Cluttered Lives, Empty Souls

2nd QUARTER 2013 | VOL. 31 #2
3
LEADERSHIP:
AFCPE
Celebrates 30 Years
Cluttered Lives, Empty Souls
4
ACADEMIC: Partner
Understanding and Treating Hoarding Disorder
Financial Literacy with
Financial Aid
6 PRACTITIONER: Focusing
on Mending Spending
8 The Massive Failure of
401(k) Education
By Terrence Daryl Shulman, MD, LMSW, ACSW
Unless you’ve been living on another planet,
divulged their struggles with clutter and
you’ve probably noticed the ever-increasing
stuff—especially my clients who were
media coverage over the last few years
compulsive shoppers or shoplifters. I also
around the “latest” disorder: hoarding.
recognized several family members and
Several cable programs on hoarding have
friends who were packrats and, bit-by-bit,
10 4 Steps to Up Your
Client’s Financial
Know-How
garnered big ratings and endless fascination.
even found my office getting disorganized.
These TV programs tend to highlight the
Then, it occurred to me: my father had
more extreme cases of hoarding. Hoarding
been a hoarder, too! And for every hoarder
13 BOOK REVIEW: Life at
Home in the TwentyFirst Century: 32
Families Open Their
Doors
finally starting to come to
14 AFCPE News
is either on the rise or we’re
terms with it. While statistics
and prevalence are still
sketchy, here’s what the
latest research shows:
• Hoarding affects about
6–15 million Americans—
still hiding behind closed
One man’s
hoard is
another man’s
collection.
TIME magazine, 2010
—Anonymous
• There are over 75 U.S.
doors, more public faces
of this disorder are coming
out, including Micahaele
Salahi, Heidi Montag
and Spencer Pratt, Lisa
Kudrow, Mariah Carey,
Kevin Federline, Celine
Dion, Marie Osmond and
Paris Hilton (17 dogs might
qualify as animal hoarding).
National Hoarding Taskforces—TIME
magazine, 2010
• Personal consumption expenditures on
storage unit rentals increased over 20
Looking at the bigger picture, society has
encouraged super-consumerism—hoarding
often is its byproduct. When everyone
percent since 1980—U.S. Chamber of
bought a home before the housing bubble
Commerce
burst, we had to fill those homes up, didn’t
we? And if there wasn’t enough room in
I became interested in studying and
your McMansion, have we got a storage
treating hoarding disorder several years
unit for you! Or two, or three or four!
ago when many of my counseling clients
Continued on page 12
the
Standard
2nd QUARTER 2013
President’s Message
2013 Board of Directors
Co-President
Barry Wilkinson, AFC®
United States Air Force
Bellevue, NE
Email: Barry.l.Wilkinson@
Barry.l. Wilkinson@
offutt.af.mil
Co-President
Co-Past
President
Rebecca Travnichek,
Ph.D., AFC®
University of Missouri
Extension
Savannah, MO
Email: TravnichekR@
missouri.eduen@
comcast.net
Secretary
Virginia Zuiker, Ph.D.
University of Minnesota
St. Paul, MN
Email: vzuiker@
umn.edu
Treasurer
Michael Gutter, Ph.D.
University of Florida
Gainesville, FL
Email: [email protected]
Members-at-Large
Kelli Jo Anthon, AFC®
Belvoir Federal Credit Union
Washington, D.C.
Email: Anthon@belvoir
Anthon@
belvoirfcu.org
fcu.org
Maryann Barry, AFC®
Airmen and Family
Readiness Center
McConnell AFB, KS
Email: maryann.barry@
us.af.mil
Sharon Cabeen, AFC
TG
Acworth, GA
Email: scabeen@
comcast.net
®
Jan Garkey, AFC®
CUNA
Madison, WI
Email: jgarkey@cuna.
[email protected]
coop
Jinhee Kim, Ph.D.
University of Maryland
Extension
Email: [email protected]
College
Park, MD
Email: [email protected]
Irene Leech, Ph.D.
VirginiaLeech,
Irene
Tech Ph.D.
Blacksburg,
Virginia
TechVA
Email: [email protected]
Blacksburg,
VA
Email: [email protected]
Dora Mays, Ph.D.
MacDill
Dora
Mays,
Air Force
Ph.D.
Base
MacDill
Air Force Base
Email: [email protected]
Tampa, FL
Syble [email protected]
Solomon
Email:
Lifewise/Money Habitudes
Wilmington,
Syble
Solomon
NC
Email: [email protected]
Lifewise/Money
Habitudes
Wilmington, NC
Michael
Wood, AFC®
Email:
[email protected]
Army Installation and
Management
Command
Michael
Wood,
AFC®
Army
Installation
San Antonio,
TX and
Management
Command
Email: michael.a.wood@
San
Antonio, TX
us.army.mil
Email: michael.a.wood@
us.army.mil
Editor: Jill Anne Ladouceur
Email: [email protected]
Technical Editor/Proof
Editor/Proofreader:
Reader:
Barbara O’Neill, CFP®, Ph.D., AFC®, CHC®
Email: [email protected]
Deadlines for The Standard are as follows:
1st Quarter—November 15
2nd Quarter—February 15
3rd Quarter—May 15
4th Quarter—August 15
The Standard (ISSN-1096). Published quarterly.
Association for Financial Counseling and
Planning Education
1940 Duke Street, Suite 200
Alexandria, VA 22314
Phone: (703) 684-4484
Fax: (703) 684-4485
www.afcpe.org
2
By Barry Wilkinson, AFC®
2013 AFCPE President
Dallas, Texas in January, the temperature
We evaluated our products and services.
was in the mid 70’s when 28 of us came
What type of association do we wish to
together for an AFCPE strategic planning
be and who is our customer? Are we a
session. I related well to a groundhog, since
professional organization that serves the
I entered the hotel in the late afternoon and
membership, or are we a certifying body
emerged two days later squinting from the
that provides a credentialing process for the
bright sunlight and seeing my shadow. How
practitioner? AFCPE is all of those things
enlightening it was to spend two days with
and we want to continue serving all. Now the
so many intellectuals from varied walks of
question is how do we continue to be relevant
life coming together because of their love
and effective as a professional organization
and dedication to AFCPE.
and set the highest standards for our
credentials?
