The Consumer Financial Protection Bureau (CFPB) recently announced that it is launching its Financial Coaching Initiative, targeting recently transitioned veterans and economically vulnerable consumers to help them with their financial goals.
The funds for the program are the first to come from the CFPB’s Civil Penalty Fund, which is a collection of the civil penalties paid to the CFPB after an enforcement action. Although many of these penalties are paid to the alleged victims of the practices, the CFPB places any money left over when it cannot locate the victims or finds it is “not practicable to pay them” and puts it toward consumer education and financial literacy programs, like this one.
The program places 60 certified financial coaches at organizations around the country to provide in-person, individualized educational services to help those who are underserved and economically vulnerable make good financial decisions and reach their financial goals.
“Having a trusted, well-informed financial coach can increase your odds of financial success,” CFPB Director Richard Cordray said. “Our project aims to provide financial coaching services at critical points in consumers’ lives, especially as they transition from military service or from being unemployed.”
In its press release, the CFPB cited millions of consumers who are economically vulnerable, including the 49.1 million people living below the poverty line, and the more than 68 million who are financially underserved. The CFPB said that these consumers are the most likely to lack access to traditional financial services, including products that are more appropriate to their needs and less costly.
Specifically, the CFPB mentioned that around 250,000 service members re-enter civilian life after active duty service and find the financial transition to be particularly challenging. Although transition programs are offered by the Department of Defense, the CFPB stated that many servicemembers lack the experience necessary for effective money management, and many need help reworking the financial plan they made while in the program. This is the point in which the CFPB’s program would assist them into successfully transitioning into a financial stable post-military life.
The CFPB initiative also hopes to assist economically vulnerable civilian consumers who seek help from social services and other providers for financial assistance. The bureau says that the coaches hired for the program have experience working with whatever population they will serve, are trained in financial coaching techniques and will be accredited by the Association for Financial Counseling and Planning Education.
The CFPB, along with the Department of Labor, performed a nationwide search and settled on 60 organizations from around the country to host the professional financial coaches, including nonprofits and Department of Labor American Job Centers. The hosts will provide resources to help consumers find jobs, identify training programs and gain skills in growing industries. All of the selected nonprofits also provide complementing services to the coaching such as job training and education, social and housing services.
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