The Derivative Project

Why Financial Literacy Efforts Failed: Wall Street Wrote the Curriculum and Spread the Message with the help of Public Radio

Why Financial Literacy Efforts Failed: Wall Street Wrote the Curriculum and Spread the Message with the help of Public Radio

Experts are baffled by why all the tax dollars and private money flowing into K-12 Curriculum and private foundation support has failed to make a dent in American’s financial literacy score.

Here is brief synopsis at CNBC, June 4, 2013, Financial Literacy Efforts Get Failing Grade.
With a focus on retirement savings, Wall Street, including their own SRO FINRA Foundation, has written 90% of the new “financial literacy” curriculum and if one reads through the lines there are three key messages in the curriculum delivered to every American:
  1. You need to remain dependent on your Financial Advisor, “this is so, so  complex, you cannot possibly learn how to pick a balanced fund on your own. It is best to just pick one of the new-fangled high fee Target date fund of funds, (that are also the “default options”) that will really charge you double with less return and no proven track record.”
  2. High fees in mutual funds and selling expenses are the norm, just accept them.
  3. Now that retirement savers have been alerted to excessive fees, passive funds are the only way to go, since then the advisor has a low enough expense ratio that he can still charge an annual assets under management fee of 1% – 2%.
A Brief History of The Selling of American’s Dependency on A Financial Advisor

Public radio powerhouse Bill Kling created the syndicated personal finance talk show, Sound Money, several decades ago, which then morphed into Marketplace Money.
The key participants for Sound Money for over a decade were Host Bob Potter and Financial Advisor Judith Brown and Economics Editor, Chris Farrell. 
Judith Brown’s firm, JNBA Advisors,  now run by her son, charges over 1.50% assets under management fee, according to their SEC filings, to their investors ($500,000) and Bob is now yes, doing business as the “Sound Money Group” and is a stockbroker at LPL Financial, (which has also had its issues recently, US Charges Ex-LPL Advisor with $2 Million in Civil Fraud Charges.)
While Mr. Potter’s and Ms. Brown’s professed concerns for the best interest of their radio listeners, it begs the questions, why didn’t they ever speak up and take action in their leadership roles and raise the issue of excessive fees and problems with high advisor fees impacting retirement savings? 
Sound Money’s Participant/Advisor Role in Shaping Retirement Policy When 401k’s Evolved
Ms. Brown had a very active policy role, in addition to her financial planning practice, on the national board of AARP, acted as chairman of the Consumer Advisory Council for the Federal Reserve Board, and as a member of the Commissioner’s Advisory Group to the Internal Revenue Service.  Not a word was ever mentioned on the failure of these policies for retirement savers and (1)the dependency and (2) the added costs and(3) lack of engagement by the investor, that the financial advisor was creating.  The period of her service was during the formative years of the creation of the financial services industry, 401K’s, AARP and the role of financial advisors in the retirement industry.
Minnesota Public Radio’s  has a vision, as a recipient of taxpayer dollars, “Vision:
We will be an indispensable resource for our audiences and an essential public service for our communities.”
Was two decades of MPR’s Sound Money, that provided a syndicated national forum for financial advisors to sell the need for their services, at a period of time when defined benefit pensions were waning and 401k plans were just developing, providing a public service that enhanced the community? Was it simply a way to get “underwriting” dollars, in addition to taxpayer dollars, to stay in business?
Was it in the communities’ best interest to allow a new industry on “public air waves” to shape a key message that has created an unhealthy dependency on an industry that has been stealing close to $100,000 from one-third of every retirement nest egg, according to a recent PBS Special, The Retirement Gamble.  Of course, there is a “retirement crisis.”
It is long past time to examine the history and role of public funding in creating a new industry that ensured the long-term message, the consumer must be dependent on a high fee, conflicted advice industry that operates in their (the industry’s) best interest. 
Going forward, the public school curriculum must be balanced and have significant input on the message and the core curriculum from independent sources.
Perhaps it is time that Wall Street stepped aside, so Americans can get the real message that should have been delivered in the early 1980′s by MPR’s Sound Money:  Engage!
Oh, by the way, past Sound Money participant, Mr. Farrell MPR’s Chief Economist wrote in the June 15, 2013 Star Tribune,
Highlighting the significant issues, when it beomes in vogue is somewhat disingenuous.  It would make a difference to focus on eradicating the message of dependency Sound Money and Marketplace have delivered for decades.  The new message:  Engage and take charge.
Every American is very capable of understanding how to pick a high- performing balanced fund, given the right tools, transparency and training, without paying a salesman (CFP, financial advisor) 1.5% – 2%. 
It is time to break the cord and and the dependency, as then, true investor engagement will follow.
Tell me and I forget, teach me and I may remember, involve me and I learn.
—Benjamin Franklin
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