagency

    Coordination Are Needed
    Consumers Require Financial Information on a Broad Range of
    Topics
    While All Consumers Need Financial Education, Certain
    Populations Need to Be Targeted
    A Variety of Methods Are Needed to Deliver Financial Education
    Effectively
    The Federal Government Should Conduct and Facilitate Program
    Evaluation

                                                                 5 5 6 8 10 11 13

    Appendixes

    Appendix I: Forum Participants 17

    Appendix II: Related GAO Products 20

    This is a work of the U.S. government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed in
    its entirety without further permission from GAO. However, because this
    work may contain copyrighted images or other material, permission from the
    copyright holder may be necessary if you wish to reproduce this material
    separately.

    Comptroller General of the United States

    United States Government Accountability Office Washington, D.C. 20548

    November 15, 2004

    The Honorable Richard C. Shelby
    Chairman
    The Honorable Paul S. Sarbanes
    Ranking Minority Member
    Committee on Banking, Housing, and Urban Affairs
    United States Senate

    The Honorable Michael G. Oxley
    Chairman
    The Honorable Barney Frank
    Ranking Minority Member
    Committee on Financial Services
    House of Representatives

    Subject:	Highlights of a GAO Forum: The Federal Government's Role in
    Improving Financial Literacy

    Faced with growing evidence that large numbers of Americans lack knowledge
    about basic personal economics and financial planning, policymakers and
    others have begun to focus increasing attention on the state of financial
    literacy in the United States. Financial literacy can be defined as the
    ability to make informed judgments and to take effective actions regarding
    the current and future use and management of money. It includes the
    ability to understand financial choices, plan for the future, spend
    wisely, and manage the challenges that come with life events such as a job
    loss and saving for retirement or a child's education. A lack of financial
    literacy affects consumers' economic well-being and security in a variety
    of ways. Poor money management and financial decision making can lower a
    family's standard of living and interfere with crucial long-term goals,
    such as buying a home and financing retirement.

    Financial literacy has broader public policy implications as well. The
    financial markets work best when consumers understand how financial
    services providers and products work and know how to choose among them.
    Further, informed consumers can help discipline markets by choosing
    appropriate financial investments, products, and services. In addition,
    our income tax system requires citizens to have an adequate understanding
    of the tax system and financial matters in general. Educated consumers are
    also essential to well-functioning retirement systems-consumers must
    understand, for example, that Social Security is

    not intended to be an individual's only source of retirement income.
    Finally, financial literacy is important in ensuring that Americans who
    receive public assistance successfully transition to greater
    self-sufficiency.

    However, there is evidence that financial literacy in America needs to be
    improved. For example, a 2003 national survey by AARP of consumers aged 45
    and older found that they often lacked knowledge of basic financial and
    investment terms. Only about half of respondents, for instance, reported
    knowing that diversification of investments reduces risk. Similarly, in a
    recent survey of 4,000 high school seniors conducted by the Jump$tart
    Coalition for Personal Financial Literacy, students correctly answered an
    average of only 52 percent of questions on basic personal finances. Yet a
    number of trends have emerged in recent years that underscore the
    importance of financial literacy in everyday life.

    o 	Consumers are faced with a wider and increasingly complicated array of
    options for managing their personal finances and selecting investments and
    credit products.

    o 	Technological advances have increased the capacity for targeted
    marketing to consumers, potentially increasing some consumers'
    vulnerability to predatory lenders and other unscrupulous providers of
    financial services.

    o 	Consumers are increasingly responsible for their own retirement
    savings, with traditional defined-benefit retirement plans becoming
    increasingly rare.

    o 	The personal saving rate has fallen dramatically, declining from nearly
    7 percent of gross domestic product in the 1970s and 1980s to around 2
    percent in recent years.

    o 	Household debt as a percentage of income hovers at record high levels.
    In addition, bankruptcy rates have more than quadrupled in the past 20
    years.

