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Marketing buries financial education

By Marcie Geffner · Bankrate.com
Sunday, December 29, 2013
Posted: 6 am ET

It's no surprise that more money is spent in the U.S. to sell financial products to consumers than to educate them about those products. But consumers who care about unbiased information might find the degree of disparity, 25 to 1, alarming.

That figure comes from the Consumer Financial Protection Bureau, a federal government agency that exists to protect consumers from harmful financial products.

In a recent report, "Navigating the Market: a Comparison of Spending on Financial Education and Financial Marketing," the CFPB found that for every dollar put toward consumer education, $25 is spent on financial marketing to try and convince consumers to purchase financial products and services.

The financial services industry spends $17 billion each year marketing financial products and services to consumers while only $670 million is spent annually to provide financial education, the CFPB said. Those amounts are equal to $54 per person per year for financial marketing and $2 per person per year for financial education.

Annual marketing spending is comprised of general promotional messages about financial products and services and direct marketing of specific products and services. Advertising and marketing messages are used to promote and sell credit cards, mortgages, vehicle loans, home equity loans, checking accounts, savings accounts, ATM networks, credit counseling, check cashing and other banking services.

TV commercials composed most of the advertising spending. But products and services were also promoted through newspaper, radio, magazine, display and outdoor ads.

Sectors that the study found contributed to financial education spending were nonprofit organizations, federal, state and municipal governments, financial institutions, school districts and philanthropic groups. Nonprofits spend the most annually on directly providing financial education, the CFPB found.

In a statement, CFPB Director Richard Cordray said consumers have access to comparatively little unbiased information since they receive the vast majority of financial information from companies trying to promote an image or sell products to them.

"Today's study further reinforces the dire need for more and better financial education in this country," Cordray said.

Do you receive a lot of marketing material from your bank? How about educational material?

Follow me on Twitter: @marciegeff.

 

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