We examined our foundation. We
revisited our purpose and values, and
We examined the landscape. We
discussed intently what is important to us.
reviewed the risks associated with today’s
Many associations have a “wait-and-see”
economics, politics, demographics,
attitude. With uncertainty all around us,
and technology. We looked at how we
hoping for things to return to the way they
might transform these into opportunities
were or remain the same may feel like a safe
for our organization. People today are
thing to do; however, if we are to grow and
more inclined than ever to learn through
prosper then we must get in the driver’s
technological advances. Social networking,
seat. If there ever has been a moment when
webinars, distance learning, and the
strategic thinking and planning mattered, it is
overarching economy are major driving
now. AFCPE has been Setting the Standard
for 30 years and I assure you that we will
have to work hard to continue that legacy.
Continued on page 14
During the transition of our Executive Director, and with the Board of Directors
(BoD) focusing on strategic planning, the BoD wants to maintain continuity
within AFCPE. In order to proceed forward efficiently with a new business plan
the BoD decided to suspend officer elections for 2013 and have responsibilities
shared between the two presidents. Rebecca Travnichek (President 2012) and
Barry Wilkinson (President 2013) will share responsibilities as “Co-Presidents”
for this year with Barry moving into the Presidency in 2014. The AFCPE Board
of Directors sincerely appreciates the support the membership and staff
continually provide as our organization evolves.
Leadership
Celebrating 30 Years: AFCPE’s Anniversary Is a Time for
Reflection and Inspiration
By Jill Anne Ladouceur
In 2013, AFCPE
attracted over 60
celebrates its 30th
attendees from 30
anniversary. As
states. It was hosted
with all milestone
the next year by Hira’s
events, it’s a good
Iowa State University
time for reflection,
where AFCPE was
as well as looking
formally launched and
toward the future.
bylaws were adopted.
The Standard
Mason quipps, “I
visited with leaders
was elected Past
who have shaped
President—funny title
the membership
for someone who was
association that
never the president.”
you have chosen
to support, and
Tahira Hira, Ph.D.
Jerry Mason, Ph.D.
likewise, the
organization that
supports you. What follows is a snapshot
of our rich history.
One of the cornerstone
ideas was to establish
an organization
and shared amongst this budding
that supported all those with an interest
profession. Mason recalls, “There was
in financial counseling. In the early years,
a need for a professional association
AFCPE was supported primarily by
The seed was planted in 1983 by two
with a mission to enhance the financial
academia, soon after joined by financial
visionary leaders, Jerry Mason, Ph.D.,
counseling profession.” From there, the
counselors, Cooperative Extension and the
and Tahira Hira, Ph.D. The two attended
first conference was developed and held
military. Tom Garman, Ph.D., was involved in
a conference together and talked about
at Brigham Young University, where Mason
the formative years and recalls, “We wanted
the need for resources to be available
taught. The invitation-only conference
to create an organization where all those
who were involved in personal financial
issues could meet, feature their work, and
AFCPE Mission: “AFCPE provides
professional development
experiences for financial educators,
practitioners, and researchers to
improve the economic well being of
individuals and families worldwide.”
be treated with respect.” He continues,
“Respecting all was critical,” and still is today.
As the need for financial counseling has
continued to grow, the membership
of AFCPE has become more diverse,
welcoming those in credit unions, financial
aid offices and credit counseling, among
others. Today, AFPCE members and
certificants are geographically dispersed.
There are 643 of your colleagues located
Continued on page 11
3
the
Standard
Academic
2nd QUARTER 2013
Eight Reasons Why Partnering Financial Literacy with Financial
Aid Makes Sense
By Mark Mielke, MPA, CFP®
As a result of Texas legislation, Texas public
on a variety of money topics. Who
as an advisor who determines a PJ
colleges and universities will be required to
possesses a more in-depth knowledge
is justified. There are circumstances
offer student financial literacy training no
of college student finances than
where a student’s Expected Financial
later than Fall 2013. Those Texas college
a financial aid advisor (sometimes
Contribution (EFC) may be modified to
administrators who previously believed that
called counselor or officer)? Financial
enable Pell Grant to be increased from
financial literacy was unnecessary are now
aid advisors talk with students and
$0 to $5,550, as well as to enable the
scurrying to establish compliant programs.
parents on a daily basis and are
student to be eligible for other grants.
Administrators from other states are also
intimately familiar with students’ money
Students who go to financial literacy
exploring options for effective, cost efficient
challenges, issues and problems.
offices that don’t possess the knowledge
financial literacy programs.
Advisors also have a pulse on their
or authority to perform PJs may only
local economies and the devastating
receive counseling to reduce spending.
The obvious need to establish financial
impact that economic downturns
literacy training to assist students sorely
can have on the financial resources
lacking in money management skills will
of parents and their ability to assist
Counseling—Offering financial literacy
be with us until students receive adequate
children with college expenses.
advice to students as part of financial
training before entering college. This
need for starting campus financial literacy
4. Comprehensive Financial
aid provides a “one-stop shop” that
2. Aware of Student Costs—Advisors
delivers exceptional customer service.
programs comes at an inopportune time as
are well-informed about their schools’
While there is additional, distinct
colleges are facing continuous pressure to
Cost of Attendance (COA) estimates
knowledge that financial aid advisors
keep budgets low. The good news is that
which provide a useful starting point
will need to obtain in order to become
establishing an excellent financial literacy
for student budgets. A fundamental
valuable financial literacy counselors,
program need not be expensive.
element in establishing a budget is
most students coming in for financial
estimating expected costs. Students
assistance don’t make the distinction
There are a number of models for
can add to or subtract from COA
between the two money classifications.
establishing college financial literacy
estimates based on their specific
They just need financial help.
programs and each has its own advantages
circumstances after performing more
or disadvantages for personnel costs, facility
detailed projections. There is not a
A student may come in with a problem
requirements and service to students. One
competent financial aid advisor who
that necessitates counseling on
model which scores well on all of these
is not able to quickly review student
establishing adequate budgeting
considerations is incorporating financial
budgeted costs for housing, utilities,
practices, decreasing the amount
literacy counseling within the financial aid
food, transportation and entertainment
of credit card debt, and explaining
office. Here are eight reasons why it makes
to determine if they are reasonable.