    Finally, I believe that a clear understanding of the country's overall
    financial condition and future fiscal outlook is an indispensable part of
    true financial literacy. The financial futures of the American people are
    shaped not only by their own personal planning and individual investments
    but also by the fiscal choices made in Washington. The official U.S. gross
    debt now stands at more than $7 trillion, and that does not include tens
    of

    trillions in unfunded Social Security and Medicare benefits, veterans'
    health care, and a range of other commitments and contingencies. Due to
    current demographic trends, rising health care costs, and other factors,
    we face the possibility of decades of mounting deficits, which left
    unchecked will threaten our economic and national security, while also
    adversely affecting the quality of life and opportunities available to
    future generations. Americans must be aware of these developments in
    planning for their own financial futures, since, for example, we can no
    longer assume that current federal entitlement programs will continue
    indefinitely in their present form.

    Currently, about 20 different federal agencies operate about 30 different
    programs or initiatives related to financial literacy. In addition,
    federal agencies often partner with the multitude of nonprofit, industry,
    state, and local entities that sponsor, fund, or operate their own
    financial literacy initiatives. These efforts cover a wide variety of
    topics, target a range of audiences, and include classroom curricula,
    print materials, Web sites, broadcast media, and individual counseling. In
    Title V of the Fair and Accurate Credit Transactions Act of 2003, known as
    the Financial Literacy and Education Improvement Act,1 Congress created
    the Financial Literacy and Education Commission (the Commission). The
    Commission is made up of 20 federal agencies and is charged with
    developing a national strategy to promote financial literacy and education
    for all Americans. The Commission is also charged with coordinating
    financial education efforts among federal agencies and between the federal
    government and state and local governments, nonprofit organizations, and
    private enterprises. The Commission is to identify areas of overlap and
    duplication among federal financial literacy activities.

    The act also mandated that GAO report on recommendations for improving
    financial literacy among consumers.2 On July 28, 2004, GAO hosted a forum
    to develop recommendations on the role of the federal government in
    improving financial literacy among consumers. The forum's participants
    included a select group of individuals with expertise in financial
    literacy and education. They included representatives of federal and state
    agencies, the financial industry, nonprofit organizations, and academic

    1 Pub. L. No. 108-159, Title V, 117 Stat. 2003 (codified at 20 U.S.C. S:S:
    9701 - 08).

    2 See 20 U.S.C. S: 9706(b). This provision also mandated GAO to assess the
    extent of consumers' knowledge and awareness of credit reports, credit
    scores, and the dispute resolution process. This issue will be addressed
    in a forthcoming GAO report.

    institutions. Participants were asked to consider the appropriate role of
    the federal government in financial literacy, particularly in relation to
    the role of state and local government agencies, nonprofit organizations,
    and financial services institutions. Participants discussed how the
    federal government could coordinate its efforts and partner with others
    more effectively. They also discussed the appropriate topics, target
    populations, and methods of delivery for federal financial education
    efforts and the role of program evaluation.

    Following is a summary of the discussion among the forum participants.
    Appendix I provides a list of the participants. Appendix II lists GAO
    products on issues related to financial literacy. This report will be
    posted on our Web site at www.gao.gov. For additional information on our
    work related to financial literacy, please contact Thomas J. McCool,
    Managing Director, Financial Markets and Community Investment, on (202)
    512-8678 or at mccoolt@gao.gov. Key contributors to this report include
    Allison Abrams, Jason Bromberg, Davi M. D'Agostino, Debra Johnson, Yvonne
    Jones, Mona Nichols, and Wendy Wierzbicki.

    I wish to thank all of the participants of this forum for taking the time
    to share their knowledge and insights on financial education and on the
    role of the federal government in improving America's financial literacy.
    I look forward to working with them and others on this important issue in
    the future.

    David M. Walker Comptroller General of the United States

    Financial Literacy: Highlights of Forum Discussion

    On July 28, 2004, GAO hosted a forum to develop recommendations on the
    role of the federal government in improving financial literacy among
    consumers. Participants discussed the federal government's overall role in
    financial literacy as well as issues of coordination and partnership,
    topics for financial education, target populations, methods of delivery,
    and the role of program evaluation. The following summarizes the
    collective discussion of the forum participants as well as subsequent
    comments received from participants based on a draft of this report.

