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Financial Literacy and Education Commission Public Meeting

February 13, 2013

10:00 am – 12:00 pm

U.S. Department of the Treasury – Cash Room

MEETING MINUTES

Committee Members Present

Department of Defense Brenda McDaniel

Department of Education David Soo

Department of Health and Human Services Mark Greenberg

Department of Labor Phyllis Borzi

Department of the Treasury Mary Miller

Department of the Treasury Melissa Koide

Consumer Financial Protection Bureau Camille Busette

Consumer Financial Protection Bureau Richard Cordray

Department of Veterans Affairs Julie Schroeder

Federal Deposit Insurance Corporation Luke Reynolds

Federal Reserve Board Anna Alvarez-Boyd

Federal Trade Commission Colleen Tressler

National Credit Union Administration Gail Laster

Office of Personnel Management Raymond Kirk

Office of the Comptroller of the Currency Barry Wides 

Securities and Exchange Commission Lori Schock

Small Business Administration Nathaniel Bishop

Social Security Administration Jim Courtney

Commodity Futures Trading Commission Michael Herdon

Department of Agriculture Susan Shockey

Introduction

Melissa Koide, Deputy Assistant Secretary for Consumer Policy, U.S. Department of the 

Treasury 

Melissa Koide opened the meeting by thanking everyone for their attendance. She 

outlined the agenda for the meeting, noting the focus on starting early for preparing for 

retirement, and reminding everyone of the Commission’s commitment and recent hard 

work on improving the financial capability of young Americans. Koide introduced 

Under Secretary for Domestic Finance, Mary Miller.
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Welcome and Opening Remarks

Mary Miller, Under Secretary for Domestic Finance, U.S. Department of the Treasury 

Under Secretary Miller opened her remarks referencing the Commission’s October 

meeting. That meeting saw the launch of the strategic focus to help empower young 

Americans with the tools, information, and resources for financial success. Ms. Miller 

noted the great need for work in this area that can help to change the course of young 

Americans’ financial futures and benefit the nation in the long run. She underlined the 

importance of retirement security, mentioning that many Americans nearing retirement 

face significant shortfalls in their savings and that according to a 2011 survey, 60 percent 

of respondents aged 18 to 27 noted that they have saved nothing for retirement. Ms. 

Miller then introduced Richard Cordray, the Director of the Consumer Financial 

Protection Bureau, and Vice Chair of the Commission.

Richard Cordray, Director of the Consumer Financial Protection Bureau, Vice Chair of 

the Commission.

Richard Cordray thanked the Commission for their work and noted how closely aligned 

the work of the CFPB and the FLEC Commission are. He also spoke about the CFPB’s 

plans to incorporate workplace financial education programs. 

Melissa Koide thanked Director Cordray and the Consumer Financial Protection Bureau

for their support in this work. She then moved the meeting to progress reports from the 

Starting Early for Financial Success committees.

Starting Early for Financial Success Committee Progress Reports

Post-Secondary Education Committee

David Soo, Office of the Under Secretary for Higher Education, U.S. Department of 

Education

Dr. Soo outlined the areas of focus in the Post-Secondary Education Committee, namely 

making available high-quality information for post-secondary planning, as well as the 

development of a community of practice for practitioners. These potential communities 

would consist of primary and/or high school educators, postsecondary educators and 

policymakers, and would encourage these educators to collaborate, identify, and share 

best practices in order to produce financial education tools and resources. Dr. Soo noted 

that their guiding principles are to produce and use research in order to assist vulnerable 

students. 

Research & Evaluation Committee

Susan Shockey – National Program Leader, Division of Family and Consumer Sciences,

U.S. Department of Agriculture

Max Schmeiser – Consumer Research, Consumer and Community Affairs, Federal 

Reserve Board
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Susan Shockey and Max Schmeiser informed the Commission that the Research and 

Evaluation Committee is now adapting previous research to the theme of “starting early.” 

There are currently 14 government agencies gathering in person and through conference 

calls to meet and discuss how to achieve that goal. They mentioned the need for liaisons 

between the various committees and the Research and Evaluation Committee. The FLEC 

Research and Data Clearinghouse, which will be housed on MyMoney.gov is set to be 

released in April of 2013, and the committee hopes to have a FLEC-sponsored journal 

completed by winter of 2014. The Committee has created an eleven-page work plan that 

encourages integration in order to facilitate their goals. 

Children and Youth Committee

Jeannie Chaffin, Director, Office of Community Services, Department of Health and 

Human Services

Luke Reynolds, Chief, Outreach & Program Development Section, Federal Deposit 

Insurance Corporation

Luke Reynolds of the FDIC discussed the progress of the committee, mentioning that a 

purpose statement had been developed in pursuit of their goals. The committee is focused 

on a broad range of strategies: fostering collaboration between programs that promote 

savings for youth for both known and unknown needs; precautionary savings, identifying

effective school bank partnerships; school based service programs; and learning what 

opportunities may exist regarding jobs programs. The committee also hopes to develop a 

plan to help facilitate better financial education for children and youth. Mr. Reynolds 

described the tasks as broad, with two subgroups. In their efforts, the committee will 

collaborate closely with the research and evaluation subgroup, as their goal of improving 

financial literacy among young people is hard to show causally. Ms. Chaffin reiterated 

that they are committed to looking at evidence and building a quality plan.

