Consumer Engagement

Last week, I got my 401(k) plan fee disclosure notice in the mail. I almost threw it away.

At first, it looked like all of those form notices you get – you know, the ones with the window envelope and “US Postage Paid” in the top right-hand corner. Not the most exciting-looking mail.

So, why am I telling you?

Because I work for the Bureau’s Office of Financial Protection for Older Americans, and because I’m an older American learning through my own experiences. A big part of our mission is to help people understand how to plan and save for retirement.

What’s a 401(k)?
A 401(k) account helps you to save for retirement by making contributions from your paycheck. In some plans, your employer also makes contributions. In many cases, participants choose from among the investment options available through the plan. The money saved in a 401(k) account, and the growth in the account, isn’t taxed until you retire. This tax deferment helps your retirement savings grow faster.

While everyone with a 401(k) plan pays fees, an AARP survey found that over 70 percent of people with a 401(k) thought that they weren’t paying any fees at all.

Possible fees include investment fees for the funds, stocks, bonds and other investments you choose, individual service fees for things like taking out a loan from the plan or selling shares in a particular investment fund, administrative fees and more.

That’s where last week’s mail comes in. Under a new rule from the Department of Labor, everyone with a 401(k) must receive an annual disclosure about fees. Many have received them already and more will get them in the mail around Labor Day. To see how fees can affect your retirement savings, check out this video:

How will this new information help me?
The disclosure will tell you the fees and expenses for the investment options your plan offers and how those investment funds have performed over time. You can use the statement to compare your options.

What can I do to get a better deal?
If you think the fees in your 401(k) plan are too high, you can ask your employer to find more cost-effective investment options or plan services.

What else do I need to know?
Remember that fees are not the only factor in choosing 401(k) investments. Your plan may offer access to professional investment advice. If you’re thinking about rolling over your 401(k) savings into an IRA, consider that IRAs have fees, too, and those fees could be higher than your 401(k) plan fees.

To learn more, the Department of Labor offers resources that cover what you should know about your retirement plan.

And of course, I’ll be there learning with you along the way.

April is a time when students and their families anxiously await their college acceptance letters. But for families across the country, the good news of getting into college isn’t the end of the anxiety. Figuring out how to finance a college education can also be daunting.

We want to find a way to make it easier to compare different options when making decisions on student debt. There is a lot of data out there on schools and loans, and we thought we’d try to get the key information into one place to help students see how their choices today might impact their financial lives in the future.

Today, we’re asking for your input to develop a new interactive tool to help navigate financial aid offers and student loans.

We’ve already put together a prototype. In this beta version, you can enter the financial aid information you’ve received from colleges, adjust your family’s contributions, input scholarships and military benefits, and much more. Our beta version can give you a rough estimate of your monthly payment after graduation, as well as a sense of your overall debt burden in relationship to the average starting salary of a college graduate. You can also see school-specific indicators like graduation rates.

But we need your help. We need students and families to tell us what is helpful and what is confusing. For the experts out there, we need you to tell us how to think about some of the technical assumptions, like interest rates and salary data. The information you provide will help us determine where to make both big changes and little tweaks.

We’ll be sure to report on what we’ve heard back to you and to other agencies working to make the process easier and simpler. Use the Financial Aid Comparison Shopper and tell us what you think.

We also challenge the developer community to make their own apps and web tools to help students make more informed decisions. Our prototype relies on data that are available to all of us, and we welcome the competition!

The CFPB wants to make sure that the student loan market works well for all students and their families. That’s why we worked closely with the Department of Education on our Know Before You Owe student loans project, launched a student loan complaint system, and created the Student Debt Repayment Assistant for borrowers navigating their repayment options.

With your help, we can make financial aid season a little less stressful when it comes to student loans.

As we work to ensure a consumer bureau that’s responsive to today’s most pressing problems, we’ve made it a priority to keep one foot firmly planted outside the Beltway. We know that those of us here in Washington will never understand what’s going on in your community better than you do.

That’s why we continue to hold listening sessions across the country. Recently, I talked with community advocates, social service providers, and others in Columbus, Ohio, and Great Falls, Montana. (more…)

I’ve just joined the CFPB as the Associate Director for Consumer Education and Engagement. I come from outside Washington, D.C., and from outside government. I moved across the country to do this job because, like my colleagues, I believe in the mission of the CFPB. That mission is to promote a fair, transparent, and competitive financial marketplace in which consumers can easily compare financial products and have the information they need to make the best choices for themselves and their families. As I get started, I want to tell you a bit about our work and ask for your thoughts.

My team and I will focus on two big tasks: financial education and consumer engagement. Consumers with financial knowledge and tools are an essential part of a fair, transparent, and competitive market. Consumer engagement refers to our work sharing ideas and information with consumers and listening to the experiences and views of consumers. Together, these initiatives will enhance the other work the CFPB will do for consumers: handling consumer complaints; understanding markets; making or amending rules where necessary; and ensuring compliance with applicable rules through supervision and enforcement.

The Consumer Education and Engagement team will work to reach you, the American consumer, wherever you are. We will focus on what is helpful and usable. We recognize that we will need to provide a variety of tools and approaches to respond to the different types of financial choices you face.

Our primary focus in financial education is simple: We will promote what works. We will identify proven, effective forms of education that help consumers make their own sound financial choices. We will work with a variety of experts: educators, consumer organizations, economists, researchers, and community leaders. We will focus on how to help consumers understand the financial choices they need to make. Our goal is to help consumers understand the costs, risks, and benefits of financial products as they decide whether to buy those products.

Financial products change so fast that our work may focus more on the types of questions to ask and things to consider than on the details of each and every complicated product. At the same time, throughout the CFPB, we will work to make the costs, risks, and benefits of financial products more transparent. We will also talk about the value of savings. Even a small emergency fund can protect you and your family. When you have a financial emergency, that fund gives you a choice you wouldn’t otherwise have: between borrowing and using those savings.

The CFPB is focused on consumers, and we want to learn from you. We have an obligation to understand all types of consumers, including those who face unique types of financial markets or financial challenges. The Consumer Education and Engagement team has four offices dedicated to this task. We will talk to and listen to servicemembers, students, older Americans, and groups who have traditionally been underserved in the financial system. In response to those conversations, we will develop ways the CFPB can help address problems faced by those groups.

You may already know about the work of Holly Petraeus, who leads the Office of Servicemember Affairs. She has been visiting military bases and units across the country since January, talking about the financial challenges facing American men and women in uniform. Zixta Martinez leads our Community Affairs office and is reaching out to consumer groups, civil rights groups, community organizations, and others. Soon we will hire leaders in the fields of student financial issues and the special financial issues facing older Americans.

We want to hear from you and work with you. Please share your ideas with us. If there is a topic you think we should offer resources about, let us know. If you like what you see from us, consider reposting it, tweeting it, or sharing it with your friends both online and offline. If you have ideas about new tools that could make it easier to compare financial products, please share them. You can start by sharing this post with others, by commenting on this post, or by sending us an email.