    The Federal Government Should Serve as a Leader in Efforts to Improve
    Financial Literacy

    Forum participants discussed the appropriate role for the federal
    government in improving financial literacy. They emphasized that the
    federal government should use its influence and authority to make
    financial literacy a national priority. In large part, its role should be
    to fill gaps left in the financial education efforts of the nonprofit and
    private sectors.

    o 	The federal government should serve as a leader. Participants
    emphasized that for a federal financial literacy effort to be successful,
    the driving force must come from the highest levels, such as the President
    or a cabinet secretary. Efforts to make financial literacy a prominent
    national issue can not come solely from the grassroots level but require
    exercising the "bully pulpit" of federal leadership. Further, this
    leadership must have a strong enough passion about financial literacy to
    keep the nation focused on the issue. One participant said that an
    important figure or agency must take the issue of financial literacy as a
    "life purpose," noting that the success or failure of federal efforts
    could depend on the effectiveness of the Department of the Treasury's
    Office of Financial Education. Some participants noted that making
    financial literacy a sustained priority would be difficult, particularly
    given the federal government's current focus on terrorism and foreign
    issues. Participants were complimentary of Congress's creation of the
    Financial Literacy and Education Commission. However, one participant
    noted that given the large number of issues that Congress takes up, it can
    be a challenge to keep its attention focused on any one issue for an
    extended period of time.

    o 	The federal government's role in financial education should be to fill
    the gaps left by others and serve as an unbiased source of information.

    Participants said that the federal government exists to serve its citizens
    by addressing a broad set of needs. With regard to improving financial
    literacy, the government should direct its efforts to the gaps in
    coverage-topics and populations that are not being addressed

                   Financial Literacy: Highlights of Forum Discussion

    adequately by the financial education initiatives of the nonprofit and
    private sectors. Some participants noted that while the corporate world
    has some very good financial education initiatives, the private sector is
    ultimately driven by the bottom line and may not always be motivated to
    devote resources to broad-based, noncommercial consumer financial
    education. For this reason, it is important for the government to serve as
    an objective and unbiased source of information, particularly in terms of
    helping consumers make wise decisions about the selection of financial
    products and services. Many participants also said that consumer
    protection is a natural role for the government, especially in those cases
    where the private sector does not have a vested financial interest of its
    own at stake. One participant noted that the federal government should
    ensure that the mandated disclosures on many financial products, such as
    mutual fund prospectuses and mortgage forms, are useful and readable-that
    is, that they actually serve to help inform and protect consumers rather
    than simply protect companies against legal liability.

    Increased Public-Private Partnerships and Interagency Coordination Are
    Needed

    Federal agencies often partner with nonprofit and industry organizations
    that sponsor, fund, or operate financial literacy initiatives.
    Participants said that such partnerships are essential and suggested
    measures the federal government can take to facilitate them. Participants
    also recommended that the federal government improve coordination of the
    many financial literacy programs that exist among multiple federal
    agencies. They suggested that the federal effort be streamlined to avoid
    duplication and concentrate resources on those federal agencies best
    equipped to provide financial education.

    o 	Public-private partnership is key. Participants said that there are
    many benefits to the development of partnerships involving the federal
    government, the states, industry groups, and nonprofit organizations in
    efforts to improve financial literacy. They noted that partnering

    o  makes the most efficient use of scarce resources,

    o 	facilitates the sharing of best practices among different
    organizations,

    o 	helps the federal government reach targeted populations via
    community-based organizations at the grassroots level, and

    Financial Literacy: Highlights of Forum Discussion

    o 	facilitates coordination of the increasing number of financial literacy
    programs that exist nationwide.