financial aid options. Financial literacy
sense to consider this model for your
school’s financial literacy program:
1. Finding the Right Professionals—
4
representatives who provide assistance
3. Professional Judgment Authority—
with budgeting and credit card debt but
One of the best parts of being a financial
who are unable to help with financial aid
aid advisor is the authority to perform
information provide less than optimum
One of the first challenges in
a professional judgment (PJ) when
customer service. Financial aid advisors
establishing an effective program is
circumstances warrant. Few people
who discuss financial aid options but
finding knowledgeable employees
on campus have the power to improve
capable of communicating information
a student’s financial status as much
Continued on page 5
Academic
Partner Financial Literacy
Continued from page 4
aid offices have programs to lower
and handouts ask that their logo remain
student loan default rates for students
on the slides, along with the school logo
or credit card debt issues provide a
at their schools. Increasing financial
of the presenter. Others, such as the
similar sub-optimum customer service.
literacy knowledge will help advisors
Money Wise Aggie, freely provide use of
who are unable to help with budgeting
Trained financial aid advisors who are
in educating students about keeping
their independently developed slides and
able to help with all three of these
their student loans as low as possible
handouts with no restrictions. Almost
topics, as well as other issues that
and establishing successful repayment
all financial literacy programs want to
may arise, are providing the first-rate
strategies. In talking with financial literacy
share their information so that students
customer service students deserve.
representatives not part of financial aid,
from all schools can receive useful
many don’t know their specific school’s
financial literacy training. With the sharing
5. Access to More Students—Financial
student loan default rate, and some had
attitude of schools with active financial
aid advisors are able to identify and
no idea that the default rate is measured.
literacy programs, there is no reason that
counsel students on financial literacy
All financial literacy representatives need
schools initiating workshops will have to
topics who may never go to visit with
to be part of an active campus team with
start from scratch.
a financial literacy counselor. Financial
the goal of keeping default rates as low
literacy counselors who are separate from
as possible.
financial aid offices have commented to
me that they don’t have a large number
of students seeking individual counseling.
8. Low or No Increase in Personnel
Costs—Since schools using this model
7. Skilled Advisors—With the sound
money and counseling foundation
are training financial aid advisors for their
financial literacy programs, there are
Perhaps that is because students don’t
see the value of their counseling.
Financial aid offices don’t have a
shortage of students seeking financial
assistance. Financial aid advisors who
carefully listen to the large number of
students with whom they meet can
“This need for starting campus financial
literacy programs comes at an inopportune
time as colleges are facing continuous
pressure to keep budgets low.”
identify financial literacy problems
and assist students in resolving these
problems. Financial aid advisors can
most financial aid advisors possess,
normally little or no increases in personnel
even require student action before
increasing their financial literacy
and facility costs. Certainly the costs of
enabling them to receive their financial
knowledge should not be expensive.
training advisors already on the payroll
aid. An example might be a student who
Advisors are skilled in working with tax
would be less than hiring new staff and
is required to bring in a realistic budget
returns when completing verifications
finding building space for them.
or attend a credit card workshop before
as well as adroitly making numerous
a Satisfactory Academic Progress (SAP)
calculations when completing
The eight reasons for integrating financial
appeal is approved.
aggregate loan determinations and PJs.
literacy into the financial aid office provide
a logical option for schools seeking to
6. Knowledgeable About Fighting
Advisors usually are able to easily learn
establish robust financial literacy programs
Against Student Debt—Financial aid
financial literacy information to allow
at a reasonable price.
advisors who possess financial literacy
them to provide counseling and present
knowledge are among the most valuable
workshops. In addition, there is a large
Mark Mielke, MPA, CFP®, is an advisor and
members in the fight against high student
amount of workshop information on
Money Wise Aggie Coordinator, Scholarships &
loan debt. Soaring student loan default
many financial literacy topics that is free
Financial Aid at Texas A&M University. He can
rates have been identified by some as
to anyone who asks. Some organizations
be reached at (979) 458-5325 or visit https://
the next credit bubble. Many financial
allowing use of their workshop slides
moneywise.tamu.edu for more information.
5
the
Standard
Practitioner
2nd QUARTER 2013
Focus on Mending Spending to Increase Savings
By Paul Richard
or research regarding whether or not the
purchase is necessary or a good value.
Anything that seems to make life easier
falls into this category, for example, eating
out or buying prepared or fast food. Other
examples of convenience purchases include
going over their cell phone limit for calls and
text messages, shopping at convenience
marts or expensive nearby stores instead of
at lower priced supermarket or department
stores, or using any ATM instead of their
own bank’s resulting in extra charges. How
can you help your clients explore new ways
to plan their routes, time, meals or record
keeping so they don’t have to sacrifice
convenience to save money?
2. Identify when people are more
vulnerable to impulsive spending
When people are feeling tired, hungry, angry,
lonely or fearful they are vulnerable to making
choices they will later regret. Help people
recognize those feelings and encourage
them to avoid spending or making financial
decisions at those times when possible.
You and your clients are frustrated!
us that having more money isn’t necessarily
Tips that could make a difference are: eat
Encouraging them to save more often
the answer. Typically when people have more
something before shopping, have a shopping
seems to be met with resistance, anger and
money but don’t mend their spending, they
list and stick to it, shop less frequently (and
hopelessness. Saving seems so unrealistic
continue to have the same money challenges!
without children) and shop at a different time
when your client is living from paycheck to
of day or different day of the week when
paycheck. Where will they get the money to
How can you help them focus on spending
there are fewer stressors. Also, once your
save? The answer: spend differently.
to get the most mileage from the money
clients recognize these feelings, they can
they do have? Try these eight ideas to
train themselves to stop before going to the
promote successful spending strategies.
register, then go through their cart to remove
When you make spending a separate subject
matter and provide new techniques, you
items by asking themselves these questions:
they get more value for their dollar. Once
1. Find options for impulsive or
convenience spending
they take control of their spending they are
Convenience is cited as a main reason for
ready to save. Taking control of everyday
impulsive spending. People surveyed say it
spending decisions is the key. Research tells
prompts spending without much forethought
enable people to be better consumers so
6
• How much time will I have to work to pay
for this item? Is it worth it?
Continued on page 7
Practitioner
Mending Spending
Continued from page 6
• What are three other things I could do/
salesperson influencing a quick (and
7. Provide hands-on learning
potentially bad) decision.
Information is more dynamic when there
5. Increase awareness of marketing
strategies
Do group shopping trips for comparisonshopping with people sharing their
Help people recognize common marketing
findings at the end. Work on spending
buy with that money? Would that have
more value for me?
