An ironic article posted on the American Banker website during Financial Literacy Month contends financial literacy education doesn’t work.
Jennifer Tescher, president and CEO of Center for Financial Services Innovation, said in the article that consumers need to “trust that financial institutions have their best interests in mind and are working with policymakers to eliminate systemic barriers that prevent them from achieving financial health.”
Tescher recommends that what financially vulnerable people need is access to high-quality products and experiences built to help them succeed by people who truly understand their financial situations and foibles.
“In this era of extreme inequality, increased income volatility and frayed safety nets, it is borderline insulting to suggest that knowledge and behavior alone are the main causes of people’s financial challenges,” she said.
The answer? Apps, Tescher said. An app, for example, that connects to users’ checking accounts and identifies small amounts of money that can be put into savings. Or an app to provide information to help consumers better manage their money such as an alert warning of a potential future overdraft based on the timing of a bill payment and suggesting a shift in the timing of the payment.
That American consumers should trust banks to help them positively manage their money is laughable. Think Wells Fargo, the largest bank in the nation. It paid $185 million in fines for secretly opening accounts consumers never wanted and $1 billion for auto and mortgage loan violations.
I urge organizations and agencies to continue their efforts on financial education during Financial Literacy Month and throughout the year. Yes, consumers have problems paying off debts, especially student loans, and saving money. But significant efforts are needed to help people manage their money to counteract the billions and billions of dollars spent every year on advertising, which now even invades social media and our cell phones.