Financial literacy requires early education, long-term strategies and segmented approaches to communication, researchers and sponsors said Tuesday at the Pensions & Investments' Global Future of Retirement conference in Washington.
“Financial literacy is a vision of the future,” said Annamaria Lusardi, the academic director of the Global Financial Literacy Excellence Center at George Washington University School of Business. “We cannot solve a long-term issue with a short-term solution.
Young people are “a particularly vulnerable group” to financial stress, especially in light of student loan debt and increasing costs of education in other countries, Ms. Lusardi said.
She advocated for offering financial education in multiple venues — schools, the workplace and the community, such as libraries, museums and “other places where people go to learn.”
When asked how early young people should be exposed to financial education, Ms. Lusardi said: “When the tooth fairy comes.”
Sponsors make a mistake by offering information on only retirement savings to their participants, said Dan Iannicola, president and CEO of the Financial Literacy Group. Sponsors must take a holistic view incorporating information subjects such as budgeting, credit management, college financial aid, elder care and mortgages.
Mr. Iannicola also warned that “one size fits none,” referring to sponsors that fail to understand that participants' needs vary by age, income and other factors.
Mr. Iannicola recommended that financial education be delivered to different audiences based on research of participants' financial requirements and challenges. “Before I know what you need, I must know who you are,” he said.
PepsiCo Inc. uses multiple approaches to improve financial education of employees, said Monika Maul, senior manager for North America and Latin America retirement plans.
PepsiCo provides access to certified financial counselors who offer information but don't sell products, Ms. Maul said. The company offers unlimited phone and e-mail access for financial education, conducts workshop/webinars and provides one-on-one counseling sessions. The workshop subjects range from pre-retirement and tax planning to financial literacy fundamentals and investment education.