Taking Financial Education to the Next Level
In 2006, New York City Mayor Michael R. Bloomberg charged the Department of Consumer Affairs (DCA) with bringing financial empowerment services to those with low incomes as part of his broad antipoverty strategy. DCA formed the country’s first Office of Financial Empowerment to take on the challenge.
It quickly became clear that, while some existing financial education services were being done well, the field did not possess the level of professionalized delivery, outcome-driven metrics and rigorous evaluation required for public programs. And one-on-one counseling, the gold standard of the field, was largely unavailable. Even the best program providers lamented this lack of standards and accordingly suffered from undependable resources to support their work.
The U.S. Government Accountability Office similarly concluded in a 2011 report that no consistent approach, delivery mechanism or technology stood out as a best practice in financial education.1 Individuals and families in need of such services had little guidance when seeking them, which increased their vulnerability to predatory, costly and often harmful actors. Most established models of financial education focused on long-term wealth creation, whereas families with low incomes typically wrestled with a number of immediate crises and underlying instability concerns that must be addressed first. Increasingly complex financial instruments for banking, borrowing and saving made safe and affordable choices, when available, difficult to identify and access.
DCA’s Office of Financial Empowerment (OFE), therefore, began developing and delivering rigorous and professional standards for counselor training, service delivery quality control, and impact measurement and evaluation. This article examines OFE’s delivery model, the collateral impacts we experienced as we integrated these programs into other services, and the repercussions for national replication.
Professional Financial Counseling in New York City
Mindful of vast need and standards of public accountability, OFE developed and deployed best practices in content, delivery and evaluation to achieve professional quality in this field, employing a three-pronged approach:
1. OFE standardized an outcome-driven service-delivery model, implemented through the city’s now publicly funded Financial Empowerment Centers, which offer free, professional, one-on-one financial counseling services. The cornerstone of this approach is a comprehensive financial health assessment completed with all clients at intake and a subsequent 30-milestone and outcome evaluation tool. The Centers strive to understand the full financial picture of their clients regardless of the motivation for the visit. Subsequent one-on-one counseling sessions include:
- Budget counseling
- Credit building and repair of credit reports and scores
- Debt management strategies
- Connection to safe and affordable banking products negotiated by OFE
- Guidance on appropriate and viable savings and asset-building opportunities
- Strategic referrals to legal services, free or low-cost tax preparation, benefits counseling and other social services, as appropriate
- Longer-term financial coaching geared toward asset-building goals
2. To ensure the quality and consistency of services offered to the public at the city’s Financial Empowerment Centers, OFE developed a formal training program with the City University of New York (CUNY) in 2009. This course is now available as a full-semester, three-credit undergraduate course offered by CUNY’s School of Professional Studies through a Financial Studies Certificate Program. All Financial Empowerment Center counselors must take and pass the course. It is also open to service providers across all fields and all CUNY students. Ensuring quality service providers is essential to make the case for public funding of the Financial Empowerment Centers and, most important, to enable the city and its partners to steer consumers into the hands of very capable financial educators.
OFE also has partnered with the Columbia University School of Social Work (CUSSW) to integrate financial counseling into the field of social work through the graduate-level course, Personal Financial Management and Financial Counseling Skills. This course is now a prerequisite to a field placement in financial empowerment and counseling.
3. Finally, OFE standardized processes and protocols across its Financial Empowerment Centers to ensure consistently high quality, regardless of the provider, and to meet the impact measurement demands of its initially private and now public funders. OFE customized an integrated database system used as both a case management tool to track client progress against four distinct service plans (banking, credit, debt and savings) and for ongoing performance evaluation.
The “Supervitamin” Effect
With the advent and track record of quality metrics, New York’s financial counseling field experienced a demand for financial counseling that extended beyond counseling
clients to include program providers in other antipoverty efforts. Because financial instability is a common underlying circumstance, other program clients were finding it difficult to make improvements. Professional financial counseling, integrated into the delivery stream of other programs, began producing strong evidence of a “supervitamin” effect, helping those programs work faster and more effectively. This exciting development is studied in detail in OFE’s multi-report series, “Municipal Financial Empowerment: A Supervitamin for Public Programs.” The first supervitamin report, released in December 2011, focused on Strategy #1: Integrating Professional Financial Counseling (www1.nyc.gov/assets/dca/downloads/pdf/partners/Research-SupervitaminReport1.pdf). The second supervitamin report, Strategy #2: Professionalizing the Field of Financial Education and Counseling (www1.nyc.gov/assets/dca/downloads/pdf/partners/Research-SupervitaminReport2.pdf), documents the exciting approaches described in this article. The third report focused on Strategy #3: Integrating Safe and Affordable Bank Accounts (www1.nyc.gov/assets/dca/downloads/pdf/partners/Research-SupervitaminReport3.pdf), and future reports will focus on integrating targeted consumer financial protections, and integrating asset-building and income-boosting strategies.
Other city governments in the national Cities for Financial Empowerment Coalition, founded and co-chaired by New York City and San Francisco, implemented citywide networks of financial education providers, like San Francisco’s Smart Money Network and Seattle’s Financial Education Providers Network. Emphasizing the kind of quality control required by public accountability, other opportunities for integrated delivery arose, and the “supervitamin” approach began taking hold across the country. With the promise of quality, scale and public systems change came further excitement.
Through an initiative of the Cities for Financial Empowerment Fund (CFE Fund), a project of Living Cities, other cities soon will replicate the rigorous, standardized and integrated version of financial education and one-on-one counseling pioneered by New York City’s Financial Empowerment Centers. As a measure of demand and interest, more than 48 cities, representing 30 million residents in 29 states and one U.S. Commonwealth, applied to offer—and publicly integrate—the professional financial counseling model with the CFE Fund.
Finally, steps in the direction of greater federal involvement are emerging. The federal Financial Literacy and Education Commission, which convenes regularly at the U.S. Department of the Treasury, revised its National Strategy for Financial Capability in 2011, including a set of core competencies that should become part of general public financial knowledge. And the new Consumer Financial Protection Bureau has a dedicated Division of Consumer Education and Engagement, with separate Offices of Financial Education and Financial Empowerment.
The field of financial counseling and education is clearly ripe for the public investment attendant to professional delivery. And the public need is arguably greater than it has ever been.
- United States Government Accountability Office: Report to Congressional Committees; Financial Literacy: A Federal Certification Process for Providers Would Pose Challenges. June 2011. Executive Summary.