It’s no secret that financial service companies spend billions each year marketing and selling their products and services. There is nothing surprising or wrong about this. However a recent study by the Consumer Financial Protection Bureau compared how much is being spent by this industry to what is being spent on financial education in our country annually.
The numbers are staggering. The study found that the financial services industry spends approximately $17 Billion annually versus about $670 Million spent on financial education. In other words, about $54 per person is spent on marketing and advertising compared to $2 on financial education. In fairness, there are certainly some education materials interspersed in the financial service industry spending, but it’s no wonder people are more confused than ever about financial matters. The odds are 54 : 2 stacked against the American consumer.
“When consumers receive the vast majority of their financial information from companies that are trying to promote an image or sell products, consumers have very little unbiased information,” Richard Cordray, director of the CFPB, said in a statement.
Cordray said the report, “Navigating the Market,” “further reinforces the dire need for more and better financial education in this country.”
We wrote recently in What’s Your 401 (k) IQ? over half the participants in 401 (k)s find investment information more confusing than health-care benefits…now that’s saying something! Over one-third feel a lot of stress when making investment choices. In Do I Need a Financial Planner? a study indicated that 56% of baby boomers are very or somewhat anxious when thinking about their finances in the future. On top of that we discovered 71% of middle-income people don’t have a written retirement plan.
The question is what to do? A good start is to check out the Consumer Financial Protection Board website. There is excellent information on a wide variety of subjects. Another is Dimespring, a website chocked full of specific financial subjects in an easy-to-understand format. I’m proud to say the Garrett Planning Network, of which we are members, is a thought leader in this educational effort.
A consultant to the Garrett Planning Network, Gerri Detweiler, has been helping consumers find reliable answers to their credit questions for the past twenty years. Detweiler is Credit Advisor for Credit.com, an independent personal finance education website. She was recently quoted in a CNBC article as saying: “Our financial lives are becoming increasingly complicated and it’s hard to make good decisions when you don’t even understand the basics. Marketing is designed to sell products and sometimes those may not be the products you need or should be spending your money on.”
At Financial Freedom Planners one of the most important things we do is educate our clients. We are dedicated to unbiased, objective advice, and our goal is to educate, empower, and enrich. As client and consumer advocates we take education very seriously. We invest in resources available to our clients and those interested in learning more about financial planning. This blog is one example. Our founder is a Certified Financial Planner™, which requires we remain current in a wide variety of financial subjects. In addition we continue to add resources on our website under our Education Center. Give us a call, we would be happy to help!