    Participants felt that in general the federal government should seek to
    build on rather than duplicate the financial education efforts that have
    been undertaken at the community level. Finally, organizations should
    understand their comparative advantage. For example, one participant noted
    that while the Federal Reserve System is good at creating financial
    education materials, community groups are good at distributing them. With
    effective partnerships, each organization has a role and can focus on what
    it does best.

    o 	The federal government can take measures to increase public-private
    partnerships. Two participants said that the federal government should
    provide stronger incentives to corporate America to support financial
    literacy programs, because the private sector will not necessarily provide
    such programs otherwise. The Community Reinvestment Act is one example of
    the federal government's efforts to encourage financial institutions to
    support financial literacy in communities they serve.3 One participant
    also cited the Department of Defense's Financial Readiness Campaign as an
    example of effective partnering, noting that the campaign brought together
    26 agencies and organizations from the private and public sectors to help
    improve financial literacy among members of the military. Another
    participant cited Jump$tart as an effective model of partnership because
    it brought together a variety of players.4 One suggested that the federal
    government consider more collaboration with financial planners, who have
    direct contact with consumers and thus are well positioned to provide
    financial information. Because financial planners and other private
    parties often sell financial services and products, however, public
    agencies need to establish ground rules for such collaborations that
    address any potential

    3 The Community Reinvestment Act (CRA) holds banks and savings
    institutions accountable for meeting the credit needs of all communities
    they are chartered to serve, including lowand moderate-income communities.
    Under the legislation, federal banking agencies periodically evaluate
    banks to ensure that they are attentive to community needs. A bank's
    efforts to improve financial literacy in the community may be taken into
    account in assessing CRA performance.

    4 The Jump$tart Coalition for Personal Financial Literacy is a Washington
    D.C.-based nonprofit organization whose mission is to improve the personal
    financial literacy of young adults. Jump$tart has more than 140
    participants, including government, nonprofit, and corporate entities.

                   Financial Literacy: Highlights of Forum Discussion

    conflicts of interest. One participant also said the federal government
    should facilitate more intergovernmental partnering. States and localities
    tend to look to the federal government for leadership, and federal
    agencies can do more to bring together state treasurers, state securities
    commissioners, governors, and others in support of efforts to improve
    financial literacy.

    o 	Federal interagency and intra-agency efforts should be better
    coordinated. Participants generally believed that the federal government
    is doing good work providing financial education and promoting financial
    literacy, but some were concerned about the possibility of duplication
    among programs and the number of federal agencies involved in these
    efforts. It was felt that the federal financial literacy effort should be
    streamlined so that agencies with the most expertise and best track
    records in this area would be doing the work. One participant stated some
    federal programs were being managed by individuals with insufficient
    background in financial education issues. Another participant noted that
    the Department of the Treasury's Office of Financial Education, created in
    2002, represented a good first step because it served as a central point
    of contact for federal financial literacy efforts. Participants also
    believed that the federal Financial Literacy and Education Commission
    would play a beneficial role in coordinating federal activities. The
    Commission, participants said, would raise the profile of the financial
    literacy issue among agency leadership, coordinate the work of multiple
    federal agencies, and create an overall federal strategy for improving
    financial literacy. One participant also noted that coordination of
    financial literacy efforts within federal agencies needed to be improved.
    As an example, the participant cited an incident involving staff who were
    working on a financial literacy initiative, unaware that a similar effort
    was under way elsewhere in the agency.

    Consumers Require What topics should federal efforts to promote financial
    literacy emphasize?

    Forum participants said that basic money management skills are
    mostFinancial Information essential and that individuals should be
    educated on meeting future on a Broad Range of financial obligations.
    Investment and retirement savings were also Topics commonly cited as
    important topics. But participants views varied on the

    need to incorporate into financial education broader issues such as the
    budget deficit and long-term fiscal challenges facing the nation.

    Financial Literacy: Highlights of Forum Discussion

    o 	Consumers need some basic knowledge if they are to make responsible and
    informed financial decisions. Participants agreed that federal financial
    literacy efforts should first and foremost aim to give consumers the basic
    financial knowledge and skills needed to make responsible financial
    decisions. Budgeting, saving, money management, and basic financial
    planning were frequently cited as the most essential topics for a
    financial education strategy. Participants also thought that consumers
    would benefit from more education on credit, including the cost of credit
    and how to use and manage credit responsibly. Two participants discussed
    the importance of encouraging consumers to do more research into products
    and services before making a purchase, noting that many consumers make
    imprudent decisions because they fail to comparison shop. Several
    participants also cited the importance of providing education on consumer
    protection issues, especially on avoiding fraud.

