That many, if not most, Americans are woefully short on knowledge about finances and financial markets is no surprise. Even so, it will take more than special recognition over the course of a month to build momentum on Capitol Hill for the topic of financial literacy.
Only a handful of relevant bills were introduced this month. Just one piece of legislation has more than 10 cosponsors — a Senate resolution designating April as Financial Literacy Month. And that was just approved April 23.
The Certified Financial Planner Board of Standards Inc. was on the Hill today trying to generate interest in financial education by providing it for congressional staffers. The organization set up shop in a House office building for three hours, offering CFP volunteers for 15-minute sessions of financial advice.
It was a pretty smart move. As a former Senate aide, I can attest to the fact that knowledge of the financial markets was not abundant among my Hill friends. In addition, one of the best ways to get the attention of a lawmaker is through his or her staff. The CFP sessions are a unique way — certainly different from the basic office drop by — to put financial literacy on the radar.
Usually, special monthly designations don't lead to much legislative activity on an issue. Every time you turn around, there's some kind of day, week or month being devoted to something. They all start to run together.
Still, the lack of legislative activity on financial literacy is curious.
It's an issue that should be bipartisan. One of the primary causes of the financial crisis in 2008 was the lack of savvy among homeowners and investors, who were lured into far too many risky ventures. In addition, the cost and establishing and running financial education programs surely would be minimal compared to other federal spending.
At the very least, Congress could sort out what the government is trying to do now on financial literacy. Sen. Tom Coburn, R-Okla., has reintroduced a resolution to eliminate duplication among 15 programs in 13 different departments.
A lot of work needs to be done to improve Americans' grasp of finances and markets, according to Michael Branham, a financial planner at Cornerstone Wealth Advisors Inc. and president of the Financial Planning Association.
He adds, however, that the base of financial knowledge will rise, as state-level education programs are implemented and as reams of financial news and information pours out online.
Even as investors become more sophisticated about how financial markets work and what they offer, they won't necessarily be able to navigate them on their own.
“You're going to see the whole relationship between the planner and the consumer change over time,” Mr. Branham said. “It will be our job to deliver advice and lead the conversation about life and money.”