Monday, January 16, 2012
Why Teens Mistrust Banks
Why teens mistrust banks
Among other suspicions, teenagers think the stock market is rigged to benefit Wall Street bankers.
By MSN Money partner on Tue, Jun 28, 2011 12:54 PM
American teens are not only mistrustful of major financial institutions, they're actually growing resentful, and that could impact both the long-term savings habits and bottom line of U.S. banks and investment firms for a long time to come.The data come from the University of Arizona's "Take Charge America Institute for Consumer Financial Education and Research," which says it's been working on the financial literacy of America's youth since the institute was founded in 2003. But what it's been finding lately has less to do with literacy and more to do with full-blown resentment against America's financial institutions.
In a study released last week, institute researchers conclude that American teenagers were especially shaken by the financial crisis of 2008 and 2009, and to a large extent still are today. After seeing their parents struggle with layoffs, high debt and mortgage payments that are becoming more and more difficult to meet, teenagers clearly lay the blame at the feet of "banks, credit unions, credit card companies, businesses and investment institutions," says the poll.
Active distrust
"This poll is extremely revealing," says Michael Staten, a professor at the University of Arizona and director of the institute. "In addition to students' lack of knowledge about the building blocks of personal finance, which we have seen for years in these types of surveys, it shows the next generation of American consumers now also actively distrusts many of the pillars of the financial services industry." Post continues after video.
Staten says the study data indicate that younger Americans have largely disregarded the need for understanding how money and finance work, and now that lack of knowledge is really sharpening their ire toward banks and financial services companies. Not knowing how banking and investment firms operate seems to add to the hostility young Americans evidently hold toward the money management industry.
The good news, Staten says, is that teenagers are starting to recognize the importance of learning more about money -- and how it works.
"Despite their strong suspicion of financial institutions, these students responded that they believe education is important to their futures and that financial success can be achieved with the right financial decisions," he adds. "This is a hopeful sign and it tells us that more financial education is needed. It may not yet be too late to defuse this sense of cynicism about all things financial, and to prepare these young consumers for the financial choices they will face in adulthood."
Greedy bankers
Still, the University of Arizona data show that younger Americans' attitudes toward financial firms doesn't differ too much from those of the rest of the population:
- The majority of students who responded to the survey (60%) believe that credit card companies often entice people into taking on more debt than they can handle.
- More than 70% of students believe that businesses often try to "trick young people" into spending more than they should.
- Only a bit more than 25% of students disagreed with the following statement: "The stock market is rigged mostly to benefit greedy Wall Street bankers."
- Only 15% of students are aware that credit unions are different from banks with respect to their not-for-profit status.
- Fewer than one in five students who responded to the survey (17%) disagreed with the statement, "Banks are mostly interested in getting my money through hidden fees."
Clearly, the younger generation holds a serious grudge toward Wall Street in general, and banks and credit card firms in particular. But financial services firms only have themselves to blame, and will have to reach out to tomorrow's consumers to earn their trust and their business.
"This isn't just about bad PR for the financial services industry," says Dan Iannicola Jr., CEO of the Financial Literacy Group, which conducted the study for the University of Arizona. "Adolescents with this level of distrust of financial institutions become adults who don't open bank accounts, invest for retirement, insure against risks or finance important purchases like college educations or homes.
"This type of financial disengagement could push a generation of consumers away from mainstream institutions and toward risky alternative service providers or toward simple inactivity, which has its own perils."
Study Shows High School Students Distrust Finacial Service Providers
New National Opinion Poll from the University of Arizona: Two Years after Financial Crisis, High School Students Strongly Distrust Financial Service Providers
WASHINGTON --(Business Wire)-- A new national opinion poll of nearly 900 high school students shows that more than two years after the country suffered the massive financial crisis of 2008 and 2009, the majority of respondents harbor a significant amount of distrust toward banks, credit unions, credit card companies, businesses and investment institutions. This sense of distrust is compounded by a lack of understanding about the basic services and products of financial institutions."This poll is extremely revealing," said Dr. Michael Staten, Director of the University of Arizona's Take Charge America Institute for Consumer Financial Education and Research, which commissioned The Financial Literacy Group consulting firm to conduct the survey earlier this year. "In addition to students' lack of knowledge about the building blocks of personal finance, which we have seen for years in these types of surveys, it shows the next generation of American consumers now also actively distrusts many of the pillars of the financial services industry.
"Despite their strong suspicion of financial institutions, these students responded that they believe education is important to their futures and that financial success can be achieved with the right financial decisions," said Staten. "This is a hopeful sign and it tells us that more financial education is needed. It may not yet be too late to defuse this sense of cynicism about all things financial, and to prepare these young consumers for the financial choices they will face in adulthood."
Some of the poll's findings include:
- The majority of students responding to the survey (60%) believe that credit card companies often entice people into taking on more debt that they can handle.
- Over 70% of students believe that businesses often try to "trick young people" into spending more than they should.