    o 	The federal government should prepare consumers for future financial
    challenges. Participants said that the federal government should educate
    individuals on meeting future financial obligations such as paying for
    health care and saving for retirement. For example, participants said that
    consumers need more information on planning for health care expenses in an
    era of rising medical costs and increasing longevity. One participant
    commented that the best way to prepare consumers for a financially sound
    future is to help them find and retain employment. As part of this effort,
    youth and new immigrants should be educated on the nation's
    entrepreneurial business culture so that they are better prepared to enter
    the workforce.

    o 	Investing and saving for retirement should be an important focus of
    financial education. In an era when employees are increasingly expected to
    take responsibility for funding their retirements, several participants
    stressed the importance of educating consumers on investing wisely and
    saving for retirement. Participants said that consumers need instruction
    on basic investment principles, such as the comparative risks of different
    types of investments and the need to diversify investments to reduce risk.
    In addition, consumers need more information on saving to accumulate
    enough retirement funds to last the duration of their lives. One
    participant encouraged the federal government to reach workers who are on
    the cusp of retirement with information on making the transition from
    saving for retirement to living off of investment income and Social
    Security. Several participants recommended that the federal government use
    the annual statements

                   Financial Literacy: Highlights of Forum Discussion

    that the Social Security Administration sends to most Americans as a means
    of delivering some of this financial education.

    o 	Views differed on the need to educate consumers about the budget
    deficit and long-term fiscal challenges facing the nation. Participants
    were asked whether the federal government should include, as part of its
    financial literacy effort, information on issues such as the federal
    budget deficit and the implications of the nation's long-term fiscal
    imbalance. Some participants felt the topic was too complex for the
    average consumer to understand or to factor into the financial
    decisionmaking process. They encouraged the federal government to keep the
    messages related to financial literacy simple in order to reach as many
    people as possible. Others noted that most consumers do not care about
    issues like the budget deficit because they do not believe that such
    issues have a direct impact on their lives. Moreover, consumers may
    suspect that any federal campaign related to the budget deficit is
    politically motivated, potentially undermining the campaign's credibility.
    But some participants supported including these macroeconomic issues in
    financial education efforts. One noted that whether or not consumers care
    about national fiscal matters, they should care. The federal government
    has a responsibility to inform consumers that entitlement benefits cannot
    realistically be sustained at current levels for the long term, and
    consumers should plan for their futures accordingly.

    While All Consumers Need Financial Education, Certain Populations Need to
    Be Targeted

    Participants said that all consumers need to be financially literate, but
    their specific needs for financial education change over the course of
    their lives. In addition, many participants recommended that federal
    financial literacy efforts target certain populations.

    o 	People's information needs vary over the course of their lives.
    Participants said that financial education is needed among all age groups
    and income levels but cautioned that consumers need different kinds of
    financial information at different phases of their lives. For instance,
    one participant commented that young people need to learn how to be
    prepared to enter the workforce, while working adults need information on
    managing credit and investing for retirement. Retirees, however, may need
    information on managing their retirement funds. Participants said that
    financial education should come at the right time-that is, at the
    "teachable moments" that occur when the information is applicable to
    events in a person's life.

                   Financial Literacy: Highlights of Forum Discussion

    o 	Many participants advocated targeting certain populations. While
    participants recommended that the federal government conduct a broad
    financial education effort, many participants said special efforts should
    be made to reach certain groups. Among these were

    o 	low- and moderate-income individuals and families, who typically have
    less experience with complicated financial transactions such as buying a
    home and may be more susceptible to deception or fraud;

    o 	low-income women, who usually do not have an employer-provided
    retirement plan and often are entitled to relatively little Social
    Security income;

    o 	immigrant populations, who may require information on operating within
    our nation's economic system, which may be unfamiliar to them; and

    o 	young people, who need to learn how to make responsible financial
    decisions as adults.

