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Symposium 2012

Solution for Improving Financial Education and Literacy

The Challenge

As governments face increasing debt burdens and companies too face significant cost burdens, there is a clear movement towards individual responsibility for financial planning for retirement. This mov ...

As governments face increasing debt burdens and companies too face significant cost burdens, there is a clear movement towards individual responsibility for financial planning for retirement. This movement is happening at precisely the time that individuals themselves are feeling more insecure about the future in the face of declining job security and the increased reluctance of financial institutions to provide credit.

Link mandatory financial education, counseling and disclosure to the point of sale.

The crux of this solution is to make dramatic improvements in financial education at the point of sale where individuals are making tangible decisions. For example, this might involve linking employees' choice of financial benefit to mandatory employee education so that education leads to immediate implementation.

In addition, mandatory counseling by certified counselors should be required prior to the purchase of subsidized financial products. For complex products such as mortgages, annuities or mutual funds, mandatory disclosure of critical financial information at the point of sale should be improved.

Another possibility is to allow and encourage banks that offer educational programs on how to save (often during "America Saves" week in the United States) to open accounts immediately for attendees who have been both educated and motivated to do so. Currently, in the United States at least, this action is discouraged as being "self-serving" by regulators who award Community Reinvestment Act credit to banks who educate but do not use that education to allow consumers to implement what they have learned.

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