Ms. Koide asked Mr. Reynolds to share any work relevant to the topic at hand, in 

advance of more comprehensive future updates. Mr. Reynolds thanked the committee 

and agencies involved, and noted that the name of the committee has been changed from 

“Youth” to “Children and Youth.” 

Ms. Koide solicited questions on the Committee work plans. 

Ms. Koide then introduced Financial Literacy and Education Commission member 

Phyllis Borzi, Assistant Secretary of Labor for the Employee Benefits Security 

Administration (EBSA). 

Early Career and Retirement Committee Report

Phyllis Borzi, Assistant Secretary of Labor, Employee Benefits Security Administration

Ms. Borzi began by saying “It’s never too early, and it’s never too late [to plan for 

retirement].” Ms. Borzi shared an anecdote about speaking with a school assembly. Ms. 

Borzi inquired about with children got allowances, and then followed up by asking how 

many were saving, and how many spent every penny. A pleasantly surprising number of 
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the children were in fact saving, but many were not and Ms. Borzi went on to speak about 

the importance of saving. 

Committee Project: Pilot Program

Ms. Borzi provided an update on the Committee’s work plan. Because most of the 

organizations present have workplace financial education initiatives, the Committee 

hopes to survey what everyone is doing and use that information to inform the 

development of a pilot. The aspirational outcome is for better educated early career 

federal employees. Ms. Borzi gave an overview of key tasks for the pilot program: 

Webcasts are useful tools that can be used to help small-businesses that do not have 

retirement plans, and to help those who do to comply with the law. During America 

Saves Week they will have two webcasts – one for businesses without retirement plans, 

one for businesses with retirement plans. www.dol.gov/ebsa

Ms. Koide then thanked Borzi for her comments, noting that the plan will be an important 

step forward to understanding what has an impact on workers staring their careers. Koide 

then introduced Robin Diamonte, the Chief Investment Officer of the United 

Technologies Corporation where she oversees $16.5 billion in defined benefit and $14.8 

billion in defined contribution assets. 

Starting Early in the Workplace for Retirement Preparedness Remarks

Robin Diamonte the Chief Investment Officer of the United Technologies Corporation 

(UTC)

Diamonte began with an anecdote about her two daughters, aged 6 and 9, who get $3 per 

week in allowance. They have three jars – one for saving, one for charity, and one for 

spending. Diamonte’s daughter asked her sister “when do you think we will actually get 

to spend what’s in the saving jar?” The reply was “when we are old like Mommy.” 

Diamonte began her presentation by explaining that companies care about employee 

savings. It is good business sense to have employees save money, and it is very 

important for employees and employers to be able to retire when they want to. 

Particularly in the aftermath of the recent recession, some individuals who were 

scheduled to retire could no longer afford to, so they continued working, but 

unproductively, because mentally they were already retired. Diamonte mentioned that 

UTC utilizes financial advice tools, and that they hired the firm HelloWallet to come and 

speak on debt management and spending. In doing so, their employees were better able 

to assess superfluous spending and identity areas to trim down their spending. They also 

discussed retirement questions like: How much do you need to live off of when you 

retire? If you make $100,000 and you want to live off of $80,000 then you need to 

replace 80 percent of that income you are making. What is the difference between an 

annuity and a lump sum payoff? Often retired individuals face two realities: either they 

live in fear of outliving their money and spend frugally, or they do not plan and spend 

everything before they die. UTC is trying to get younger employees to get in a high 
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growth income portfolio. When employees retire, they turn the lump sum into an 

annuity-like payment, but if they prefer, they can have the lump sum. 

UTC developed the Lifetime Income Strategy which has a flexible design that adjusts, 

depending on age. It starts by investing in a portfolio of stocks and bonds (similar to the 

UTC Savings Plan’s current Target Retirement Funds). At age 48, a portion of assets 

will protect the insured Income Benefit. This feature gradually increases over time. By 

age 60, the entire Lifetime Income Strategy balance is used to secure the insured Income 

Benefit and becomes available after the employee terminates employment from UTC.

Diamonte posited that the flexibility of the Lifetime Income Strategy is what makes it 

most successful. She noted that there are three behaviors that work. Auto-enrolling 

works really well, but one problem was that people are contributing 6 percent to their 

retirement, but maxed out their credit card at 12 percent interest. They therefore took a 

step back and realized the need to teach better debt management and financial education.