    A Variety of Methods Are Needed to Deliver Financial Education Effectively

    Participants were asked how federal financial literacy efforts could best
    reach consumers. They said the government should initiate a major media
    campaign with a clear message that underscores the importance of financial
    literacy. They also said that existing financial literacy materials should
    be more widely distributed, but not at the expense of interaction with
    individuals-a key element of successful financial education. Many
    participants also said that the U.S. Department of Education needs to make
    a greater commitment to financial literacy.

    o 	The federal government should initiate a major media campaign on the
    importance of financial literacy. Participants said such a campaign should
    be directed at the general population and should include a simple, clear,
    direct message-for example, "Financial Security for All Americans"-that
    would motivate consumers. Television and the Internet were cited as two
    potentially effective ways to deliver such a message. Participants noted
    the success of certain federal public service announcements, such as
    Department of Agriculture's Smokey Bear campaign. One participant
    suggested a campaign encouraging consumers to do a periodic "financial
    check-up." Another suggested that members of the Financial Literacy and
    Education Commission promote a "message of the month." For example, the
    Department of Labor might

    Financial Literacy: Highlights of Forum Discussion

    sponsor a message on the importance of contributing to employersponsored
    retirement plans. These messages could be delivered through channels that
    regularly dispense financial literacy information, such as financial
    planning professionals, community organizations, church seminars, and
    radio talk shows. In contrast, however, one participant believed that
    broad-based efforts to raise awareness are overly costly and are far less
    effective than in-depth community-led education in changing behavior.

    o 	The federal government should do more to distribute existing financial
    education materials. A participant noted that many federal, nonprofit, and
    financial industry organizations create high-quality financial education
    materials that reach relatively few people. These materials need to be
    marketed more effectively, using a variety of methods to ensure that they
    reach as wide an audience as possible. In general, participants agreed
    that federal agencies need to provide credible financial information that
    is easy to access. Two federal initiatives could meet these criteria: the
    central financial literacy Web site and telephone information hotline
    established by the Financial Literacy and Education Commission.5 One
    participant said, however, that more research is needed on where consumers
    obtain financial information, while another said that agencies should work
    with local newspapers and television stations to disseminate stories
    showing how financial education has helped people and potentially
    encouraging other consumers to tap into available resources.

    o 	Delivery methods for financial information should vary according to the
    target audience, but interaction with individuals is key. Although
    participants favored using a variety of different delivery methods to
    reach different audiences, they added that personal interaction is often
    the most effective vehicle for conveying information in a way that
    actually impacts behavior. One participant noted that the Department of
    Defense incorporates person-to-person counseling in its financial literacy
    initiative. Another said that the government should encourage

    5 The Financial Literacy and Education Improvement Act that created the
    Commission required it to establish (1) a Web site to serve as a
    clearinghouse and provide a coordinated point of entry for information
    about federal financial literacy and education programs, grants, and other
    information, and (2) a toll-free telephone hotline available to members of
    the public seeking information about issues pertaining to financial
    literacy and education. See 20 U.S.C. S: 9703(b) and (c). The Web site
    (www.mymoney.gov) and hotline (1-888mymoney) were launched on October 12,
    2004.

                   Financial Literacy: Highlights of Forum Discussion

    companies to make greater use of their benefits counselors to provide
    employees with financial counseling. The federal government could also
    develop a closer partnership with the Financial Planning Association,
    perhaps to encourage financial planning professionals to provide pro bono
    counseling services to individuals in need of financial expertise.6
    Certified public accountants were also seen as a potentially effective
    means of reaching the general population.

    o 	Financial education should be part of school curriculums and additional
    commitment by the Department of Education is needed. Participants
    discussed the importance of including financial education in school
    curriculums at all levels. They noted that many states do not teach
    financial education, in part because of limited resources and because the
    standardized exams used to assess students and schools do not test for
    financial knowledge. Many participants believed the U.S. Department of
    Education should make financial education more of a priority. While states
    and localities control public schools, they noted, the department could
    use its influence to encourage them to incorporate financial education. A
    stronger commitment by the department could perhaps include funding or
    other incentives to schools and teachers to promote financial literacy.