• Will I think this was a good choice when I
look back in a month?
are opportunities for practical applications.
strategies that are very successful. For
projects, play games that include financial
It could also be helpful to not purchase
example, salespeople and advertisements
choices, role play different scenarios
anything unplanned that costs above a
will break down an expensive item into “ten
and work out the real cost of buying on
certain amount of money (maybe $50?)
easy payments of only ....,” so the total
credit. Discussions and activities are more
without waiting a day, week or month.
cost plus interest is never mentioned. Ads
motivating, engaging and reinforcing than
that appeal to making your life easier will
lectures and PowerPoint presentations.
3. Differentiate between quality and
brand names
distract the customer from considering
the price. Common phrases are shop at
8. Get beyond dollars and cents
Marketing, peer pressure, status and the
home, our agents are available 24/7, and
Consider self-evaluation tools that will help
fleeting moment of feeling good are often
delivered to your door. Be aware of ads
consumers understand themselves better and
the cause for buying more expensive items
and salespeople who provide incentives
how that influences their spending patterns.
when comparable items are available for
if you immediately commit to purchase
less. For some people that means replacing
something. Common phrases are special
their perfectly serviceable items with the
gifts for the first ten callers, discounted
latest model at a higher cost. Technology is
price if purchased today, and 15 percent
the biggest culprit here as people are buying
discount on all your items if you apply for
expensive new cell phones, tablets and
this credit card today.
• What money messages did they learn or
inherit growing up?
• Does how they spend their money reflect
their values?
• What is their money personality?
• How does their spending affect their
computers and then spending more on brandname accessories for them. Other examples
Other common marketing strategies
include buying bottled water and designer
in grocery stores are: placing the least
relationships?
drinks, automatically having cars serviced at
expensive brands on the bottom or top
Poor spending habits and choices result
the dealership, buying flowers and plants at a
shelves and the most expensive items at
in about 80 percent of American adults
florist, buying brand name clothing and only
eye level; placing items at the end of aisles;
feeling they cannot save enough, build net
shopping in the “right” stores.
and placing individual pieces of produce
worth or attain a good credit score. Helping
by the pound in the front of the store and
consumers spend wisely can make the
4. Provide comparison shopping
education
produce packaged in multiple pound bags
difference! While a single class on spending
at a discounted rate further back.
issues can be helpful, focusing on spending
One of the easiest steps to increase
throughout a more comprehensive program
the value of every dollar spent is to do
6. Share good spending practices
lasting weeks or months will have a greater
comparison shopping before spending.
Great practices to establish are to wait
chance of fostering positive changes in a
Besides teaching how to research big-
for sales, use coupons, take advantage
person’s life.
ticket items and ask the right questions,
of group buying, use rebates and be
suggest a separate shopping trip just to
aware of what are the best months to buy
Paul Richard is executive director of the Institute
get information without buying anything.
certain products. Another important habit
of Consumer Financial Education, (ICFE) a
That means the person does not carry
is to save up to buy something instead
nonprofit, educational foundation, established
credit cards or a checkbook and is only
of buying on credit. If you’re working with
in 1982. He is a bankruptcy reform advocate,
comparing prices, value, repair history,
groups, participants generally are more
author of books/articles, educator, savings
warranties, etc. This not only helps educate
open to interactive discussions when other
advocate, and public speaker. He can be
the buyer to make the best choice, it also
members of the group share their personal
reached at [email protected].
eliminates the possibility of a persuasive
suggestions, experiences and successes.
7
the
Standard
2nd QUARTER 2013
The Massive Failure of 401(k) Education
By Dennis Ackley
401(k) balance is about
knowledge must beginning 401(k) participants
$62,000.3
have to be successful? And how do you
measure the results of your education to
Most of the content
ensure employees know what to do and
and techniques used
how to do it?” Unfortunately, many providers
in today’s 401(k)
don’t have the answers. So how can they
education came from
determine what should be in or out of a basic
1980s mutual fund
401(k) curriculum?
sales presentations.
They were designed
No well-run organization would allow
for financially aware
drill-press trainers to teach new operators
people who were
without a clear description of the required
interested in mutual
competencies and without success
funds to supplement
measures. Why is that allowed in educating
their traditional pension
new 401(k) operators?
plans. Does that sound
like today’s typical
Cruelest Consequence
company employee?
Ask some employees how much money
There was no sinister
retirement they want. Most will have no idea.
they would need in an account to afford the
motive. It was just easy
Lots of hard work and great intentions have
Yet, it will be the most expensive “purchase”
and inexpensive for the mutual fund industry
most people will ever make. (Back in the
gone into the retirement aspects of personal
to change the name of the sales materials to
day, we were told it was a house—we were
financial education. Yet sadly, 401(k)
“401(k) education.” But it was:
told wrong.)
• Not pilot tested
Research shows only four in ten employees
• Not modeled after successful voluntary
say they’ve tried to calculate how much
education is the largest failure ever of adult
education. What does the failure look like?
At best, $400 a month. That’s the
expected lifetime income when all 401(k)
and IRA accounts are combined in typical
households headed by employees age
55–641. The median total balance in those
households is $120,000. Using the 4
retirement ed programs
• Not designed using adult-education
principles
• Not based on competencies employees
need to begin using 401(k)s successfully
• Not equipped with successful testing tools
percent a year lifetime withdrawal guideline
they’ll need in retirement. Even about half
the workers age 50–65 don’t know.4 This
is tantamount to intending to start a new
career and having no idea how much it will
pay or where the money will come from.
Why is the realistic cost of retirement a
mystery? It could be because the 1980s
that many financial planners follow,2 it
In 30 years, about the only change is that
mutual fund presentations didn’t address it,
amounts to $400 a month ($120,000 ×
some content is now delivered via websites,
so it’s still not covered in 401(k) education.
4-percent ÷12 months). Looking at 401(k)
emails and Twitter.
The retirement industry has had an odd
accounts alone, it’s around $200 a month
practice of “benchmarking” retirement plan
for life for typical employees age 55–64
Test it yourself. Ask 401(k) education
(using the 4 percent guideline). Their median
providers, “What specific skills and
8
Continued on page 9
haven’t asked the question, the answer has
401(k) money out when they change jobs,
401(k) Education
nowhere to go. You have to want to know
buy a house or encounter a hardship. And,
Continued from page 8
the answer.” Telling unmotivated adults to
they will never reduce their contribution
save and giving them advice they haven’t
rate, even though they have no idea
sought are wasted efforts.7
how much the retirement they’ll want will
features—not plan outcomes. Today, fewer
than 5 percent of plan sponsors focus on
retirement income as a success measure of
cost. What are the chances of all that
Rather than tell employees what to do, an
their 401(k) retirement plans. If retirement
effective 401(k) education program should
income is not the main purpose of a
help them imagine their future lives and
5
retirement plan, what is?
happening?