UTC has developed best practices based on their experiences, and Diamonte highlighted 

them. She mentioned that many plans get too confusing for individuals, financial 

education programs need to be segmented by age, one-on-one coaching is very important, 

tech savvy apps are helpful (for example, HelloWallet has an iPhone app), and sometimes 

making training mandatory can be helpful. She noted that in developing these plans, it is 

important to keep in mind that comprehensive financial education is new to many 

companies.

Melissa Koide thanked Diamonte for her presentation and then opened the floor for 

questions from the Commission. One issue which was raised was the task of quantifying 

the return on investment. Ms. Diamonte noted that it was too early to make quantifying

statements like this. Diamonte was asked why UTC is focusing on more comprehensive 

approaches to employee financial education now as opposed to any other time. She 

replied that pensions are going away, and there was a need to find new ways to get 

employees to save without them. A Commission member then asked for clarification on 

auto-reenrolling. Diamonte informed her that auto-reenrolling can take on a number of 

formats. For example, an organization can find out the number of employees not enrolled 

in a savings plan and enroll them. They then send communications informing them that 

they have to opt out if they do not want to be enrolled. It can also take the shape of 

mapping them to a more diversified portfolio. On the federal level, Phyllis Borzi noted 

that auto-enrolling is mainly for health plans. 

The discussion also covered the possibility for partnerships with schools in order to teach 

students about these principles, and to determine on a behavioral level what causes 

people to save. Though there has not yet been an opportunity to share these tools with 

small businesses. UTC would be open to that type of interaction. In terms of research 

and evaluation, there have been efforts made to do more, and there is a lot of data, but 

there are concerns about privacy. The main focus of their work has been identifying how 

to get people to save for retirement and diversify their portfolio. Diamonte then advised 

that the government provide guidance for companies focusing their attention and 
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resources to large projects such as this. Other priorities are leveraging focus groups to 

hear more diverse opinions, but the work is just too new to identify priorities for 

troubleshooting, or determine what practices have made employees most successful.

Diamonte mentioned that employees often do not diversify out of company stock because 

they have invested so heavily in their own firms. It can be hard to change this behavior 

because people love their work and their firm. To combat this, corporations have been 

sending employees letters if their investments in company stock exceed a certain amount. 

UTC for example, will flag you electronically exceeded what they deem to be prudent 

levels of investment. The key to the success of this mechanism is repetition. Diamonte 

encouraged the use of professional financial advisors for those employees with limited 

understanding of investment strategy. She also mentioned that lower income employees 

tend to have less diversified stocks concentrated in the company, and that they do not

often move money around. 

Other Announcements/Comments 

Melissa Koide then asked the Commission to provide updates from their organizations. 

Raymond Kirk mentioned that there is an Office of Personnel Management webinar as a 

part of African American History month talking about financial empowerment. Barry

Wides noted that America Saves Week is coming up beginning February 25. The Office 

of the Comptroller of the Currency sent out an America Saves update to all financial 

institutions they regulate to encourage consumers to save, and the Treasury Department 

Federal Credit Union is offering to pay the $10 fee to join during this week. Susan 

Shockey mentioned that USDA Cooperative Extension Service is also very involved in 

America Saves Week, and that they developed an America Saves Challenge which was 

sent out to the FLEC members. Anna Alvarez-Boyd from the Federal Reserve Board

mentioned that that a professor from Harvard will be coming to talk about the effects of 

medical spending on retirement spending on March 7 at 3:30 PM for the GW Financial 

Literacy seminar series. FDIC is also supporting America Saves Week by holding a 

webinar for financial institutions and for young people to discuss saving for college, 

among other topics.

Brenda McDaniel followed up by flagging the 7th annual Military Saves Week during the 

same time (Feb 25 – March 2). This is co-sponsored by the Consumer Federation of 

America and the Department of Defense. This week represents a major part of the 

Department’s financial literacy efforts. The theme of the week is: set a goal, make a 

plan, save automatically. The goal is to increase participation of military savers. She 

noted that according to the Consumer Federation of America, 340 organizations have 

signed up so far to participate, 215 installations, 61 financial institutions, 300 branch 

locations, 57 non-profit organizations. She also noted that for the first time, the 

Chairman of the Joint Chief of Staff has signed the memo for Military Saves Week and 

developed a public service announcement. 

http://www.youtube.com/watch?v=gQRsgmLTH64

Several media events are being conducted by the Department of Defense. 
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Jeanne Hogarth Recognition

Koide commended and thanked Jeanne Hogarth, who recently retired from the Federal 

Reserve Board of Governors for her years of dedication to the work of the Commission. 

Jeanne most recently led the Commission’s Research and Evaluation Working Group in 

developing the 2012 Research Priorities and Research Questions, and shared with the

group last spring, a presentation on mobile technology and financial capability. 

Conclusion and Announcement

Melissa closed the meeting and reminded everyone that the next meeting will be on May 

15. Before then will be Financial Literacy or Financial Capability Month in April, and 

Melissa mentioned that she looks forward hearing updates on these activities in May. 

The meeting adjourned at 11:45 AM.