- Only 25% of students disagreed with the following statement: "The stock market is rigged mostly to benefit greedy Wall Street bankers."
- Only 15% of students are aware that credit unions are different than banks with respect to their not-for-profit status.
- Fewer than 1 in 5 students who responded to the survey (17%) disagreed with the statement that "Banks are mostly interested in getting my money through hidden fees."
"While some organizations are making strong efforts in the field of financial education, overall not enough is being done to educate America's youth about money, at school or at home," said Dan Iannicola, Jr., former Deputy Assistant Secretary for Financial Education at the U.S. Treasury Department and CEO of The Financial Literacy Group consulting firm. "But as these results show, just because we aren't teaching about money, doesn't mean kids aren't learning about it. This survey asks the question 'just what are they learning?'
"This isn't just about bad PR for the financial services industry," said Iannicola. "Adolescents with this level of distrust of financial institutions become adults who don't open bank accounts, invest for retirement, insure against risks or finance important purchases like college educations or homes. This type of financial disengagement could push a generation of consumers away from mainstream institutions and toward risky alternative service providers or toward simple inactivity, which has its own perils."
An executive summary of the study is available at www.FinancialLiteracyGroup.com/services.
The University of Arizona's Take Charge America Institute for Consumer Financial Education and Research www.tcainstitute.org
The Take Charge America Institute for Consumer Financial Education and Research's mission is to create research-based educational outreach programs to improve financial literacy and help consumers to make informed financial choices in today's complex markets. The Institute was established in 2003 as the result of a major endowment gift to the University of Arizona from the credit counseling agency Take Charge America. Since then, the Institute has developed an array of financial education outreach programs at the University. In addition, The Institute's Family Economics and Financial Education program (www.fefe.org) develops and continually updates a financial education curriculum for high school students. Provided free of charge by the Institute, the curriculum is being used by more than 12,000 teachers nationwide and reaches several hundred thousand students annually.
The Financial Literacy Group
www.FinancialLiteracyGroup.com
The Financial Literacy Group is a consulting firm which helps companies, non-profit organizations and government agencies empower people of all ages and backgrounds with financial knowledge. Founded in 2009, the Group designs, develops, evaluates and implements financial education programs, materials and research. Its international team of financial literacy experts includes educators, economists, researchers, curriculum writers and former policy makers, from a variety of disciplines including education, personal finance, economics, consumer behavior, government, communications, and law.
Monday, January 2, 2012
Take Charge America's National Outreach Efforts
National Outreach
The Take Charge America Institute provides financial education leadership on a national scope at professional conferences, educator training workshops, testimony before federal and state regulators, and much more.
Testimony:
- Dr. Michael Staten, Testimony, U.S. House of Representatives, Committee on Financial Services, Subcommittee on Oversight and Investigations, “What Borrowers Need to Know About Credit Scoring Models and Credit Scores,” July 29, 2008
Invited Meetings/Focus Groups:
- Staten, National Foundation for Credit Counseling, Annual Leaders Conference, presenting “Education and
Counseling: A Sustainable Future? Not Without Evidence of Value to Consumers,” Washington, DC
(September 2009) - Staten, Federal Reserve Bank of Philadelphia, conference on The Future of Consumer Credit Counseling,
keynote presentation, “Education and Counseling: A Sustainable Future?” (July 2009) newsletter article - Dr. Michael Staten, U.S. Treasury, International Conference on Financial Literacy. (April 2008)
- Dr. Michael Staten, U.S. Treasury, invited presentation at Financial Literacy Education Commission meeting to describe the activities of TCAI and the FEFE project. (September 2008)
- Dr. Michael Staten, U.S. Treasury, invited participant, National Research Symposium on Financial Literacy and Education (October 2008)
Professional Conferences:
- Dr. Michael Staten, presentation to the National Foundation for Credit Counseling annual conference on Proposed Test of Expanded Concessions Options for Consumers on Debt Management Plans (September 2008)
Educator Training:
- June 2009 FEFE National Training: 83 educators representing 29 states attended
- Specialized Trainings: since June 2009, FEFE has conducted trainings for 455 educators. Extensive trainings were conducted in Arkansas, Louisiana, North Carolina and Maryland
- Dr. Michael Staten, presentation at the 2008 FEFE national training about understanding credit reports.
- June 2008 National Conference: 110 educators representing 29 states attended the annual FEFE training.
- Specialized Trainings & Professional Presentations: Since March 2008, FEFE has conducted eight one-hour to four-day presentations in 7 states for 660 educators. Since July 07, FEFE has conducted presentations for 2, 181 educators. States extensive trainings were conducted in include: Nevada, Pennsylvania, Missouri, North Carolina, Michigan, Arkansas, Maryland.
Jump$tart Coalition - 2011 National Board of Directors & Officers
http://www.jumpstart.org/university-of-arizona-take-charge-america-institute.htmlhttp://www.jumpstart.org/board-and-officers.html
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