If organizations want employees to be
dreams. The curriculum could be designed
successful using voluntary retirement
to get employees to ask themselves, “On
plans —401(k)s, 403(b)s, and 457s—they
No Target, No Success
top of income from Social Security, personal
must make sure employees know how to
Every beginning 401(k) user needs a
assets and part-time work, how many
use the plans to provide the retirement
personally meaningful, realistic target account
$100,000 accounts would I need to support
income they want. American workers
balance. Research shows that employees
the retirement lifestyle I want?”
deserve a retirement education that works
who know how much they need are not
discouraged. In fact, they save more.6 It’s
… or retirement plans that don’t require
Shouldn’t employees discover in their 20s
knowledgeable users.
illogical to expect employees to reach a
—and not in their 60s—that every $1,000
target that is unknown to them or they have
a month will take around three $100,000
Dennis Ackley is an advocate for clarity and
not personally set … especially one that
accounts? Not knowing the cost from the
accountability in 401(k) education—helping
requires substantial financial contributions.
start of their careers steals the time they
workers gain the basic knowledge needed to
need to accumulate the account balances
begin achieving the financial future they want.
Here’s a simple approach. Imagine you are
they’ll want. Starting early and making
Early in his career, Dennis spent six years in
age 65 today and it’s your last day of full-time
substantial contributions are essential for
educational research and instructional design.
work. You have $100,000 and you expect
success using 401(k)s.
For the next 30 years, he worked in retirement
to spend it over 25 years to age 90. And
administration and communication consulting.
say you’ve put it in bank CDs (a favorite of
Helping young employees discover a
For more of his ideas regarding retirement
retirees), and the CD and inflation rates are
realistic idea of the cost is just the start.
education, see his speeches and articles at
the same. If you divide $100,000 by 25 years,
It’s intended to turn them into motivated
dennisackley.com.
how much is that each year? Is it really only
learners who will want to learn much more
about $4,000 worth of buying power a year—
and obtain sophisticated advice from
© Copyright 2012 Dennis Ackley
$333 a month—before the account runs out?
financial professionals. Getting a good
Is this realistic? Is it meaningful? Coincidentally,
start early in their careers is something
Endnotes
this example reinforces the 4 percent guideline
employees need, but most do not get.
1. 2010 Survey of Consumer Finances,
Federal Reserve System, June 2012.
Nudging to Success
2. Revisiting the ‘4% Spending Rule,’ The
Vanguard Group, August 2012.
that a $100,000 account provides around
$4,000 in buying power a year.
Some prominent behavioral economists
Questions Fuel Motivation
have a well-intended theory of nudging
Most 401(k) education delivery is based on
employees through automatic enrollment
the old sales presentation model of having
and escalating contributions so employees
an expert tell employees what to do. But for
will accumulate several hundred thousand
people who are not yet motivated to learn
dollars for retirement. That’s fine as long as
about retirement—i.e., most young adults—
it’s done along with education so employees
telling isn’t teaching.
know, among other things, the realistic cost
4. Financial Literacy and Retirement Planning
in the United States, Lusardi and Mitchell,
February 2011, Netspar.
5. Looking Into the Stars, Plansponsor
Magazine, November 2012.
of the retirement they want.
6. The 2011 Retirement Confidence Survey,
ebri.org, Issue Brief, March 2011.
To believe automatic provisions will work
7. Asking for Help: Survey and Experimental
Evidence of Financial Advice and
Behavior Change, Hung and Yoong, RAND
Corporation, January 2010.
Clay Christensen, a widely admired
Harvard professor, paints a vivid image of
3. How America Saves 2012, The Vanguard
Group, June 2012.
how adults learn. “Questions are places
without effective education, you must also
in your mind where answers fit. If you
believe that employees will never take the
9
the
Standard
2nd QUARTER 2013
4 Steps to Up Your Client’s Financial Know-How
By Eugene A. Woods, AFC®
Financial Literacy is an important factor
for consumers to improve their basic
Consumer A Loan Information (Credit Score 720 points)
understanding on how to handle money
Amount Financed
$ 15,000.00
and to make smart decisions concerning
Total Amount Paid
$ 17,399.52
their personal finances. Having a basic
APR (%)
6%
understanding of how to better manage
Total Interest
$ 2,399.52
money and the opportunity to enhance that
Length (years)
5
knowledge can save your clients hundreds
Paid/Borrowed
1.16
of dollars each month and thousands
of dollars per year. A basic definition of
financial literacy is the ability to understand
Consumer B Loan Information (Credit Score 620 points)
how money works.
Amount Financed
$ 15,000.00
Total Amount Paid
$ 22,854.08
Regardless of your clients’ age, they should
APR (%)
18%
take a few minutes a day to improve their
Total Interest
$ 7,854.08
basic financial management skills to become
Length (years)
5
better educated on consumer matters,
Paid/Borrowed
1.52
improve their awareness of bottom line
figures before signing documents, and
loan at an APR of 6 percent. If Consumer
purchases are often taken for granted. A
most importantly, to implement preventive
B has a current credit score of 620 points,
snapshot for comparison is illustrated in the
measures to help them avoid the pitfalls of
Consumer B could possibly qualify for an
chart on page 11. Compare that to a large
predatory practices. Note that predatory
APR of 18 percent or higher. Please see the
purchase of an iPad Mini at $329.
practices are not just known for high-interest
charts above to illustrate the computations.
loans from predatory lending, rent-to-own or
3. Legislation/Agency that Protects
take-it-home (no down payment necessary)
Consumer B would pay $5,454.56 more
Consumers—In July 2010, the United
establishments, but insurance fraud and
in interest payments for the same time
States Congress passed into law the Dodd-
investment scams are also known for
frame of the loan without any additional late
Frank Wall Street Reform and Consumer
predatory practices and are on the uprise.
charges or penalty assessment fees. This
Protection Act. The Dodd-Frank Act
Many experts agree that financial literacy
consumer lesson illustrates that a higher
implemented significant changes to financial
empowers your clients to make smart
credit score will yield lower interest rates,
regulation in the United States to implement
financial decisions. Here are three areas that
therefore your client saves money.
preventive measures for unfair practices in
can improve your clients’ financial well-being.
the financial industry.
