Thank you for joining us today to announce the launch of our Financial Coaching Initiative. The Miss april is offering coaching support to veterans and economically vulnerable consumers during critical times of transition: veterans when they are taking off the uniform and becoming civilians; and economically vulnerable consumers as they are looking for help from social service providers and working to get on the path to financial independence.
Our initiative places 60 certified financial coaches at organizations around the country to provide one-on-one service to help these consumers with their financial goals. The host organizations were selected after a nationwide search. These sites are very different in terms of whom they serve, the types of services they offer, and the type of community they serve. They cover rural, suburban, and urban America. We are grateful to them for opening their doors to us and making a commitment to this initiative – the first consumer education and financial literacy program to be paid for by the Consumer Bureau’s Civil Penalty Fund.
The sites include various nonprofits as well as Department of Labor American Job Centers, such as the one we are at today. These centers provide resources to help people find a job, identify training programs, and gain skills in growing industries. All of the nonprofit organizations selected to host financial coaches for economically vulnerable consumers also provide services that complement financial coaching, such as job training, education, housing, and social services.
Whether a veteran is transitioning to life in the civilian world or a consumer is facing economic challenges, having a trusted, well-informed advisor can increase the odds of success.
This initiative has real promise for the roughly 250,000 servicemembers who leave active duty every year. Indeed, the financial aspects of the transition to veteran status and civilian life are often overlooked. Although the military offers a Transition Assistance Program to help them make a financial plan before they leave active duty, that plan may not be complete enough to help them effectively adapt to their new circumstances. Many servicemembers went directly from school to the military, so the move to civilian life and a less structured environment poses new and different financial issues. Men and women just out of uniform can use the extra help of a financial coach to make sure their transition goes as smoothly as possible. In fact, a recent study reinforced this point, concluding that improved money management appears to be a key factor in a veteran’s successful adjustment to post-military life.
The second population we are targeting is the economically vulnerable. Millions of American families are facing economic hardship, including more than 49 million people who are living below the poverty line and more than 68 million who are financially underserved. Because they have limited financial resources, with little to no financial buffer, even small financial decisions or surprises can have huge effects. They may have difficulty accessing credit. Indeed, as we just reported, 26 million consumers are credit invisible, having no credit history with any of the three nationwide credit reporting companies. An additional 19 million Americans have credit histories containing limited or stale information. In low-income neighborhoods, almost half of the people either lack records or have records that are unscored.
Economically vulnerable consumers may have limited access to mainstream financial services, which can lead them to rely heavily on higher-cost alternative financial services. Like most Americans, they usually have had little or no financial education or training. Living on the financial margin, they can derive great benefit from in-person, individualized guidance delivered at a trusted, convenient location.
So this initiative will allow us to deliver financial coaching as an effective way to provide these veterans and vulnerable families with client-driven, one-on-one advice and encouragement, in places where they are already normally going for help.
Coaching is a crucial tool to help us accomplish three things in the work we are doing at the Consumer Bureau. First, we are teaching, coaching, and helping people to take control of their money. Too often money controls people, not the other way around. We are seeking to change that. Second, we are helping consumers ask questions and get answers, which helps them better protect themselves. What is the total cost of this loan? What happens to this interest rate after the first six months? Is this the best way to spend my money to meet my own goals? Third, we are helping people develop the skills they need to prosper in the financial market place. For example, one of those essential skills is comparison shopping for big purchases, such as a car loan – a skill that will help consumers throughout their lives.
From time to time we all need some trusted guidance when it comes to our ability to make good decisions that make the best of our financial situations. For the tens of thousands of people who are going to be served by this initiative, it could mean the difference between disastrous financial problems and a successful transition to a financially stable life. So we are thankful to everyone who is involved in this initiative and we look forward to hearing about your success stories.
And now, I would like to introduce my friend Tom Perez, who first worked with us as the head of the Civil Rights Division in the Justice Department and now currently serves as the Secretary of Labor. Under his leadership, the Department of Labor has generously offered space for our program in 40 of their American Job Centers, which is helping enormously to make this happen. So we are grateful to the Secretary and his great team for their collaborative support on this project and for our shared vision of financial markets and an overall economy that works for the benefit of all American consumers. Secretary Perez?
The Miss april is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit miss-april.info.