© 2013 Center for Financial Services Innovation 1

FINRA’s 2012 Financial Capability Survey

Jon Erickson08/06/2013

© 2013 Center for Financial Services Innovation 2

POOsPurpose• Understand how national and state-by-state financial capability has changed

in the past 2 years

Objectives• Analyze key findings from FINRA’s study• Redraw national and state-wide portraits of how Americans are making

ends meet, planning for the future, managing financial products, and making financial decisions.

Outcomes• Update CFSI knowledge bank on recent financial capability findings• Better position our department strategy and initiatives

© 2013 Center for Financial Services Innovation 3

Introduction

FINRA’s purposes for the 2012 survey - Update key figures - Deepen exploration of highly relevant topics

- Identify disparity in financial capability across state lines and demographic g groups

• Deployed to over 25,000 adults across the US, with about 500 respondents per state

• Implications for national and regional FIs, funders, & policymakers

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State-by-State Findings

Most Financially Capable States

2008 Survey New York, New Hampshire, & New Jersey

2012 Survey California, Massachusetts, & New Jersey

Least Financially Capable States

2008 Survey Kentucky & Montana

2012 Survey Mississippi, Arkansas, & Kentucky

Most Financially Capable States

Least Financially Capable States

© 2013 Center for Financial Services Innovation 5

Making Ends Meet • 41% reporting spending less than their income, 36% spend about equal, and

19% spend more (no major change from 2009).

• 22% of checking account owners occasionally overdraw (decrease of 4% from 2009), with respondents ages 18-34 being the most likely (28%).

• Nearly two in five (39%) said they probably or certainly could not come up with $2,000 if an unexpected need arose.

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Planning Ahead

• Over half (56%) of respondents indicated they did not have a three month emergency fund (up 5% from 2009).

• Planning for events farther out (higher education & retirement) only saw a 3% increase.

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Managing Financial Products• 7% of all Americans are unbanked. Over half of the unbanked (54%)

are formerly banked.

• Regarding payment methods, 33% reported using cash frequently, while 6% use prepaid cards frequently.

• Nearly a third of Americans have used at least one non-bank borrowing method within the past five years, and 14% have used two or more.

• Usage of non-bank borrowing methods is highest among 18-34 year olds, those with less than $25K income, African-American and Hispanic respondents, and those with high school or less than high school education.

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Financial Knowledge and Decision-Making

• While respondents’ performance on FINRA’s financial literacy quiz declined slightly, self-perceptions of financial knowledge increased. (67% in 2009 & 73% in 2012)

• Even among the 41% of respondents who gave themselves the highest score, nearly one-third engage in costly credit card behaviors, 22% use non-bank borrowing methods and 14% overdraw their checking account.

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Discussion

In groups, discuss FINRA’s findings and how they might inform our efforts to increase financial capability.

Starting Questions

What survey findings are true/representative – what are you seeing in your line of work?

How might these survey findings influence your department strategy and future engagements?

© 2013 Center for Financial Services Innovation 10

FINRA’s 2012 Financial Capability Survey