A bill to dramatically increase national service by expanding AmeriCorps hits President Obama's desk soon. While he's at it, we hope he will consider creating a different kind of corps -- a volunteer financial services corps to put quality financial advice within the reach of every American.
The financial services landscape has become so complex that most of us need a tour guide. And those who need one the most can least afford it. The profit motives of the big financial advice firms lead them to seek out clients who already have wealth to grow. A volunteer "FinancialCorps" could help fill this void in the marketplace.
A culture of volunteerism runs deep in the legal profession to help those who can't afford expensive advice. Many law firms take on pro bono legal cases, and some expect associates to provide a base amount of free legal advice. Hopefully, a FinancialCorps would inspire a similar commitment to volunteerism in financial services firms.
The goal would be to create a trusted source for basic financial advice. Volunteers would be able to answer questions like: "How can I improve my credit score?" or "Should I lease or buy a car?" They could also provide one-on-one help to create a budget or figure out how to pay down debt.
The FinancialCorps could also set up shop outside Wal-Marts, grocery stores and public libraries. People could sign up for 15-minute appointments, kind of like Lucy did in Charles Schulz's "Peanuts" comic strip. Except in this case it would be the financial doctor who is in. One possible model is a national nonprofit organization called SCORE, which recruits retired professionals to provide free advice to small-business owners.
For this to work, people would need to feel confident that the advice is sound, and that the individual giving it doesn't have a financial stake in the outcome. All volunteers would hold relevant professional certifications, like those held by financial planners and advisers, for example. They would be carefully screened and would pledge not to sell anything that would financially benefit them or their companies. They would also undergo training about the financial needs of lower and moderate income people -- the needs of someone earning $25,000 a year are different from someone who makes $250,000.
Critics will say such a volunteer corps isn't needed since financial literacy programs fill this void. Indeed, such programs have proliferated in the last few years, led in part by the FDIC and other regulators. But the jury is still out on how well classroom-based financial education works. Plus, many people don't have time for a course if they work multiple jobs, lack transportation and have kids to care for. Most prefer one-on-one advice tailored to whatever challenge they're facing.
Others will worry about the price tag. Perhaps the financial services industry, as opposed to taxpayers, could foot some or all of the bill. Firms could "pay in" through providing volunteers, funding, or both, according to their asset size. Surely the Charles Schwabs and technology gurus of our nation could sit down with advocates for lower income people and figure out how to make this happen. Polls show Americans are ready to respond to the president's call to step up to address our nation's challenges.
It has been 35 years since Legal Aid was created to put free legal advice and representation within the reach of every American. In these challenging economic times, President Obama should create something similar for financial advice.