2. Track Expenses—Maintaining a monthly
1. Credit Score Impact—Your clients
budget and tracking monthly expenditures
Another piece of legislation that consumers
should know their credit score. It can save
are not as difficult as perceived. Your clients
should be aware of is the Credit Card Act of
thousands of dollars in getting the best
can start by tracking their daily expenses. It
2009. In brief, the Credit Card Act of 2009
annual percentage rate (APR) for consumer
should be no surprise that small purchases
required financial institutions (card issuers)
loans. For example: If Consumer A has a
on weekdays could add up to more than
to provide a notification to consumers for
current credit score of 720 points, Consumer
one large purchase on a weekend. Most
A could possible qualify for $15,000 auto
large purchases are planned, but small
10
Continued on page 11
Up Your Client’s Know-How
Small Purchases Add Up
Continued from page 10
Small Purchase
Frequency
Amount Spent
$5.62 (Breakfast) + $9.35 (Lunch)
5 x per week
$74.85
major changes such as an increase in the
$5.62 (Breakfast) + $9.35 (Lunch)
20 x per month
$299.40
APR. Consumers would be allowed to “Opt
Compared to iPad Mini
$329.00
– In” or “Opt – Out” of the changes and
agreement of the new terms and conditions.
help to stay in charge. Being conscious
morale, and move them toward financial
of the amount of money spent provides
success. Have your clients review their
An important federal agency for consumers
the safety net and precautions from over
credit report at least once a year and take
to become more aware of is the Consumer
spending. Using a credit or debit card is too
the time to learn about their consumer
Financial Protection Bureau (CFPB). One
easy to swipe. Spending actual currency
rights before making a large purchase for
of the primary responsibilities of the CFPB
(cash) can make it difficult or very unpleasant
a car or home or applying for a consumer
is to provide guidance for regulating the
to spend. A budget may not be written down
loan. Have them track their daily and
rights of consumers with regards to financial
on paper or maintained with the use of an
monthly expenditures to stay in line with
products and services in the United States.
excel spreadsheet, but it is important to
their overall goals. Keep the ball in your
realize budget procedures are implemented
clients’ court to help them stay in control.
4. Take Control—Reversing the bad habits
every time income or a daily transaction for
of learned financial behavior is simply a
purchases or services occurs.
matter of taking control of the monthly
Eugene A. Woods, AFC®, is Personal Financial
Counselor, ACS/Financial Readiness Specialist. He
budget. Tracking when and where your
Small steps in the right direction will
can be reached at [email protected] or
clients’ daily and monthly expenditures occur
improve your clients’ well being, overall
[email protected].
AFCPE 30th Anniversary
chaired by Mary Stephenson. In 1992
the economic well being of individuals and
Continued from page 3
Mason was called on again to spearhead
families worldwide.” The vision of AFCPE
the creation of a certication program
leaders is to be internationally recognized
working from a spare bedroom in his
for these efforts, including its certification
in every state within the United States.
home. Ike Templeton, ACS Financial
programs, research journal, newsletter and
There are also 72 members and certificants
Readiness program manager in Community
annual conference.
located in Armed Forces Europe and Armed
and Family Support Center’s Family
Forces Asia area, as well as 82 members
Programs directorate was instrumental
In 2003, at our 20th anniversary celebration,
and certificants in Canada, and there is one
in gaining the support of the U.S. Army.
Karrol Kitt , Ph.D., and the late Celia
member in Hong Kong.
Mason remembers, “The reader needs to
Hayhoe, Ph.D., remarked that, “The pie-
understand that this committee had no
in-the sky vision for the future includes a
In the 1980’s, AFCPE leadership recognized
money. However, Ike Templeton said he
new profession of financial counselors with
the need for a professional journal that
would get the U.S. Army to make advance
AFCPE as its steward.” I think Celia would
addressed the specialized content needs of
payments to buy courses to launch the
be very pleased to know that vision wasn’t
financial counseling and planning education.
program. Thanks to the Army’s rescue,
pie-in-the-sky at all—it is reality.
Sherman Hanna launched the journal,
we had a little support to launch AFCPE’s
now known as The Journal of Financial
certification programs.”
Counseling and Planning, and remained
editor until 2002.
Thank you to the many, many leaders who
have shaped the financial counseling and
In 2001, AFCPE established the vision,
planning education field. Your hard work
“AFCPE provides professional development
has left a lasting imprint and benefited the
Later in the 1980s, a certification
experiences for financial educators,
lives of consumers worldwide. Your work
committee was established which was
practitioners, and researchers to improve
makes a difference.
11
the
Standard
2nd QUARTER 2013
Hoarding
Continued from page 1
loss of time, loss of relationships, shame/
Terrence Daryl Shulman, JD, LMSW, ACSW,
embarrassment/isolation, arguments with
CAADC, CPC is the Founder/Director of The
But what, actually, is hoarding? Compulsive
loved ones, germs/disease, accidents/
Shulman Center for Compulsive Theft, Spending
hoarding (a.k.a. pathological hoarding or
injuries, loss of freedom/loss of movement,
& Hoarding in Franklin/Southfield, Michigan.
disposophobia) is a hard condition to pin
and, increased mental illness, especially
He has authored four books, including the
down. The latest edition of the American
depression, anxiety and obsessive-compulsive
recently published Cluttered Lives, Empty Souls:
Psychiatric Association’s Diagnostic and
disorder, and legal consequences.
Compulsive Stealing, Spending & Hoarding
Statistical Manual of Mental Disorders (Volume
(2011, Infinity Publishing, see www.clutteredlives.
5) will separate hoarding and obsessive-
Why Do People Hoard?
com). He offers specialized counseling and
compulsive disorder. Hoarding disorder will be
While pioneers and experts in the field of
consulting in person, by phone and via Skype.
defined as ‘persistent difficulty discarding or
hoarding are still unlocking the puzzle of what
He can be reached at (248) 358-8508 or
parting with possessions, regardless of their
causes hoarding, it’s believed that hoarding
[email protected]. His
actual value. Certain defining features have
has both genetic and socialized components
websites include www.theshulmancenter.com
been identified by researchers in dealing with
(nature and nurture). Hoarding has been
and www.hoardingtherapy.com.
chronic hoarders. These criteria include:
related to obsessive-compulsive disorder
and anxiety disorder, but it is distinct in itself.
