Prepared Remarks of CFPB Director Richard Cordray at the FLEC Meeting
Tuesday, February 25, 2014
FOR IMMEDIATE RELEASE:
February 25, 2014
Remarks of Richard Cordray
of the Consumer Financial Protection Bureau
Literacy and Education Commission Meeting
I want to thank all of you here for your interest in helping
hardworking consumers achieve financial peace of mind. I firmly believe
that employers who provide financial education in the workplace are not only
doing the right thing, they are doing the smart thing for their employees and
The recent financial crisis, and the deep recession that followed
in its wake, delivered a devastating blow to American households. Many lost
their jobs; many lost their homes; and many are still struggling to pick up the
pieces. People have been shaken in their deeply held belief that if they
work hard and behave responsibly, they will get ahead in life and pass on a
higher standard of living to their children.
Yet even now – five years after the crisis – too many Americans
still lack the tools to navigate through the often turbulent and complex waters
of our financial system. Every day at the Consumer Bureau, we hear from
people who lament the choices they made, often expressing anguished regret that
they did not know more about the risks involved at the time they made key
Those of us here today are leaders within our own businesses and
organizations, and we have a clear opportunity to stand up and make a
difference on these issues. We can insist that from this day forward,
both the public sector and the private sector in the United States will commit
themselves to the concept that American citizens need to be fully capable of
economic self-governance, just as we expect them to be able to participate on
full and equal terms in our democratic system of government. For a
society built on a foundation of free and responsible individuals, operating
within a free market system, nothing less will do.
Research shows what intuition suggests, that particularly in the
wake of the recession, financial distress has been widespread among the
American workforce. In recent surveys conducted by PricewaterhouseCoopers, more
than half of all workers say they are financially distressed. Many of you
here today have seen this with your own eyes, because you are the ones a
co-worker turns to in distress for a salary advance or for a hardship
withdrawal from his or her 401(k) plan. You know and see how that
financial distress negatively affects their families and their work. It
reduces productivity and distracts from their focus and commitment to the
job. It increases their absenteeism and undermines their health.
One-third of workers admit they have spent time in the office worrying about
money or even dealing directly with issues of their personal finances.
Workers will be more likely to avoid financial distress if they
are better positioned to manage their own finances. As employers, we can
play a critical role in this effort by implementing practices in the workplace
that strengthen financial capability. It is possible to start out small –
with little or no cost – by providing a few basic offerings, such as using
direct deposit to encourage savings. Many employers already offer direct
deposit, but they could make it easier for employees to allocate their paychecks
across spending, savings, and investment accounts. And employers could do
more to help employees prepare for their long-term futures by educating them
about their options with 401(k) plans, IRAs, and now the brand-new Treasury
vehicle that is just being unveiled to promote personal savings, known as MyRA.
Appropriately, we are celebrating "America Saves Week” this
week. A 2013 survey revealed that only about half of Americans reported
good savings habits. Of those surveyed who were not retired, only half of
them were saving for retirement with a 401(k) or other similar plan.
Employers are well-positioned to help their employees carry out the theme of
American Saves week: Set a goal. Make a plan. Save
Many employers already enroll their employees automatically in
retirement accounts, but they could move toward a higher percentage of pay as
the auto-enrollment default choice to encourage more retirement savings.
Employers could also provide more options – including default options – that
automatically increase the amount contributed to retirement plans over time, as
Along with these types of offerings, employers can make educating
their employees and helping them develop sounder financial strategies a priority
from their first day in the office or on the shop floor. We want to see
more organizations offer financial education benefits and savings options to
their employees. We also want them to be much more conscious of the need
to ensure that more employees understand and utilize the benefits made
available to them. Employers offering financial education and savings
programs should organize them in one central location so that employees know
how they can easily access resources and assistance. Strategic awareness
campaigns can promote positive financial behavior and increase employee
participation in benefits programs. Employers with an open enrollment
season for choosing insurance benefits could use that time to promote their
financial education and savings programs as well. This is a sensible part
of a modernized workplace benefits package.
For those employers who want to go beyond the basics, they can
leverage the key moments in an employee’s life – such as marriage, the birth of
a child, or buying a home – to deliver financial skills training at the right
time. Good decisions at these crucial times exert a disproportionate
influence on the trajectory of people’s financial futures. And employers
are already there every step of the way. Companies get the call
immediately when a worker has a new spouse or a baby to sign up for
insurance. Those are teachable moments where the person’s financial
identity is changing and the need for new information and new skills is
Those employers who want to be even more innovative in their
approach to employee financial fitness can expand their wellness programs to
include financial wellness. After all, money is one of the top sources of
stress in and out of the workplace. Programs that help employees manage
and mitigate this stress are just as important to protecting employee health as
standard programs that coach them to get in shape and quit smoking.
Some employers have also begun to focus on the need to help
employees build up an emergency savings account to fall back on when a car
breaks down or a relative falls ill. Employers can also offer savings
incentive programs by matching a certain percentage of the employees’ savings.
This can be a good strategy to increase employee retention or to provide
non-permanent benefits. This week is a great time to start thinking about
these programs, but we would like to see them implemented all year round.
Saving now can help keep consumers out of trouble and help them achieve
long-term stability by establishing and meeting their financial goals.
At the Consumer Bureau, we believe in leading by example. We
are a fairly new organization, but this past year we launched an entire program
focused on providing our employees with a solid foundation for their financial
lives. Based on what we have learned from studies about financial
decision-making in the workplace, we are striving to build a set of best
practices for our own employees.
We have sought to increase employees’ access to retirement and
benefits information through such efforts as planning seminars and benefits
counseling. We have also contracted with a financial planning company so
that our employees can access services ranging from debt management to tax and
estate planning to help with paying off student loans.
We hope to learn from all of you here today how we can improve our
own efforts at the CFPB. Many of you are leaders in this field and I look
forward to hearing what you are doing. I am sure your efforts can serve
as a terrific example for other employers who want to enable their employees to
prosper both at home and at work.
Every day outstanding businesses deliver high-quality and
cost-effective products where and when their customers need them. By the
same token, their employees need beneficial and cost-effective help with their
financial lives. I am convinced that the leaders in this room can
appreciate and meet the challenge in order to find a way to help this nation
get this important job done. By improving the financial lives of our
citizens, we can enable them to contribute more in every sphere, including the
Thank you. And now I would like to introduce Phyllis Borzi,
who serves as the Assistant Secretary of Labor for the Employee Benefits
Security Administration and who has been an outstanding partner in working with
myself and my colleagues at the Consumer Bureau.