    The Federal Government Should Conduct and Facilitate Program Evaluation

    While financial literacy programs have proliferated, research measuring
    the effectiveness of the programs has not kept pace. Participants were
    asked about the nature of the evaluation component that should be included
    in financial literacy programs and the role the federal government should
    take in facilitating effective evaluation efforts. Evaluations should
    generally attempt to measure changes in behavior rather than simply
    knowledge or skills, participants said. They also cited ways the federal
    government could assist in evaluation efforts, such as by serving as an
    information clearinghouse, setting some standardized benchmarks, and
    helping nonprofits build an evaluation infrastructure.

    6 The Financial Planning Association is a membership organization for the
    financial planning community. Its individual members include financial
    planners, some of whom hold the Certified Financial Planner(R)
    certification, as well as accountants, attorneys, insurance agents, money
    managers, investment consultants, and others involved in financial
    planning for consumers.

    Financial Literacy: Highlights of Forum Discussion

    o 	Program evaluation is essential. Participants agreed that a strategy
    was needed to learn what is and is not effective among federal financial
    literacy programs. However, relatively little program evaluation and
    cost-benefit analysis have been done to assess these programs and
    determine their effectiveness. Participants said that program evaluation
    ensured that scarce resources were being used efficiently and were
    actually improving financial literacy. Moreover, demonstrating that
    financial literacy programs have meaningful results is important for
    building political and public support for these programs. At the same
    time, two participants cautioned against allocating too many scarce
    resources to program evaluation and putting an undue burden on small
    programs with limited resources. In addition, anecdotal evidence rather
    than specific outcome measures may sometimes be an adequate indicator of
    success in the early stages of a new program.

    o 	Evaluations of financial literacy programs should try to assess
    behavioral change, if feasible. A number of different measures can be used
    to evaluate a financial literacy program, participants said. A program can
    be assessed by measuring such things as changes in the target audience's
    financial knowledge and skills or by changes in actual behavior. Ideally,
    any evaluation of a financial literacy program should measure the impact
    on behavior, such as changes in program participants' personal savings,
    credit scores, or homeownership rates. The Federal Deposit Insurance
    Corporation's Money Smart program was cited as an example of an effort
    that has resulted in behavioral change, as some 50,000 people have opened
    bank accounts after completing its curricula. One participant noted that
    the Department of Defense could serve as a particularly good laboratory
    for learning what is effective in financial education, as it already has
    standardized financial literacy programs and a "captive audience" that is
    easy to track over time. In general, someone noted, behavioral change can
    be measured on a micro level (the impact on individual program
    participants) or on a macro level (the impact on society or the economy as
    a whole).

    While participants said that evaluation efforts should attempt to measure
    behavioral change, they also acknowledged that this type of evaluation can
    be extremely difficult. It can require tracking actions and decisions by a
    program's participants over a long period of time- activities that may be
    unduly expensive, time consuming, or infeasible. In addition, because many
    variables can affect consumer' behavior and decision making, ascribing any
    long-term changes to a particular

    Financial Literacy: Highlights of Forum Discussion

    program is difficult. One participant emphasized that we must acknowledge
    programs with significant intangible benefits that nonetheless do add real
    value.

    o 	Build on existing models of evaluation. Participants indicated that
    evaluation efforts should build upon, rather than duplicate, one another.
    Some standardized means for measuring program impact should be used to
    evaluate multiple programs. One participant noted that the National
    Endowment for Financial Education was currently funding the development of
    some standardized evaluation tools.7 Another noted that the Department of
    the Treasury had developed a list of elements that are common to
    successful financial education programs. One participant pointed out that
    the Department of Agriculture, working through the nationwide Cooperative
    Extension System to deliver the Financial Security in Later Life program,
    had an evaluation component built into it from the beginning and that
    other programs may want to use this program as a model. Another
    participant suggested borrowing from the Office of Management and Budget's
    work on cost-benefit analysis and using it to evaluate financial literacy
    programs. Two participants said that longitudinal studies (following
    consumers over an extended period of time) were needed to prove that
    programs are having an effect. Also needed are benchmarks-baseline
    standards for measuring or comparing the effect of a financial literacy
    program. A participant said that the federal government might want to
    establish basic benchmarks and that Jump$tart's periodic survey of high
    school students' financial literacy could be used as one of these
    benchmarks. In addition, the federal government could use the vast amount
    of economic data it collects to help benchmark and measure the
    effectiveness of financial literacy efforts on a macro level.

