Subject: File No. 4-626
From: Linda Rapacki
Affiliation: Museum of American Finance

June 28, 2011

I thought I would type this up in response to your inquiry about the current state of Financial Literacy as it applies the Museums goal as educator. Currently, there are no standards when it comes to Financial Literacy. The Jump$tart National Standards are a step in the right direction. However, the Standards lack any definition of skill or aptitude. As presented, the Standards establish that Financially literate high school graduates should have a general understanding of all key aspects of personal finance. In addition, graduates will be confident in their ability to find and use the information required to meet specific financial challenges as they arise. In my humble opinion, when a general understanding meets confident high school graduates interesting decisions will ensue.
The ability to find information in this day and age is nearly an insult when defined as an aptitude required for financial literacy. A Google search for Financial Literacy will return over 12 million results in 0.13 seconds. Furthermore, a general understanding does nothing to establish a base of knowledge from which to build.
The issue here is actually too much information. It requires a skill just to be able to determine which source will be most useful. Instead, each person should have a set of actions or guidelines that should be completed before a decision is made. These guidelines are specific enough to quickly convey information rather than the lengthy content often used. They are based on techniques to protect the consumer. They are supported by research. Finally, the consumer can build on them.
Consumers can build on this base with defined levels of skill. A skill can be how to calculate a specific financial cost/benefit. These skills will progress during life stages and income level.
For example,
Topic: Choosing to invest with a broker
Perquisite: Know how to establish a savings plan Know how financial representatives are compensated.
Skill Level: Calculate commission quickly identify all fees and costs

When choosing an investment from a broker?
1) Check that the product registered (list actions here)
2) Check brokers registration (list actions here)
3) List all fees and commissions (list actions here)
4) Check if the same product is offered elsewhere (list actions here)
Warning: If you fail to perform any of these actions you risk, dealing with an unlicensed person, financial product or paying too much for the product.
Note: Research has found that nearly 70% of all financial fraud is committed by UNREGISTERED persons.

Again, this is just an example. However, it contains all the elements needed to clearly identify 1) the required knowledge 2) the appropriate skill level needed 3) simple action steps before proceeding 4) identifiable risks 5) facts to support the checklist rational.

I hope this helps.

Linda Rapacki
Managing Director of Visitor Services and Operations
Museum of American Finance
48 Wall Street
NY, NY 10005
212 908 4693

Follow the Museum of American Finance on Facebook.