WASHINGTON (11/20/13)--Financial product marketing spending far outpaces funding for financial education efforts, a situation that the Consumer Financial Protection Bureau said "can make it difficult for consumers to find objective information."
The CFPB detailed this spending discrepancy in a report entitled "Navigating the Market." The study examined financial education spending by nonprofits, the federal government, financial institutions, state governments, municipal governments and school districts, and philanthropic giving groups, and spending on awareness advertising and direct marketing.
"When consumers receive the vast majority of their financial information from companies that are trying to promote an image or sell products, consumers have very little unbiased information," CFPB Director Richard Cordray said.
Financial services firms spend $17 billion annually to market financial products and services to consumers, while $670 million is spent annually to provide financial education to consumers, the CFPB said.
Nearly $2.5 billion in financial marketing funds are used to promote credit and loan products, and around $1.4 billion was spent to advertise checking accounts, savings, and other bank related services, the CFPB said. The majority of this advertising was done through television ads, but newspaper, radio, magazine, display and outdoor ads were also used, the CFPB said. Around $12 billion was spent on direct advertising, which aims to get consumers to make immediate purchases. Nearly half of this direct marketing total was spent on online advertising endeavors.
Financial institutions came in third in financial education spending, providing around $31 million for those efforts. Overall, nonprofit spending accounted for $472 million of the funds spent on educational efforts, while the federal government spent $130 million, the CFPB noted.
The study, Cordray noted, "further reinforces the dire need for more and better financial education in this country."
Credit unions continue to work to close the financial education knowledge gap, providing financial counseling to more than 1.5 million consumers each year, according to a National Credit Union Foundation report entitled "Credit Unions: Focused on Financial Capability across the Nation." In total, credit unions invested more than $140 million in financial literacy efforts in 2010.
Credit unions also provide financial education through on-campus credit union branches, which held more than $34 million in funds from 111,500 student members as of 2010. Nearly 5,000 student workers received on-the-job training experiences at those 1,400 in-school credit union branches.