• The acquisition of and failure to discard a
Theories about what causes hoarding include:
Tips for Your Clients Who Hoard
• Getting a high from accumulating and
If you or someone you know may have
large number of possessions that appear
to be useless or of limited value
• Living spaces sufficiently cluttered so
as to preclude activities for which those
spaces were designed
• Significant distress or impairment in
function by hoarding
• Reluctance or inability to return borrowed
items. As boundaries blur, impulsive
tendencies could sometimes lead to
stealing or kleptomania
There are different degrees of hoarding—
from Level I to Level V—and there are
different things that people hoard, including:
feel pain/anxiety when discarding
• Reaction to change, trauma, loss,
stress—lack of control over little things
protection
• Freebies and junk (picked out of garbage,
the side of the road, etc…)
• Food
“Beauty is Nature’s
coin, must not
be hoarded, must
be current.”
• Shaky sense of self and overidentification with objects
counseling/therapy
• Read books/watch TV programs on
this subject
• Visit the websites www.hoarding
therapy.com and www.hoarders
anonymous.org
• See support groups (Messies
Anonymous, Clutterers Anonymous)
• Problems processing information/
• Set a timer to clean a certain amount
categorizing
• Newspapers, magazines, bills, and/or
• Problems with memory (too much/too little)
• Attempts to experience safety, security,
control
projects
• Intangibles (email, DVR recordings, etc.)
• Seek professional, specialized
• Hire a professional organizer
• Problems making decisions
• Scraps or parts for artistic or utilitarian
help
• Problems with attention/organization
• Animals
other papers
at www.hoardersanonymous.org.
• Admit you have a problem and need
• Newly purchased items
markets, discount stores)
Center 20-Question assessment available
• Social anxiety/phobia, isolation/
—John Milton
• Used items (from garage sales, flea
a hoarding problem, take The Shulman
Hoarding is a difficult and highly
emotionally-charged problem. If you
of time per day
• If you are trying to help a hoarder,
don’t move or throw out their
possessions
• Seek help categorizing things: trash,
keepers, recycling, gifts, for sale
• Maintain order and cleanliness
Hoarding can lead to many negative
suspect your client is in trouble, it is best to
through ongoing support/
consequences, including loss of money,
refer them to a specailist.
accountability
12
Book Review
Life at Home in the Twenty-First Century:
32 Families Open Their Doors
Written by Jeanne E. Arnold, Anthony P. Graesch, Enzo Ragazzini, and Elinor Ochs
Reviewed by Barbara O’Neill, Ph.D., CFP®, Rutgers University
As Book Review Editor for the Journal
such as material saturation; vanishing leisure
A striking observation was that sampled
of Financial Counseling and Planning, I
time; food preparation patterns; kitchen,
households rarely engaged in outdoor
frequently receive marketing materials for
bathroom, and master bedroom use; and
leisurely activities and rarely use furnished
new books. When I received a publisher’s
subjects’ personalization of their homes
outdoor spaces despite California’s mild
summary of Life at Home in the Twenty-First
and use of electronic devices. Financial
climate. Over two-thirds of parents’
Century: 32 Families Open Their Doors,
practitioners who teach about needs versus
activities were non-interactive and indoors.
the topic intrigued me. The book “presents
wants, materialism, and the concepts of
A gender gap in leisure time was “quite
a visual ethnography of middle-class
“enough” and “affluenza” will especially
pronounced in the father’s favor.” Kitchens
households” in southern California. The
find this book useful. Following are some
were found to be “command centers”
authors, archeologists and anthropologists
interesting facts and findings:
where families maintained an average of
photographer, used a multi-year systematic
Materialism has significant costs beyond
members’ schedules.
observation and interview process with a
overspending and depletion of family
diverse sample of two-earner families with
paychecks. Many families amass more
The Los Angeles study documented
children to present “an unvarnished view of
possessions than their houses can hold.
a number of downsides resulting from
the home lives of contemporary families and
This can result in psychological stress
material affluence including comfort lost if
from UCLA and a world renowned
their material possessions” (p. 3).
5.2 activity calendars to keep track of
associated with clutter and disarray, not to
possessions overly crowd a home, waning
mention financial anxiety due to mounting
leisure time, and reduced social interaction
Part research summary and part coffee table
debt. Many two-income families report not
at mealtimes. The book does not offer
book, this 171-page hard cover publication
having time to organize their possessions
any prescriptive solutions, however. Its
contains hundreds of photos of the contents
and create order.
purpose is simply to describe behavioral
of the subjects’ homes. According to the
and material characteristics of early 21st
authors, while the sample of 32 households
U.S. families have trouble getting rid of
seems small, the collection of detailed
possessions and struggle to cope with
century families.
information about their everyday interactions
stored clutter. Cars have been banished
Life at Home in the Twenty-First Century
and behavior and “material assemblages
from 75 percent of garages to make way
is a fast, insightful read. The photographs,
for dozens of houses” is very rare. The
for accumulated “stuff.” The U.S. has
as expected, are “ordinary” and reveal
researchers spent a week in the homes of
3.1 percent of the world’s children and
the clutter present in many homes. The
each of the 32 households between late
“buys more than 40 percent of total toys
time lag between final data collection in
2001 and early 2005, took pictures of their
consumed globally.” (p. 36).
2005 and the book’s publication in 2012
possessions, and observed and recorded
the activities of every family member.
was not explained. Perhaps it simply
U.S. families exhibit a strong propensity to
took the authors that long to categorize
stockpile food with long shelf lives and bulk-
and interpret the data. In the meantime,
While not a personal finance book per se,
rate prices. This minimizes the number of
new products to buy (e.g., big screen
Life at Home in the Twenty-First Century
times they need to shop for food. About 25
televisions) and ways to spend time (e.g.,
provides valuable insights into American’s
percent of evening meals involve no home
Twitter) have come along that are not
time-use and spending habits. It is
labor and are obtained through carry out,
reflected in the book’s content.
organized into nine chapters covering topics
delivery, or restaurants.