    o 	A primary goal for federal evaluation efforts should be to facilitate
    the evaluation efforts of other players. Participants said the federal
    government could play a constructive role by developing an evaluation
    infrastructure that would help local organizations build their capacity

    7 The National Endowment for Financial Education is currently funding a
    project to develop a Web-based evaluation toolkit aimed at helping
    financial educators build their evaluation capacity. The project's purpose
    is to develop a database of evaluation questions and planned practice
    changes for a wide range of financial topics and target audiences. The
    project also includes an evaluation manual with instructions on how to use
    the database to construct evaluation instruments and guidelines on how to
    present and use the evaluation data to show program impact.

    Financial Literacy: Highlights of Forum Discussion

    and evaluate their programs appropriately. For example, the federal
    government could serve as a clearinghouse for evaluation results. At the
    same time, at least one participant had reservations about establishing
    federal standards for financial literacy programs, fearing that a topdown
    approach might inadvertently serve to hamper efforts at the community
    level. In fact, several participants said an assessment should be built
    into the evaluation of any federal financial literacy program to determine
    whether the federal government was indeed the best entity to be conducting
    the program. Participants noted that federal agencies should carefully
    consider whether they have sufficient expertise to deliver financial
    education effectively or whether another entity, such as a private or
    nonprofit organization, might be a more appropriate choice.

    Appendix I

                                   Forum Participants

    Facilitator

    David M. Walker	Comptroller General of the United States U.S. Government
    Accountability Office

    Participants William L. Anthes

    Marcus Beauregard

    Don M. Blandin
    Kelvin Boston
    Stephen Brobeck
    Sharon Burns

    Denise Voigt Crawford
    Dara Duguay
    Timothy J. Forde

    President and CEO
    National Endowment for Financial Education

    Financial Readiness Campaign Coordinator
    Irving Burton Associates
    for the U.S. Department of Defense

    President and CEO
    Investor Protection Trust

    President
    Boston Media, Inc.

    Executive Director
    Consumer Federation of America

    Executive Director
    Association for Financial Counseling and
    Planning Education

    Securities Commissioner
    State of Texas

    Director, Office of Financial Education
    Citigroup

    Vice President for Strategic Analysis
    Investment Company Institute

                                       Appendix I
                                   Forum Participants

    Donna Gambrell	Deputy Director for Compliance and Consumer Protection
    Federal Deposit Insurance Corporation

    Carl R. George	Chief Executive Officer Clifton Gunderson LLP

    Sallyanne Harper	Chief Administrative Officer and Chief Financial Officer
    U.S. Government Accountability Office

    Jeanne Hogarth	Program Manager, Consumer Education and Research Board of
    Governors of the Federal Reserve System

    Dan Iannicola, Jr.	Deputy Assistant Secretary for Financial Education U.S.
    Department of the Treasury

    Elizabeth W. Jetton	President Financial Planning Association

    Laura Levine	Executive Director Jump$tart Coalition for Personal Financial
    Literacy

    Angela C. Lyons	Assistant Professor of Economics University of Illinois

    Dan Mahoney	Senior Vice President, Public Affairs and Publishing American
    Council of Life Insurers

    Thomas J. McCool	Managing Director, Financial Markets and Community
    Investment U.S. Government Accountability Office

    Gary John Previts	Professor of Accountancy Case Western Reserve University

    Jane Schuchardt	National Program Leader, Cooperative State Research,
    Education, and Extension Service U.S. Department of Agriculture

    Colleen Tressler	Senior Project Manager Federal Trade Commission

                                       Appendix I
                                   Forum Participants

    Susan Ferris Wyderko	Director of Investor Education and Assistance U.S.
    Securities and Exchange Commission

    Appendix II

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    Appendix II
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