13
the
Standard
2nd QUARTER 2013
Notes from the Executive Director
By Rebecca Wiggins | AFCPE Executive Director
Evolutionary Innovation
This strategic planning retreat was just the
President’s Message
The New Year brings much more than
beginning of a dynamic process that will
Continued from page 3
empty resolutions. It provides an opportunity
allow us to respond to the changing trends
to reflect, recharge and recommit. As
and needs of the financial counseling field
factors in the way associations need
we prepare to celebrate AFCPE®’s 30th
in a collaborative way. Throughout the
to conduct business today. We should
Anniversary this fall, it seems fitting to look
coming months, we will seek your input and
have an “AFCPE App” on every smart
back on an organization that is rich in history
feedback on new ideas and initiatives as
phone! AFCPE should be the first hit on
and built on a foundation of research,
we seek to enhance AFCPE and remain a
Google for financial counseling. Every
expertise and vision. This is our springboard
leader in this field.
bank, credit union, school, university,
for the future.
social services agency, and employee
Ways to Get Involved
assistance program should know our
Over the years, AFCPE has matured into
Communities of Practice. AFCPE
name. Our certifications should be as
a well-respected leading authority in the
would like to feature the work you
common as Coca Cola to those who
field of financial counseling and education
and your colleagues are doing across
seek a financial counselor/educator.
through its rigorous certification programs,
constituencies or in your regions, to impact
quality publications, relevant educational
your communities. Please provide a brief
Celebrating our 30th Anniversary
offerings and engaging conference sessions.
synopsis to [email protected].
this year is recognition of AFCPE
But, to properly support our mission and
and the strides we have made over
meet the needs of the changing landscape,
AFCPE Vision for the Future. Help us
the years. We also celebrate the
we must continue forward on a path of
shape the future of this organization!
design of our strategic map which
evolutionary innovation.
will guide us into the future. We will
• Share some ideas on the two or three
In order to effectively prepare for the
important journey ahead, a group convened
in January for an intensive strategic planning
most important challenges you face in
your profession.
• What programs/services could we
maximize the potential of AFCPE by
streamlining processes, eliminating
useless and costly practices, taking
advantage of today’s technology,
retreat. The 28 participants consisted of
provide that would enhance your
and insuring that we are using every
founding members of AFCPE, previous and
knowledge and skills?
social network and marketing avenue
current Board members, representatives
for AFCPE constituencies, AFCPE staff and
thought-leaders in the field. The experience
created a collaborative vision for the future
of the financial counseling field and shared
• Was there a recent learning opportunity
that you thought was wonderful, and if
so, why?
• What are some topics that you would like
to discuss with your colleagues?
passion for a strategic direction for AFCPE
to our advantage. However, most
importantly, we will maintain open
communication, continually evaluate
the needs of our customer, use the
latest and greatest technology, and
always think strategically. There is an
that honors the past, recognizes the present
Your input is extremely important to us and
old saying around the military, “either
and shapes the future for our organization
will help inform program planning. Please
lead, follow, or get out of the way” We
and the field.
email [email protected] with your ideas.
choose to lead.
14
Why Community Is So Important in this
Profession
Congratulations New
Certificants
AFCPE Accredited Financial Counselor®
Graduates (11/19/12 – 2/25/13)
By Dean Obenauer, MPA, AFC®
Bone, Silke
Just for the heck of it, I googled the Webster
a fun and informative ice breaker activity,
Edey, Lorraine
definition of community and highlighted
which was well received. For many, it was
England, Nicole
some key words that describe AFCPE:
a first time meeting with colleagues from
Froelich, Mary
their own backyard. Engaging, thought
Gette, Gayle
• A unified body of individuals
provoking conversation, exchange of
Grimes, Rachel
• People with common interests
contact information, and lots of smiles were
Hafley, Victoria
• An interacting population of various
common observations.
Miller, Mark
kinds of individuals in a common
location
Roth, Julie
The breakouts provided a backdrop to
Stueve, Cherie
• A group linked by a common policy
continue meeting, networking, sharing
Tomaneng, Jeffrey
• A body of persons having a common
ideas and collaborating throughout
Young, Shinae
history or common social, professional,
the entire conference. Feedback from
economic, or political interests
participants showed that this was a
AFCPE Accredited Credit Counselor®
worthwhile activity.
Graduates (11/19/12 – 2/25/13)
provide the best financial resources for
The breakouts were indeed a bonding
Chairez, Maritza
those we serve. The AFCPE conference
event, but we need to keep the momentum
Munster, Richard
in St. Louis last November opened with a
going through local, state, and regional
“Communities of Practice” session. This
involvement. Simply put, AFCPE needs
AFCPE Accredited Financial Counsellor®
was a great opportunity for participants
you! Are you willing to volunteer to start
Canada Graduates (11/19/12 – 2/25/13)
to take another look at why we are in this
a listserv, blog, online activity, news brief,
business to serve, and the access we
or any type of communication activity?
Westenberger, Nova
have to a tremendous wealth of expertise
Please contact Rebecca Wiggins,
Whittle, Delima
through our shared membership in AFCPE.
executive director, at [email protected]
AFCPE is all about working together to
with your great ideas today!
The general session was immediately
followed by regional breakout sessions,
Dean Obenauer, MPA, AFC®, is Assistant
which provided another opportunity for
Director of Financial Aid for Financial Literacy
participants to come together in a more
at Creighton University. He can be reached at
informal setting. The breakouts started with
[email protected].
Thank you to this issue’s
contributors:
Dennis Ackley
Michael Mielke, MPA,CFP®
Dean Obenauer, MPA, AFC®
Are You in the Conversation?
Barbara O’Neill, Ph.D.,CFP®
Paul Richard
Terrance Daryl Shulman, MD,
www.afcpe.org/blog
LMSW, ACSW
Rebecca Wiggins
Barry Wilkinson, AFC®
Eugene A. Woods, AFC®
15
Presorted Std.
US Postage
PAID
Columbus Ohio
Permit No 2609
Association for Financial Counseling and Planning Education
1940 Duke Street, Suite 200
Alexandria, VA 22314
Mark Your Calendar for the
2013 Annual Conference
November 20–22, 2013
We believe…
Everyone has financial desires that affect their lives
every day.
Better financial decisions lead to a better quality of
Hyatt Regency Greenville, SC
www.afcpe.org/conference/
life.
People can make better decisions when they are
supported by a trained professional.
Academics, research, and practical experience
inform professional financial counselors and
educators.
Setting the standard for performance and a forum
for learning will provide a consistently higher level of
service.
Purpose…
To advance the profession of Personal Finance
by promoting and supporting the field of personal
financial counseling and education.